Whether your organization is for-profit or non-profit, its board of directors is one of its greatest assets. However, many boards suffer from the type of dysfunction or underutilization that prevent board members and the board as a whole from putting the full force of its value to work on the organization’s behalf.
Here are 10 questions to ask yourself to determine if your board is indeed high functioning or firing on only three cylinders (or less).
#1. Does your board INSIST on receiving timely, accurate information? A great CEO trusts his or her board with information and makes it a priority to deliver that information in a timely manner. However, a great board won’t settle for anything less and will proactively seek out information and notify the organization of any gaps it needs filled. Additionally, a great board takes consuming information seriously (rather than simply glancing through documents) and is, therefore, able to catch inconsistencies and inaccuracies before they harm the organization.
#2. Are board members forming back channels of communication? A sign that your company isn’t providing (and your board isn’t demanding) timely, accurate information is the appearance of back channel communication between board members and internal team members. While the culprit can also be board members pursuing personal agendas, back channels are most common when there is lack of trust and transparency between the CEO, the board and the organization. In a high-performing board environment, the CEO provides a free flow of information and the board stays out of the day to day running of the company.
#3. Do you hear YES far more often then NO? Disagreements of opinion are a sign that board members respect each other and that the board as a whole is strong enough to invite opposing viewpoints and therefore will have better perspective for final decision making. If you currently have a board full of “yes people” you may not be hearing the opinions you need to hear most.
#4. Does everyone on your board have expertise in your industry? If yes, it may not be such a good thing. While it’s important that all board members understand your organization’s industry, as well as your specific target audiences, market and competition, those who bring outside-the-industry expertise and ideas can help lead the organization toward innovation and greater growth. Diversity of experience is just as important as other types of diversity.
#5. Do your board members hold themselves and each other accountable? It’s common for groups to excuse individual members who drop the ball, including those that are not prepared or fully participating.
#6. Is your board gender diverse? There is no lack of data on the impact women directors have on organizational success. Data shows that having women on boards leads to higher return on sales, equity and invested capital, along with increased social performance and social responsibility and improved handling of risk. What’s not so clear is why so many organizations still lag behind when it comes to acting on this information. Rather than being one of them, proactively seek out women directors. Past studies have shown that it takes at least three female board members to change board culture enough to see positive change.
#7. Is your board talking enough (or at all) about hacking? Records, data, trade secrets and all kinds of information stored on computers are essential to an organizations survival. Not to mention the fact that a cyber attack can seriously interrupt operations and lead to regulatory fines. Boards today are not only responsible for overseeing risk but are being held liable for not doing so adequately. In fact, the 2013 breach of Target resulted its board members being sued and an oversight committee calling for their replacement. These actions set a precedent and put the responsibility for preventing cyber attacks squarely on the shoulders of board members serving organizations across the country. If your board is not discussing cyber security at all or enough and also not making strong recommendations for ensuring protection, you may not have all the expertise you need sitting at the table.
#8. (and speaking of crisis…) Does your board have access to expertise to guide your organization through one? A financial or reputational crisis – or even the resignation of the CEO (sudden or not) – are revenue and growth threatening events. It’s important that your board has the insight and experience to manage these complex situations with foresight, confidence and know how. As part of risk mitigation, every organization needs a crisis communications plan, and board members able to take the lead in ensuring damage is eliminated or reduced to the minimum possible.
#9. Are your board’s practices and policies rigorous? Strong board governance is the foundation that enables your board to fulfill its duties and focus on what’s important rather than constantly revisiting processes or cleaning up messes. There is nothing more frustrating to CEOs and to board members themselves then when poor governance prevents the board from contributing the full extent of its expertise. While strong governance is not the answer to every single board issue, the governance framework adds significant value to the organization just like strong systems and processes within the organization improve operations and therefore profitability. Of course, part of the board’s role is to evaluate itself, as well as individual members, so it’s critical that the board is lead by individuals steeped in good governance practices. If this is not the case, any quick fixes (such as bringing on “better” board members) will ultimately never improve board performance because they don’t address the underlying cause. When problems arise, always look at governance and make sure that foundation is solid before doing anything else.
#10. Is your board driving performance? Achieving significant growth is difficult and stressful, and if your board is not determined to improve results and isn’t continually examining opportunities and planning next steps, it’s not fulfilling a top priority of its role. Your organization may be well governed, but not moving forward at full steam.
Be on the lookout for the final article in this series on boards in April – Is Your Board on Board? Part 2: Moving from Perfunctory to High-Performing.
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