Boards drive performance. When performance is strong, it is tempting to credit your insight, intelligence, and fabulous skill and to “not fix what ain’t broke.” When performance is lagging, it is equally tempting to try to fix everything. How do you know when it’s your board that needs changing, and how significant are the changes needed? In the parlance of home improvement, do you need a simple refresh or a moderate—or extreme—renovation?
Candace took over the family clothing manufacturing business from her dad, inheriting a productive group of board members, many of whom she had grown up with as she moved through various roles in the company. These individuals had superb industry knowledge and contacts, and a robust understanding of the supply chain. But she was uneasy about digital disruption and accelerating change in how customers engaged with the product lines. She wasn’t sure that the current board, as talented and engaged as they were, could help her transform the business to meet the current challenges.
All improvements start with an honest assessment. As with a bathroom or kitchen remodel, you should look at your board with fresh eyes—as if you’re walking into the boardroom for the first time. Ask yourself:
- Is the board functioning optimally for today’s needs?
- Is your business the same as it was when you put your board in place? Segments may have changed. What’s important and what’s not important anymore?
- Are you adapting to your environment at the rate the environment demands?
- Is your board driving strategy and performance or reviewing past performance and hoping for the best?
- Is the board weighted correctly? Are there gaps in expertise, experience, or perspective? This is not a reflection on the quality of individual board members but on the completeness and appropriateness of the board as a whole.
A good look at board performance also starts with self-assessment. It’s time to look in the bathroom mirror, too. Ask yourself:
- Are board meetings set up to optimize strategy and performance, or is too much time allocated to recaps? Are you using the agenda to focus on the big issues that are keeping you and your team up at night, or are you addressing tactical challenges that lead only to incremental changes?
- Have you been challenging the board with the right questions?
- Have you educated your board well enough, giving them homework to accelerate them along their learning curve?
You may be tempted to take on these two assessments sequentially, but time is of the essence. Instead, look at the “who” and the “how” simultaneously.
After an honest assessment with her management team, Candace decided to add two new board members who could provide more productive insights into a changing customer and who could help the company develop a more responsive go-to-market strategy. She added a term limit for these new directors, so she wouldn’t find herself in the same position in the future. The company is not out of the woods, but Candace is confident that the tenor of board meeting discussions and support for the management team between meetings are trending in the right direction.
Making sure that your board has the right people, meeting agendas, information, and questions is crucial to driving performance and preparing your company to face a turbulent future.
Tune in next time for our article that outlines how to perform a board evaluation.