Growing high-performing private companies through the implementation of governance requires three critical elements: selecting appropriate directors, following a defined methodology and applying an effective process.
If done well, these three elements drive the creation of value and tangible business performance.
The board meeting is only one dimension of the governance process, yet is central to the flow and effectiveness of governance. Doing this part of the process well can shift a business positively – for both the short and the long term.
If you want to increase the value of your board process, consider focusing on these basics.
Resource: How To Create Founding Documents
Set the rhythm
The governance process brings new cycles and patterns into an organisation — a structured flow and a focus on planning ahead.
Every board should have an annual board calendar, with the dates for board meetings and themes or focus areas for each meeting.
This flow is directly linked to the financial year-end and other timing cycles unique to the company.
Once board dates are locked into the diary, they create defined milestones towards which the team can apply its activities. Erratic, last-minute or unfocused meetings dramatically undermine the opportunity for governance to drive momentum.
Plan the meeting focus
If a board meeting does not have a clearly defined set of outcomes and supporting documentation to achieve those outcomes, the conversation may drop from directorship down to operational detail.
It is therefore essential that the chairman and chief executive meet at least two weeks prior to the meeting to reflect on a theme and agree on the specific board papers, reports and supporting documentation required to maximise the value of the board’s time.
This is a formal and focused preparation meeting geared towards making sure that critical issues are addressed effectively.
Design the flow of insight
Without the right flow of information at the right time, the board is unable to fulfil its fiduciary duties and apply its mind to value creation.
The reporting structure and information flow are frequently the greatest hurdles, especially when there are many reporting participants or the reporting framework lacks maturity.
Board papers must be circulated to the board at least one week before the meeting. Getting all the reporting flows to consolidate within this timeframe is critical. It may take time to formalise the reporting standards and lift the quality of insight overall.
Create formality in the meeting
The board meeting should be a focused and high energy process. It should be kept to time by an effective chairman. More importantly, it should create a level of formality that lifts the level of conversation and activates leadership thinking.
There are many ways to create this formality: Formal dress or attire, behaviour and body language, language (such as addressing the board ‘through the chairman’) and a strong focus on accountability.
It is not a discussion — it is a focused process where engaged directors apply their minds to unlock value for the company. If your meetings are too relaxed or unfocused, consider creating a more formalised approach to the meeting and the methodology used.
Translate discussion into action
As soon as possible after the meeting, circulate the minutes to the board for review and commentary. We believe that action or outcomes driven minutes are much more effective in translating the meeting into value.
Verbatim minutes create ‘noise’ that may undermine their value.
The quicker executives can get the minutes, the more time they will have to get tasks underway.
Minutes are an essential performance and accountability driver, yet they also protect directors from liability. If your minutes take too long to come out or are not actively used by your team, reconsider how you manage this process.