When your critical business decisions and strategies hinge upon governance from a board of directors, it becomes paramount to ensure your board is positioned to handle the duties required.
“With the many uncertainties in business, don’t let the health of your board be one of them,” advises Donna Funk, Pinion biofuels business advisor.
“Invest in your board with the same dedication you give to your products or services. The ripple effect of strong leadership cannot be overstated.”
How can you evaluate if your board of directors is performing at its best? Considering the expanding workload and high expectations from shareholders, even the healthiest boards have room to grow.
Pinion business advisors have outlined seven tips to help you enhance the performance and effectiveness of your board:
1. Prioritize trust and communication.
“Trust and open communication should be a top priority for every board,” advises Derek Wagoner, a Pinion business consultant.
“Without them, even the most skilled and well-intentioned team will struggle to reach its full potential.”
Trust and communication are the two pillars on which an effective board is built. Without one, the other suffers; a lack of trust hinders communication, and poor communication erodes trust. Does your board have this essential foundation?
Pro tip: Reflect on whether members openly share differing opinions, engage in respectful conversations, and communicate transparently without hidden agendas. Answering ‘no’ to any of these considerations may indicate the need for improvement.
2. Establish a board succession plan.
Given staggered terms and unexpected turnover in the workplace, a succession plan is key to maintaining stability and continuity.
Pro tip: Effective succession planning involves six key steps: defining the organization’s vision, business development, strategy and objective setting for new leaders, identifying leadership criteria, evaluating candidates, and creating a development process to equip the next leaders.
3. Create a consistent meeting structure.
Effective board meetings hinge on structure. Prepare by sending out an agenda at least one week in advance, giving enough time for members to review and prepare.
Pro tip: Include action items that will be voted on and any topics that are up for discussion. Then set a time limit of 1.5 to 2 hours, monthly meetings – and stick to it, unless there is a specific reason for a longer meeting. A strict cut-off gets everyone in a more decisive, focused, and action orientated mindset and helps reduce absenteeism.
4. Utilize board committees.
Committees are a powerful tool to help drive productivity. The idea behind committees is to tap into the specific talents, skills, and knowledge of individual board members and then inform the full board on areas of topic. Common committees include finance, audit and compliance, executive, governance, and strategic planning.
Pro tip: Consider which areas of your organization need a higher level of attention and focus and tailor groups accordingly.
5. Use unanimous voting selectively.
Not every decision needs to be unanimous. While it’s important to be united on a final decision, it’s equally important to have differing opinions throughout the decision-making process.
Pro tip: A healthy board encourages discussion by allowing dissenters to be heard. A dissenting perspective could be invaluable, identifying potential obstacles and contributing to more informed and successful outcomes than a straightforward agreement would have achieved. Unanimous voting has its place – but use it selectively, in other words, do not withhold a vote waiting for unanimous agreement.
6. Manage difficult or underperforming members decisively.
PwC’s 2024 Corporate Director’s survey found that 49% of directors believe that at least one member of their board should be replaced. This highlights a challenge: even the most effective boards can face issues with difficult or underperforming members. Such challenges might include members who consistently miss meetings, disrespect other members, or violate board bylaws.
Pro tip: Leadership should address any issues directly, consult the by-laws, and document all incidents. If the behavior doesn’t resolve, it may be time to bring in legal counsel, HR, and/or outside consultants. Don’t leave it to the CEO to handle disruptive members.
7. Understand your fellow board members.
Who is sitting around your table? What are their strengths, motivations and communication styles? Knowing this can open a whole new level of collaboration and efficiency.
Pro tip: One of the best ways to get to know your board is by taking a relationship-based personality test like 16Personalities. This type of tool can help identify how different personalities interact, their decision-making needs, and areas that can be improved.
Connect with a Pinion advisor for tailored guidance on identifying and developing a strong leadership team, as well as effective board discussions and strategies.
