Wednesday, December 5, 2007

How to run a board meeting


I’m on my second company as CEO now, have run a public company, sit on two public boards and sit on several small private company and non-profit boards. It’s surprising, given the diversity of size and objective, how much there is in common between the good and bad practices of boards.
So – here are my top 10 things to pay attention to when preparing for, and running, a board meeting:

1. Plan the agenda – seems obvious right? But you need to remember the purpose of the board meeting when you plan it. It’s for corporate governance and advice. So to achieve that objective you must ensure, whether in the meeting or in the materials, that all the pertinent topics that need to be are covered: sales, R&D, marketing, HR, finance, legal etc.

2. Get materials out in advance – this is my personal pet peeve. Nothing annoys me more than a CEO not getting materials out. a) if s/he can’t be bothered to put the time in to prepare in advance why should I bother to put the time in to show up? and b) boards do significantly better work when they have thought through the issues on the table in advance.

3. Assume board members do their homework – see #2 – in my experience the good board members know their responsibilities and will read through what you send them so they are prepared. If they’re not willing to do that then maybe they should not be on your board.

4. Work on the hard stuff – see #1 and #3 – If you have your board’s attention for a limited period of time – be it 2 hours or 6 – you want to use the time as efficiently as possible. That means focus on what’s not working, not what is. Yes, a little bit of advertising on how great a job your team is doing is helpful for morale – but it’s not useful to the task at hand for the board. What matters is that you educate, go through the challenges and get the boards advice. Be open, trust and get the issues on the table so you can tap into their collective brain power. After all, what’s the worst that can happen? – you get fired – but the alternative is to sub-optimize your success.

5. Remember what it means to be CEO – that means you are the leader. Even if you have a separate chair it’s your company and you need to be in control of the meeting. Make sure the conversation is rich and nutritious (not rat holing), make sure it’s direct (not passive aggressive) and step in front of the bullets for your team.

6. Don’t surprise them. Good or bad. Again, you want the best of their brainpower in the meeting and most people do better if they have 30 seconds to think about something before they respond. Good news – email is OK. Bad news pick up the phone, call your board members and talk them through it.

7. Use dinners carefully – yes board dinners can be useful time but only if they are thought through so they mean something. Just going out to dinner to “bond” i.e. eat good food and drink good wine is not a benefit to most board members and frankly I’d rather be with my kids unless I’m really working. But, bringing small groups together to work on an issue, or bringing a presenter in to update the board on fiduciary responsibilities can be educational and still leave time for social interaction.

8. Have good AV – again obvious but so often neglected. It’s a fact that today you will often find one or more board members have to phone in. Just a side effect of our global economy. As a result, a quality phone system where those on the phone can hear what’s going on in the room is a must.

9. Always have an executive session & an outside director’s session. For the first, ask management except the CEO to leave, for the second ask the CEO to leave as well. This is important both for substance and for hygiene. The session with the CEO enables the board to have frank discussion about highly sensitive topics (for example if a board member believes the company should be broken up or sold – usually not a productive discussion in front of execs who are working 24 hours a day to hold it together) and about the performance of the executives. Then the outside director’s session enables the directors to express their brightest and darkest thoughts to each other. In both cases if you have the session every single meeting then there is no sense that “something’s up” when you go into executive session.

10. Finally - don’t let the meeting get you down – in my experience the most useful board meetings have been the ones that (in the moment) seemed the most brutal. That’s when you are getting your money’s worth from your board because they are telling you the truth no one else can tell you.

Other posts you may find helpful
How to run a board meeting part 2: in a market crisis
How to run a compensation committee

8 comments:

David said...

At a previous start-up, our VP of Engineering would present to our board each month. He often complained that it would take about one month to address the previous board meeting issues, then plan for the next board meeting (Point #1). He suggested increasing the time between meetings to at least two months. He never won those arguements. So, #1 is perhaps more painful than meets the eye.

Penny Herscher said...

David - good point. I think the frequency of meetings depends on the stage you're at. Early on monthly meetings make sense because board members have a lot to contribute and hopefully things are changing fast. Later on (like FirstRain today) every other month makes sense. Even so, the VP engineering can respond to the previous meeting's issues in the packet, but not in the meeting unless it's still a hot topic.

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