Tuesday, March 6, 2012

How to understand your board's baffling behavior

Boards don't behave like management teams and their sometimes seemingly baffling behavior can be an irritant to management. But if you can get inside the head and motivation of a board member you can, with a little distortion of the nth dimension, understand their behavior.

Whether it's a public company board, a start up board or a non-profit board there are perspectives a board member has that give them a very different view than the senior management team:

1. They don't live it every day. Some board members do a better job than others of learning and remembering the critical aspects of your business, but if they only attend meetings once a quarter (or even once a month in the start up case) your business will have moved by leaps and bounds between each meeting and you have to take the time to back up and fill in the gaps for them.

2. Reasonable people given the same information will often make the same decision. But given that your board does not have all the same information as you, they will not instantly come to the same conclusion as you. They are not being difficult, they just don't have the same info. And, short of a Vulcan mind meld, you are always going to know more details than them, so be patient.

3. Good governance on a public board requires a board to have diverse opinions and deliberate - it's all part of good process. That then means they are not going to agree with you, in fact at least one of them should be disagreeing with you and challenging you at times or they are not seriously deliberating. Some board members disagree "just because" as a way to shake up the conversation and see what falls out. It's all part of the process, not about you.

4. Really good board members have a laser like ability to figure out what you are most defensive about and then pick at the wound. It's a way of testing and needling the CEO to understand what the real dynamics of a difficult situation are. It's meant to be helpful.

5. Being defensive is like a red rag to a bull. When a CEO has a defensive "don't question me" reaction to a challenge it's infuriating to the board member because a) it's the board member's job to question and b) it signals that the CEO is not on firm ground with his/her position, knows it and attacks back to try to stop the line of inquiry. As a CEO it's bad, bad behavior. I cringe inside every time I do it!

6. The board's most solemn duty is the selection of the CEO. Boards are always, always thinking "Is the person in the job the best person for the job right now?" Their duty is to the shareholders, even in a private company, and the selection of the leader is the greatest impact they have on the return to the shareholders. As CEO you just have to get comfortable with it, and help the board question you, and engage you in a continuous succession planning analysis. The day will come when you may not be the best person - for any one of a thousand reasons including your own - so get comfortable with the discussion.

7. Different board members have different roles to play. Some are financial - they may well ask remedial questions as they seek to understand your products, but if they are a former CFO and running your audit committee - God bless them! Some are technical and may question your go-to-market strategy but be a great resource for you when it comes to evaluating a technology. But just because they have a deeper set of skills in one area and less in others it does not mean they always remember that.

8. Your board are not your friends. Remember pt #6. They are your advisers, your ultimate employer and the representatives of your shareholders. While they may be fun to have dinner and play golf with outside the meeting they are not your friend inside the meeting and you can get smacked in the meeting if you forget that. Want to complain to someone safe? The only safe person in the room is your outside counsel (your lawyer) once you tell him the conversation is confidential.

9. Your board may have their own fears and issues about being on your board which can show up as baffling behaviors in your meeting. One board member (of a currently high profile and controversial public board) told me about the reputational risk of being on a board that should have been interesting and fun but has now turned into a public pillorying. The problem is by the time the going is rough it's hard for the board member to resign if the company actually needs his/her help. You can't know what challenges they are facing so don't assume their behavior is always about you.

10. Your board's job is not to motivate your team. In fact they can do quite the opposite when they get on a tear on an issue. Your job is to be the buffer between your board and your execs and if one of your execs can't handle the challenging, difficult decisions, don't have them in the room. Or tell them to grow up and grow a thick skin.

So if they are baffling you, or annoying you, or confusing your team take a deep breath and remember they are probably good people trying to help the company. And never forget the old proverb "With the rich and mighty, always a little patience".

For help on your meeting - refer to my How to Run a Board Meeting post.

I sit on the boards of FirstRain, JDSU, Rambus, the Anita Borg Institute and Planned Parenthood Mar Monte. No one board is special - these behaviors show up across the spectrum.

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