Reinventing the Board Part II: The Role of the Chair in Increasing Board Effectiveness

11/15/11Follow @geshwiler

Technology companies’ boards of directors need better leadership. I made a case last month about reinventing the board of directors by treating the board as a team and doing annual assessments against company needs. Boards that are structurally more aligned with their company’s operations are better able to help them achieve success-or at least reduce the board’s contribution to company failure. That said, it’s hard for a CEO to do this alone. Even with a well-organized board, a lot of board meetings also are under-effective, ineffective, or worse, really stink.

Enter the effective chairperson.

The non-executive chair of the board has three responsibilities:

1. Set the board agenda for each meeting;

2. Run the board meeting; and

3. Manage board terms and help recruit new members.

Executive chairs take on additional functions and play an active management role, often including being an outward face with external stakeholders such as government entities, investors, and strategic partners. Those are important roles, but different from the role played by a non-executive chair. It’s also rare to have an executive chair in an early stage company. Non-executive chairs are very different; they talk less, listen more, and as one lawyer put it to me, “their job is to bang the gavel.”

Setting the Agenda: A big reason a lot of board meetings stink is they focus on the wrong things. If left to their own devices, management typically will set an agenda about what they want to talk about—or at least what will make them look good—rather than what is vital to the company’s long-term success. Alternatively, the board can operate on a rote formula, often covering activities such as sales, marketing, and engineering since the last board meeting rather than looking ahead to the future.

Even well-intentioned CEOs will have blind spots or resistance about what should be on the agenda, because they live inside their own tactical world and suffer from day-to-day stress. They may be unaware of or underappreciate strategic changes in the market. They also may want to postpone discussion of an important topic until they have what they perceive as enough time to address it sufficiently to look good in front of the board.

(Above, a short video with additional thoughts about what makes a good board chair.)

Instead, the chair should reflect on what tough questions should be addressed and which ones aren’t being asked. He or she may want to consult with fellow board members, management, and other informed parties in the market. These questions and an outline of the agenda should be circulated a week in advance of a board meeting. Early distribution of the outline can create constructive conflict about items of importance and ensure that management does not waste their time preparing elegant, but not very effective materials.

Unfortunately, what is typically considered best practice today is management preparing lengthy PowerPoint slides and distributing them one to two days in advance of the board meeting. Board members may or may not have time to review them and are often playing catch up when they walk in the door for the meeting. As a result, management often becomes frustrated—either when the conversation quickly derails from their agenda or, at the other extreme, board members sit passively listing to a parade of data, seemingly unappreciative of all the hard work that went into them and not adding any value.

Running the Board Meeting: Good chairs are facilitators. While many CEOs also are good facilitators, even some of the best ones I’ve seen have lost control of board meetings for one … Next Page »

James Geshwiler, a managing director at CommonAngels for more than 10 years, has financed over 40 software and Internet companies and worked with them through over 100 rounds of investment and related changes in boards of directors. [Editor's note: CommonAngels is the lead investor in Xconomy.] Follow @geshwiler

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  • http://www.ceolearningnetwork.com Martin Coyne

    Jim,
    Overall, very astute and accurate comments. From my experience as a director on companies in multiple stages of evolution and sectors, I’m struck by the importance of board leadership which can be formal or informal. Strong board leadership provides focus, important support for the CEO and the company while enabling all to reach full potential. A strong board leader also proactively addresses many of the issues in your previous post of 10/3/11 and can help avoid the pitfalls you discuss.
    Excellent summary for all CEOs and directors to read and heed.
    Marty

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