Companies & Industries

Enhancing Board Performance


Giving your directors better information is one of the easiest ways to boost their effectiveness

Replacing board members takes time—and political capital. Those searching instead for a quick and easy way to ramp up their performance almost overnight can turn to a resource as straightforward as board information. After all, nothing has greater impact on the quality of directors' discussion and decision-making than the information they receive.

Start by looking at the balance of presentation vs. discussion time in your board meetings. Are your directors suffering from death by PowerPoint as senior executives read bullet after bullet from a 25-slide deck? Or are agendas simply so packed that only 5 to 10 minutes remain for debate after each 30-minute presentation? Either way, you can bet not only are your directors bored to tears, they're vastly underleveraged.

The best boards aim for an equal amount of presentation vs. talk. Achieving this often necessitates changes in board pre-meeting materials. One board looking to rebalance implemented a rule that executives had to include sufficient detail in what they distributed beforehand (but not more than that) so their presentations could be limited to three or four slides of highlights and a Q&A. Management grumbled at first but came to prefer this approach. The directors became far more engaged and valued the increased opportunity for dialogue.

Create Board-Friendly Packages

Most boards find their background materials overly packed with details, particularly financial or other technical information. Lamented one board member in the entertainment industry: "I am receiving pages upon pages of technical information that only someone with a background in this industry would be conversant with. I become angry wading through it all—and I'm not the only person on the board having this reaction." When most of your directors are showing up irritated from this kind of overload, how do you think the meeting is going to go?

While some chief executive officers attempt to keep board members in the dark, sometimes through distributing too much information, most boards today won't tolerate it—they simply don't have the time. They sometimes receive their materials only a few days before board meetings and often do their reading on planes en route. Why make it tough for them to get the gist of what you'll be addressing?

Something as simple as a brief summary at the start of each agenda can make all the difference. One CEO's board packages begin with one or two pages highlighting key items to be covered and indicating which ones will require a decision from the board, which are for discussion, and which materials are only for background. To help the group focus, he often includes questions to be thinking about. He not only scored major points from his board for this kind of preparation, but meetings have become far more productive.

Asking for Feedback

Most senior executives learn how to present to a board by watching their bosses. They seldom get any feedback from the directors themselves. Yet many tend to judge executives' capabilities based on their performance and factor their conclusions into succession decisions.

A chief financial officer in a financial services company said of her colleagues: "I watch some of the presentations that people make to the board and I think they're awful. The board never makes critical comments and I wonder why. Are they just being polite or do they really like this stuff?"

The best way to find out is to ask. One CEO in the energy industry began ending each board meeting with this question: "What feedback do you have for me about the presentations of the people on my team today?" The answers not only reshaped the presentations, making them more effective from a member's standpoint, but they enabled the CEO to mentor his colleagues, several of whom he was grooming as potential successors.

A Two-Way Street

During a series of interviews, the CEO of a midcap oil and gas company was shocked to learn that his entire board was soundly critical of its pre-reading materials. "Why didn't any of you tell me this before?" he asked. Well, no one told him because the he hadn't asked—and that's all too common. Board members feel preparation is management's job. They will often denigrate what they get without taking the initiative to suggest what would make it better. But board information should be a two-way street: If directors don't feel they're getting what they want or are not getting it in the best format, they should say so.

In this case, the CEO and board had a productive discussion about the mergers and acquisitions material. "What you sent us all focuses on the financials," the board said. "We'd prefer you to present it this way: First, how does this acquisition jibe with the corporate strategy—the rationale for the deal. Then, give us information on the geology of the properties that will come with the acquisition. Finally, give us the financial information on the deal."

Reformatting the material as the board requested took the CEO only slightly more time—and led to far better discussions and decision-making.

Beverly Behan is the managing director of the Board Effectiveness Practice of the Hay Group and co-author of Building Better Boards: A Blueprint for Effective Governance. She writes "The Boardroom" for BusinessWeek.com/Managing/.

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