What Do Management Teams Want from Their Boards?
Boards and management teams have distinct roles in their partnerships to maximize the success of the enterprises that they lead. Over the past couple of years, RHR has conducted board evaluations with more than 200 individual directors and members of management teams who interface with board committees. In the interviews, we asked management teams about their experiences working with directors and for recommendations on how their boards can enhance their value proposition. Here are the some of the things we consistently heard.
1. Do your homework to understand our business thoroughly
Management teams usually spend many hours preparing for board meetings. One of the top frustrations they express is responding to directors’ questions—or worse, suggested actions—that reflect a lack of understanding about the company’s real business context and challenges. Conversely, management teams genuinely value questions from directors who offer perspectives and counsel informed by a thorough grasp of the competitive landscape and the key drivers of the P&L. This first point suggests that companies need to ensure a very robust onboarding and continuing education process to equip directors with the knowledge they need to contribute in a meaningful way. Doing so allows directors to best prepare for board and committee meetings. Simply browsing through the board book on the plane on the way to meetings doesn’t cut it anymore. Directors need to be continual students of the organizations they govern and be proactive in making sure they have the information they need to really understand the key issues management teams are grappling with.
2. Help us think through strategic options
Whether in committee meetings or full board sessions, too often agendas are devoted to reporting or “show and tell” presentations by management teams to update directors on the business. The underlying assumption is to demonstrate to the board that management is on top of their responsibility in running the company. Given the challenging environment that organizations function within these days, more and more management teams (and boards for that matter) are asking for less agenda time focused on report-outs and more time for discussion of key strategic issues. To accomplish this, all the information to update the directors on company performance should be sent to directors in advance of meetings, along with some key questions or issues that the management team would like the board’s input on. This allows for less time spent in board and committee meetings informing directors, leaving more time for strategic discussion.
3. Hold us accountable but let us handle the day-to-day management of the organization
In their effort to be helpful and add value, sometimes directors cross the line drawn by their governance role into the management realm. While directors can sometimes add value (when invited to do so), by making suggestions about how to execute, management teams often get frustrated when board members exert their power by directing executive team members on execution. Clarity about the respective roles and decision rights of boards and management leads to the most efficient division of labor and minimizes mixed messages and inefficiency. Individual directors need to be very thoughtful about how they insert themselves in any operational matters, if at all.
4. Leverage your network on our behalf
Several CEOs we work with refer to their board members as invaluable resources to open doors through the relationships they have cultivated over the years. Whether with regulators, potential customers, key suppliers, or domain experts, the best directors have a network of contacts that are relevant to the company’s business and are able to make warm introductions to key stakeholders in the organization’s ecosystem. While this is always a welcome contribution, it is especially valuable in start-ups and younger enterprises and can even be an essential requirement in composing the board and inboard succession planning.
5. Invest in our learning and development
Boards of directors are ideally composed of highly experienced and seasoned business leaders. Almost to a person, the management team members we have interviewed told us they deeply appreciate directors who take the time and effort to get to know them and who are committed to their ongoing development. While primary responsibility for talent and career development resides with the CEO, CHRO, and with the executives themselves, many CEOs and executives rate their boards more highly when their interactions with directors offer new ideas and perspectives that enrich them. Some boards go so far as to set up mentoring opportunities for management team members with selected board members.
The CEOs and management team members we work with certainly understand and respect the role and responsibility of boards to hold them accountable. By adopting the recommendations suggested above, directors can extend their contributions in supporting and sustaining the best performance by management over time.
This appears on the Society of Corporate Governance website.