The Managing Up Kit part 6 – Board access to management

One of the most contentious issues in board – management relations is the degree of access which individual directors may have to the organisation's management team. The most useful way to regulate that access is to have a protocol approved by the board on the circumstances in which directors may interact with management.

There are a couple of ways in which such a protocol can be developed. You may want to raise it with the chair and include (with their consent) a discussion at a board meeting in which a protocol may be hammered out and articulated. Or you may want to try the power of the first draft and prepare something for the consideration of the chair initially and then the board. The form and content of the protocol need to be organisation-specific, but here is an example of what a typical protocol might look like.

 

Protocol for board access to management

• Directors may have access to the CEO at any time and for any reasonable purpose. The CEO should have access to directors for their guidance and counsel in relation to areas of particular know-how, experience or skills which the director may have.
  
• Directors may have access to the members of the senior management team to seek information or clarification ahead of a meeting about matters covered in the board papers.
  
• Directors may give constructive feedback directly to the CEO about the CEO's performance in relation to specific matters.
  
• Before giving any constructive or negative feedback to a senior executive about their performance, or that of their staff, directors should consult with the CEO and. if the CEO requests, allow the feedback to be passed on by the CEO if that is the CEO's preference.
  
• However, directors should feel free at any time to give positive feedback or reinforcement to executives (as long as it is not "Well done, BUT….")
  
• When giving constructive feedback to the CEO or executives, directors should follow accepted practice and ensure that the feedback is given with an appropriate degree of respect, and is timely, prompt, specific and supportive of learning.
  
• Directors should not seek information from or access to staff outside the senior executive team without prior consultation with the CEO, who may in their discretion propose an alternative course.
  
• Directors are encouraged to provide counsel and mentoring to executives, after consultation with the CEO and the chair on the most appropriate way to do so.
  
• When dealing with each other, directors, the CEO and executives should act and communicate in a way which is respectful, open, transparent, and for the purposes of the business of the organisation, or the personal development of the CEO or executives.
  
• Directors should be aware of the potential for appearance of preferential treatment about the organisation's products or services when dealing with management – obtaining things for free or at deeply discounted rates.
  

The Managing Up Kit part 5 – Be clear about what you want from the board

A frequent source of confusion, and therefore of ineffectiveness, between board and management is a lack of clarity about what the board is actually being asked to do at a board meeting. There are a number of potential outcomes when a matter is considered by the board. An issue may be for the board's information, such as a survey of the external competitive environment. It may be for noting, such as a risk management report, so the board can show they have considered relevant prudential matters and discharged their duties. It may be for a decision in principle, so that further work can be done to focus more sharply the final decision. Or it may be a request for a formal resolution, so that a transaction or course of action can be undertaken.

If you are not sure, and explicit, about what you are asking the board to do, neither will they be. You may end up with something unhelpful, or delay-inducing. Take the time to articulate exactly what you want from the board. Even if you don't get it, you will have the board in the right territory, and you will give them the opportunity to delineate what they want done before they will agree to what you are seeking.

Do you want the board:

• Simply to be informed about something
  
• To note, for their benefit or yours, some action or state of affairs
  
• To agree to something in principle, and also to agree on what else needs to be done before any final approval is given by them
  
• To decide, and authorise formal actions to be taken
  
• To decide, with conditions precedent before any action is taken, but still granting authority to proceed without further board involvement (a very useful mechanism for CEOs for getting on with things)?
  

 

Whatever it is, make sure you tell them clearly. State what outcome you want in any board paper or board report; include it briefly in a separate column in your first draft agenda (eg "note", "agree in principle", "resolve"), to help the chair support you in getting what you need.

Finally, be prepared for the eventuality that you may actually get everything you asked for. A common follow-on from the board in such circumstances is "What else do you need?" or "What will be the next step after that?". Not being able to articulate that next stage may mean you miss out on an opportunity that might not come again soon.

The Managing Up Kit part 4 – Taking one for the team

One of the inevitable parts of being a leader is taking the responsibility for what your team members do. They won't always produce the best results – none of us do. Sometimes there will be serious mistakes. When those happen, and are being explained to or reviewed by the board, probably the least successful tactic a CEO can employ is to focus the blame on the executive or team member who has made the mistake. I've watched it happen often in board rooms. Mostly it looks obvious and undignified. The same result occurs when one executive tries to pin an unfortunate consequence on another executive, in front of the board.

When mistakes happen, usually the most effective way to deal with them is just to take the position with the board that "it happened on my watch, and I take responsibility for that". To the extent that the circumstances allow, the board will see where actual blame lies. The CEO will appear much more statesmanlike by not pointing the finger at someone else.

That's not to say that the mistake or poor performance should not be dealt with appropriately or on its own merits. Just don't do it in front of the board.

The Managing Up Kit part 3 – are you on the board as well as being CEO?

It's not unusual for the CEO also to be a member of the board; that's where the title "managing director" came from. Being on the board, as well as being CEO, brings an added layer of complexity which is worth your while thinking, and talking, about.

The CEO "reports" to the board in a line management sense, and is certainly accountable to the board for the performance and success of the organisation. But there are no grades of directorship. Every director has the same duties, responsibilities and liabilities under the law – subject only to their obligation to employ their individual skills and expertise in a way that any similarly skilled person would reasonably do so as a director. In their capacity as director, the CEO is a brother or sister in liability with the rest of the board.

This dual nature of the CEO's role can cause some difficulty however, particularly for the CEO's participation in board meetings. I think the key to successfully managing the duality is to accept it as inevitable, and to be clear which hat you are wearing – CEO or director – at any given stage in the board meeting. In presenting reports to the board, or discussing the organisation's performance, you are unavoidably wearing the CEO hat, and should expect the board to ask searching questions or make incisive comments – in other words not treat you as one of them. When the board is making important decisions or approving significant transactions, you are entitled to put on your director hat, and exercise your rights as director on an equal footing with the rest of the board.

This is sometimes a hard thing for the board to recognise. It is an issue which is worth a specific discussion with at least the chair, to ensure that the rest of the board should expect there will be times when you will not be answering to them, but standing side by side with them.

In my experience this is not a card to be over-played, and tactically it is usually preferable to put on your director hat only when the context really requires it. This may be when you feel that the board may not be heading in the right direction, or when consensus is not appearing likely and a vote may be needed. The power of your director's hat is probably inversely proportional to the number of time you explicitly put it on.

One thing you should bear in mind about your position on the board is the information imbalance. As CEO you will be aware in great depth of the organisation's circumstances, performance and prospects. Non-executive directors touch the organisation much less frequently (see a previous post on "Managing the board") so be conscious when you do wear the director hat that you will have information the rest of the board does not, and act accordingly.

 

The Managing-Up Kit part 2 – Embracing the Power of the First Draft

It is usually unrealistic to expect that people in non-executive positions will have the time (or possibly the experience or know-how) to be preparing important material that impacts on you personally or on the organisation you lead. What senior or non-executive people can contribute much more practically is to review drafts. That has likely been a large part of their more recent lives. Giving a chair or a director a blank sheet of paper is mostly a recipe for disappointment, or an invitation to be given something back you don't want or won't like.

Some of the things you should consider doing as a first draft, if you haven't got them in place already, are:

• Your job description – it's likely that the only one which exists is the one prepared by the recruitment agency or the headhunter; suitable for that process but not so useful for explaining what you will do on a day-to-day, or quarterly, or annual basis. Have a go at writing down what you do – a high level description including the purpose of your job; then your responsibilities; then the things you are held accountable for; and then functional things. Think about how it can be expressed in terms of deliverables. Then share it with the chair. It will be interesting to get their perspective on what they think your job is. They can discuss, comment, amend, delete – but it is very unlikely that they will scrap it and re-write it from scratch.
  
• Your own performance goals and KPIs – there will inevitably be a negotiation process with the chair and even the board in coming to the final version. In doing your first draft, it's helpful for both you and the person doing your review if you can be as specific as possible in setting up measures, as tangible as possible , and as objective as you can make them. Some goals may be more difficult to nail down as numbers, particularly around the assessment of your leadership. This may be a place to use 360 degree feedback or staff engagement scores. When performance review time comes, you'll find you will be managing up more effectively, and be having a more fruitful conversation, with a good framework to hang the conversation on.
  
• The board meeting agenda – The way the board meeting runs, and therefore the way the board and management interact, are both heavily influenced by the board meeting's agenda. Sadly, the construction of the agenda often ends up in a vacuum, or defaults to the company secretary if there is one. The final authority over the agenda rests with the chair. For the reasons discussed in "Managing the board", they are unlikely to draft it personally. There is usually a priceless opportunity available to produce a first draft of the board agenda, which is more likely to be appreciated by the chair than to be seen as presumptuous. There will invariably be some adjustment to your draft, but you will have taken an important step in influencing the context, and thus the outcomes, of the board meeting.
  

The Managing-Up Kit – how CEOs can work more effectively with their boards (part 1)

For an organisation to run most effectively, the CEO needs a sound working relationship with their board. Boards by their nature have a number of features which need careful attention from management:

• Boards must produce collaborative decisions and results derived from a number of individuals with different skills and backgrounds
  
• Directors usually have other jobs, and do not touch the organisation on a frequent basis
  
• Directors face particular, and sometimes stringent, legal duties and obligations
  

 

This blog series provides a number of suggestions and tools to help CEOs develop productive relationships with their boards.

 

Managing the board

If your board is comprised of part-time, or "non-executive" directors, there are some important factors you need to bear in mind as a CEO or senior executive, to ensure that you have the most productive relationship possible with the board.

Because of the intrinsic nature of their interaction with the organisation, non-executive directors generally do not touch it or its business or operations on a regular basis

There are two major consequences which flow from this irregular interaction:

• You cannot assume that directors will remember in detail what has happened in previous board meetings or strategy retreats. It is usually helpful to give a quick recap or summary of what has been previously discussed or decided by the board before launching into any new stage. When preparing reports or presentations, it is simple enough to commence with something like: "Directors will recall that at the last board meeting, it was agreed that there were three important factors to be taken into account [then list them], and it was decided to take the following actions [then summarise them]"
  
  
• Because of their intermittent touches of the organisation, non-executive directors form impressions, fairly or not, on the basis of the occasional things they see or hear which affect them personally, or push one of their particular individual hot buttons. It is useful to draw on your observations of the board generally, and directors individually, to identify particular hot spots they might have. You will then be in a better position to minimize the chance for any unproductive interactions. For instance, lawyers on the board (like me, sadly) are likely to react adversely to typos; accountants generally don't like to see numbers that don't add up. Give yourself a head start by eliminating avoidable errors.
  

Top tips for new NEDs

I was talking over lunch to a bloke who had just scored his first serious non-executive director appointment – a very serious one, in fact, to a top 10 listed company. I made so bold as to offer him my top 3 tips on being a good NED.

1. Before you say anything in a board meeting, ask yourself why you're about to say it. I've seen too much boardroom discussion which is ego-driven, banging on about old hobby-horses, or just not being of any use to the topic or agenda item under consideration. A slight pause before you throw in your bit can help to ensure that it has relevance, is not being driven by some collateral purpose, and will have the right tone for that moment. This might even include a bit of calculated frustration or stroppiness, which can play a useful part in the board dynamic – as long as it is calculated.
   
2. Master the art of the intelligently naive question. Management will often, intentionally or not, start discussions at a place some distance from the most sensible starting point for the board's purposes – often because they would prefer not to explain or justify some of the basic underlying assumptions. Testing these assumptions is a vital part of the NED role: while you might initially appear to be a bit dumb in bringing the discussion back to a more basic level, it is more likely than not that your seemingly naive question will flush out some crucial piece of information not previously revealed, or something worth debating.
   
3. Don't let an acronym pass you by if you don't know what it stands for. I guarantee that you won't be the only person in the room in that position. That may include the person spouting the acronym. I once caught out the director of the technology division (surely the high temple of the cult of the acronym) talking about a vital and expensive piece of equipment called a GGSN. I asked "What does that stand for?", and he didn't know. It turned out to be a compound acronym, where one of the letters stood for another acronym. Informed debate needs everyone to understand clearly just what is being debated. Like the GPRS Gateway Service Node, not the General Gauge Sensor Network or the Great Green Sea Nymph.
   

I'm not sure the new NED was quite ready to display as much ostensible naïveté as I was recommending, so early in his tenure and in front of his heavy-hitting colleagues. I suppose it is ultimately a matter of balance, but you don't always have to look clever to be clever.

The Board Coach