There has been a massive recalibration of expectations of all boards and senior executives (not just in Financial Services) in relation to how organisations
Just being a good board is not enough in the current uncertain, complex and fast changing economic environment. Shareholders and other stakeholders are raising the bar in terms of their expectations of board performance.
Insync has put together its best suggestions for boards in this article having done 23 board reviews this year and having well over 200 board reviews in its benchmarked database.
It is not one-size-fits-all
Directors continually ask us for our main recommendations for boards. They say, isn’t it all about being more strategic?
If only it was that simple.
Every board is different. The board of an organisation can be fabulous one year and pretty ordinary just two or three years later.
How boards perform, act and make decisions is a complex interaction of many factors, most of which occur “behind closed doors”. Insync’s benchmarked Board Effectiveness Survey and review process has been designed to understand those factors and shine a light on those areas where improvement is required to improve overall effectiveness. Coupled with Insync’s practical experience we identify the greatest levers for positive change.
Insync uses the highly regarded and proprietary WhatWhoHowDo™ framework to assess board performance.
The WhatWhoHowDo framework
The WhatWhoHowDo framework can be shown diagrammatically as follows:
Great boards are well structured and clear about their role – (the WHAT). They have the right people with the right capabilities and experiences – (the WHO). They adopt the right processes to organise themselves, their meetings and information flow – (the HOW). They also carry out their main tasks well – (the DO). The WHAT, WHO and HOW are the enablers to ensure the board’s tasks and outcomes (the DO) are achieved well.
Ideas for improving board structure (WHAT) and composition (WHO)
We have made the following main suggestions to boards to improve in the area of board structure and composition:
- Ensure committees are structured to support the work of the board. Some boards have too many committees and others don’t have enough. Some have inappropriate mandates or terms of reference
- Have a process to ensure the ongoing renewal of the board
- Match the skills and experience of the board as a whole with the future strategic needs of the organisation
- Regularly revisit your competency matrix to identify gaps in skills and experiences and recruit to fill those gaps
- Extend a wider net into a more diverse pool when seeking new director talent
- Induct and train directors well in your organisation’s operations
- Provide education opportunities in complex matters impacting your organisation
Getting many of these things right is not that difficult, indeed many would be regarded as hygiene factors but each is an important foundation stone to the good functioning of your board.
Ideas for improving board process (HOW)
Pleasingly, most boards have a healthy unease about whether they are allocating the appropriate amount of time and effort to the right priorities. That’s where the processes that boards use to organise themselves, their meetings and their information flow comes in.
Some of the main suggestions for improvement we have made to boards in the area of board process have included:
- Prepare a detailed annual agenda of topics for the board and committees
- Be explicit about your desired board culture and select your Chair accordingly. Ensure behaviours that don’t support your desired culture are called out
- Get your hands back on the steering wheel of the board’s agenda by spending time to agree to the board’s objectives (normally four or five) for the year ahead and drive the board’s agenda accordingly
- Stay in the helicopter and out of the weeds – but dig deep when warranted
- Use management time wisely – not just to repeat information in board papers
- Diversity around the board table helps facilitate robust discussions and avoid group think
- Reserve time for frank discussions without the CEO/management. Also spend time with just the CEO.
Ideas for improving board tasks (DO)
You can have the right board structure, the right people around the board table and very good board processes but if you aren’t tackling the issues that you are there to oversee and add value you are not a very effective board.
We have made the following suggestion to boards in relation to board tasks, (the DO):
- Ensure your organisation commits to a shared and compelling vision, purpose and values
- Ensure that your organisation’s culture is driven from and reflective of your vision, purpose and values
- Set a high bar (and an appropriate tone from the top) in relation to your organisation’s performance, integrity and risk management
- Have a well facilitated strategy day and plan deep dives into agreed strategic priorities during the year
- Ensure the strategy, business plan (including KPIs, remuneration, etc.) and desired culture are aligned
- Get input from all directors into the CEO’s performance assessment and close the loop following the review process
- Be of one mind with management on the board’s appetite for risk and ensure the organisation adopts a culture that is consistent with that risk appetite
- Ensure all key stakeholders are appropriately engaged
Great boards carry out all of these tasks well.
Great boards also continually strive to improve their performance and effectiveness and regularly review what they can do to improve. This is where Insync can help. Benchmarking your board against over 200 other boards or against dozens of similar boards in your industry will quickly shine a light on the areas where you can most improve.
Contact us today to learn how we can help improve your board’s effectiveness and performance.