A company’s board can be a significant contributing factor in successful operations, offering oversight, guidance, and expertise designed to lead the course of business in the right direction even in turbulent times. Or, at least, this is what the board should be doing. In many companies, however, the board often serves as somewhat of a figurehead, listening to decisions and suggestions without weighing in explicitly when the road ahead looks bumpy.
The reasons behind a lackluster board are various and multifaceted, ranging from the professional experience of board members to an overall lack of confidence. In fact, a recent study of over 800 board members conducted by the Stanford Graduate School of Business and the US National Association of Corporate Directors found that many directors feel as though they are ill-equipped to manage risks and focus on long-term strategic goals.
The average director from the surveys worried about not getting enough director education as well as a lack of access to quality management information prior to board meetings. Furthermore, the study honed in on deficiencies common in directors, ranging from a lack of trust in other members (68% of participants), a lack of feedback (77%), and a lack of technical knowledge and experience (48%).
If your board is not performing well in some of the key areas that matter most, all hope is not lost. Here is what you can do to build an effective and efficient board.
Assess Directors on Critical Positions
As an outsider, it can be hard to know what’s truly going on behind the scenes. Instead of assuming everything is fine, however, a few simple questions can shed plenty of light on the realities of your board. Take some time to speak to board members and question their positions on key topics, such as the effectiveness of board committees, decision-making processes, and leadership. Detailed findings can provide a better foundation in how your board functions, as well as offering guidance on how to move forward.
Facilitate Director Improvement
With the high number of surveyed directors who believe they can benefit from continuing education, it is in your company’s best interest to provide additional opportunities for board members. Consider developing a matrix that covers skills and experience to explore where your board members need improvement, and plan coaching and training sessions accordingly. Outside experts can be a valuable investment, challenging board members to be proactive about developing new skills and capabilities.
Periodically Evaluate Board Members
If you currently have no term limits or other processes in place to refresh the members of your board, it may be time to change that. Instead of assuming everyone appointed to the board will offer value forever, implement an independent process to re-evaluate board members and, if needed, facilitate turnover. Self-assessments and peer evaluations every few years are also encouraged, helping directors to see their own weaknesses with enough time to act accordingly.
A good board is a valuable investment, especially if your team has their sights set on big growth and development. If you’re struggling to find the best way to fine-tune your board, Klein Hall CPAs can help. With extensive experience in consulting and management, we can help you develop best practices that can keep your corporate leadership moving in the right direction. Contact us today to get started!