Maximize the Power of your Board

Corporate Governance is the number one role of a board, ensuring that business practices and general activity are consistent with shareholders’ and stakeholders’ best interests. Being good stewards of governance, however, is not in conflict with offering valuable business insights. Unfortunately, in my work with clients, I have seen several cases where the board is in the weeds of the business or merely nodding their heads in agreement with what is presented. In general, their board meetings feel like operations reviews. In other cases where there has been a recent merger or union representation on the board, information is filtered, presenting only what is of interest or knowingly in agreement with board members. Companies are more successful when their boards are engaged and find the right balance between governance and business input.

Recently, I had the opportunity to be part of a Harvard Business School Case Study in Corporate Governance. The case study and subsequent class discussion centered around balancing corporate governance and business advice. My experience on boards leans toward leveraging director talent for both corporate governance and business vision and strategy. This is not to say that the board is managing the business, but rather, that it offers diverse points of view based on directors’ current and past business experiences. The CEO on my board does not expect or desire the board to agree and rubber stamp her vision and strategy. She challenges the board to tell her why the plan of record will not work. Effective directors have diverse and relevant experience when a thorough skill set analysis is used when recruiting and appointing directors. Unlike most boards, nearly 100% of the directors on our board are working senior executives. Boards add great value to companies when a balance of governance and business input is achieved.

Since board meetings require a great deal of preparation, review of material, and several days of meetings during the year, why not make sure your board meeting adds value to the business, in addition to governance? The first step to achieve high value is to be selective about who gets appointed to the board. The governance and nominating committee must understand the vision and strategy of the company and ensure that there are board members who have experience in areas where the company is growing. Have someone on your board who understands the government procurement process if the federal market is part of your strategy. If your company is in a transformation to digital or eCommerce, ensure that one or more board members can reflect on key areas where they have experience and can present an alternate view. This does not mean that board members are consultants, but rather a sounding board to identify barriers, challenges, and past successes or failures that they have experienced. The CEO should not blindly follow these pieces of advice, but certainly should be able to make better decisions based on diverse insight and market intelligence gained from the directors’ experience.

Debating and challenging strategies and business direction and providing alternative views can be a bit tense. Therefore, for productive debate, positive chemistry between board members and management is critical. Humility, reuse of best practices, the ability to change one’s mind, and professional development advice are great assets for the management team. Kimball board members are active executives and are better directors and leaders because of our time together in and out of the board room. There is mutual gain between the directors and management team. Assessing a good cultural fit with the board is essential in the appointment of new directors.

Wynstone Partners is proud of our board assessment and advisory practice, which helps directors and management teams maximize the value of the boardroom.

For more information on board assessment and advisory services, please visit our Board Assessments webpage.