The song “Don’t Fall Asleep at the Wheel” by Red Simpson tells the story of a veteran trucker offering advice to a beginner trucker. Red offers lots of great lessons to the young man including “try out your brakes… try to make time to read all the signs if you’re truckin where you ain’t been”. But, most of all, he offers his most important piece of advice – “don’t fall asleep at the wheel.”
It might be a bit of a stretch (and you’d really have to like old time country music), but Red’s song may offer something of value to Board members. I thought of it after reflecting on the conversation we had with Chris Makuch on episode 9. As we have noted before, the simple role description of the Board member as described by Jim Brown is to “direct and protect”. While this description is fairly straightforward, the execution of the role is a bit more complex. There are lots of factors for Board members to consider when they are discerning how to direct and protect their organization. Most of all, you don’t want to be perceived to be “asleep at the wheel” and neglect some aspect of the business that is preventing it from achieving its goals.
Our conversation with Chris reminded us of the importance of staying alert and having a clear understanding of who it is that “owns” your organization. Every organization has some set of “owners” or group that they are ultimately accountable to – be it shareholders, government, funders, the public, etc. The Board is ultimately acting on behalf of these owners and when the perception is that things aren’t going well, Board members are vulnerable to being removed. There are mechanisms in place to appoint, renew, replace, and remove Directors in any organization. It is critical to be aware of how those mechanisms operate as well as how your organization and its owners are measuring success. If the owners are uneasy with your performance or if they see large gaps in your business model, they may look to replace the Board and exert their influence so that they can “right the ship” according to the direction they plan to head. As a result, it is necessary to primarily focus on your organization’s health but to also keep a close eye on who owns the corporation and how they may push and pull levers to force decisions at the Board table.
In publicly owned corporations it is obvious that the owners are the shareholders. The challenge can be understanding who the shareholders actually are. Chris argues for the need to have transparency so that the Board knows who owns the corporation and can regularly engage with shareholders to build good relationships (hence the issues with proposed changes to form 13f). You may want to consider giving him a call if you find yourself in a situation on a Board without regular check-ins with shareholders. One of Red Simpson’s other pieces of advice is to “watch out for bears” – some sage wisdom for corporate Board members and a great reminder that professionals like Chris and MaisonBrison can help you keep an eye on an often overlooked but critically important piece of information.
In a not-for-profit corporation, the “ownership” is a little murkier. No one technically “owns” the corporation however there are overarching authorities that can significantly impact the work of the organization when their priorities differ. Government programs, new policies, or changing funder priorities, for instance, may force the Board to consider how they should react to the various policy levers at play that are outside of their control. If the Board is “asleep at the wheel” and not aware of these outside influences then it may be time for a serious rethink of who is around the table. It may also be time to give a directive to management to start bringing this critical information forward on a regular basis so that we can be aware of it, not be surprised by it, and ultimately stay focused on our purpose and mission.
So friends, stay focused on what matters and don’t fall asleep at the wheel.
This week we are joined by Chris Makuch, Vice-President of MaisonBrison, to talk about the importance of shareholder engagement and Boards under stressful situations. This was a great learning experience for us. Chris opened our eyes to the complex issues that arise for Boards related to this topic and it is a fascinating area to unpack. The questions we asked Chris included: – What are proxy contests, why are they important, and why should Boards care? – What should Boards be worried about when viewing activist investors? Do activist investors present opportunities for the Board? How can Boards stay informed about who owns the company? – How do you recruit Board members in light of possible proxy battles? How do you make sure you have diversity of opinion around the Board table? – How does the Board stay focused on key strategic and industry measures while there is added pressure from activist investors or powerful shareholders with different viewpoints? – What are some common red flags you have seen around Board tables? – How can Board members think like activist investors? – How much of an impact might the proposed changes to form 13f make on Canadian corporations?
This week Cathy Brothers, CEO of Capacity Canada joined us. Cathy works to increase the impact of Canadian non-profits. We jokingly call her the governance doctor because she works with so many organizations, she has a pretty good idea of what makes boards healthy and what ails them. (Her other nickname, earned in her many years of assisting boards, is the “governance queen”. ) We were fortunate she was able and willing to sit down with us.
So, what did we learn?
Importance ofRole Clarity In previous podcasts, we’ve identified role clarity as a principle of good governance. Cathy says that some questions of governance and role clarity “may seem intellectual” but they have critical implications. Role clarity helps a board recruit good members because candidates can more clearly assess whether the role is right for them. Additionally, nomination committees have clear expectations against which to assess candidates.
Clear expectations help board directors understand and perform in their roles. What do board members need to be clear about? Their role is oversight and strategy. Cathy encourages boards to look at “what’s coming down the road” and develop a vision of how we can serve the community better. Our benevolent service sometimes isn’t enough. Clarity about who makes decisions and how those decisions are made helps focus efforts and prevent conflict.
Intentional Board Recruitment, Development and Evaluation Andrew asked a damn good question. What should boards do when they have a problematic board member? Toxic board members damage organizations by driving away others and distracting from the board’s important work. Cathy urges us to prevent problematic board members through recruitment, development, and evaluation.
When recruiting board members, go beyond the standard skills matrix and also look at behaviours. Someone may be a successful CEO/lawyer/accountant/star volunteer, but they may also be a huge pain in the ass to work with. All things being equal, choose or find a candidate who is a delight. Recruitment should identify those who work well with others, understand the role of the board, think critically yet constructively contribute to strategy. Purposely recruit board members who have the potential to take on leadership roles. The only thing worse than not having anyone who wants to be Chair is only having one person who wants to be Chair who doesn’t have the confidence of their colleagues. Cathy suggests putting board succession planning on each agenda so that it stays an active item.
Board education can help improve performance of individual members and the overall Board. Maybe someone isn’t performing at a high level or they are being disruptive because they don’t understand their role. Education and frank conversations about board performance may be enough to improve board cohesiveness and performance.
Regular evaluation gives the board an opportunity for members to understand their own performance and to offer feedback on each other. Cathy says board members can either make improvements based on their evaluation or “weed themselves out” because “most of us won’t hang around where we’re not making a contribution”. Regular board evaluation is critical.
Why We Care About Governance Finally, a story Cathy told brought me back to why I care about governance. Cathy said she got into governance because she volunteered for organizations to make a difference and eventually realized that there was a considerable amount of time and resources being squandered because there weren’t effective decision-making processes. Good governance should offer us the opportunity to maximize our impact as individuals and organizations. Check out our conversation with Cathy here.
How does Cathy Brothers, CEO of Capacity Canada and “Governance Queen”, describe what makes Boards work well and what to avoid? Find out in this episode and listen as we glean some of her wisdom gained from decades of experience advising, supporting, and participating on Boards across the country.
Capacity Canada is also our resource of the week. Find more information about this great organization at www.capacitycanada.ca
A Board’s role does not change in a crisis. The dual role of the Board to protect and direct (as Jim Brown writes in The Imperfect Board Member), remains in place whether your Board is on a summer break when times are great or when you are wrestling with the chaos of a global pandemic.
That being said, the intensity of the level of change in the external environment will require a Board to increase the level of attention they are paying to how the organization is faring. Plans for reopening for the year ahead not only need some consideration from the Board but those plans will benefit from the scrutiny of the people around the table. When businesses, schools, and offices were closed back in the spring, the next step was not to simply pop open the binder marked “What to do in a global pandemic when everyone is required to stay at home for several months and no one knows what is going to happen from day to day.” There is no step by step playbook that is guiding our organizations. There is, however, the Board and a dedicated staff who will put the best interests of the organization at the forefront of their decisions and who are armed with their set of questions to keep everything on track. Board members need to be mindful that their CEO will be likely dealing with frequent stressful situations while s/he is trying to make decisions “in the weeds”. As a result of the demand for the CEO to be looking inward right now, there is a heightened need for the Board to stay focused outward , with the mission and purpose of the whole organization as the primary lens.
In 2019, the Florida State University football team stopped using a conventional playbook for their season. Typically a team will have a thick binder of plays from which they will draw during a game so getting rid of a playbook was pretty radical. Here’s what one of the players said about the strategy:
Not having a playbook means that the players have to know exactly what they’re supposed to be doing at all times.
That means a lot of repetition. It also means a lot of time in the film room.
“We have to watch so much film and you have to stay around your coaches in learning so much because we don’t have a playbook,” Terry said.
I think there are some lessons for Board members here. In this time of uncertainty and in the absence of a “playbook”, be clear about your role, spend extra time understanding the challenges facing the organization, be prepared to ask tough questions, be supportive of each other and your CEO, and stay focused on the horizon and the mission.
Understanding how your Board can be effective begins with an assessment of your Board’s architecture. Author, consultant, and non-Executive Director Mark A. Pfister joins us to talk about what he means by the architecture of a Board and how individual Board members need to meet the demands of their roles in order to serve the organization well. This conversation touches on a number of key governance principles and best practices and we hope you enjoy it as much as we did.
Mark A. Pfister is CEO & Chief Board Consultant of M. A. Pfister Strategy Group, an executive advisory firm that serves as a strategic advisory council for executives and Boards in the public, private, and nonprofit sectors. He is also Chairman & CEO of Integral Board Group, a specialized Board services and consulting company. Mr. Pfister is a ‘Board Macro-Influencer’ and his success has been repeated across a wide range of business situations and environments. He prides himself on being a coach and mentor to senior executives and directors. In Board Director circles, Mr. Pfister has earned the nickname ‘The Board Architect.’ His book is available on Amazon: https://www.amazon.ca/Across-Board-Architecture-Effective-Directors/dp/0692064265
When you sit on a Board, part of your role is to deal with difficult situations. When inevitable challenges and dilemmas arise, the organization will benefit from Directors who show courage, wisdom, humility, and a strong commitment to the Board. Join us as consultant, author, experienced Director, and frequent media commentator Julie Garland McLellan guides us through how to deal with difficult situations that can arise in the world of governance.
Julie Garland McLellan is the creator and author of the very popular and internationally circulated Director’s Dilemma newsletter, available at: https://www.directorsdilemma.com/. Ms. Garland McLellan is an experienced board director with current directorships, an international expert on corporate governance, and a corporate governance advisor to mid and small-cap boards, Julie champions the cause of directors required to shoulder enormous responsibility on a shoestring budget.
How can a Board build trust in its organization and broader community? Can a Board really monitor and even measure trust? How? Rahul Bhardwaj, CEO of the Institute of Corporate Directors, sits down to discuss with us the critical role that all Boards play in rebuilding trust in their organizations. The ICD’s recently published Trust Toolkit explains that companies that are industry leaders “regularly outperform the overall trust level for their sector.” Join us to find out why trust is so important today and how having your Board pay close attention to it can help your organization and your community to thrive.
Preparing for a Board meeting is a critical part of your work as a Director. When done well it can ensure that the Board fulfills its responsibility to provide oversight, insight, and foresight for the organization. Join us as we sit down with Scott Baldwin, Co-Founder of DirectorPrep.com, to hear from him about how to follow the PREP framework in advance of a Board meeting so that you make sure your contribution is meaningful.
Boards need to be intentional about succession planning for new Directors and for key leadership positions. How should Boards assess their current capacity, seek out the right people to join the Board, and raise up leaders within the Board?
Can culture be managed? Measured? Improved? Is it a function of leadership? Join us as we chat with Dr. Debra Brown, President and CEO of Governance Solutions, as she shares her research findings and wealth of Board experience related to organizational culture. Her insights show that culture can not only be managed well but that it is critically important, and strategic, to regularly monitor it at the Boardroom table. Dr. Brown describes different types of culture, the broader organizational impact of developing the right culture in the Board, and the need to lead culture rather than have it lead you.
It is widely accepted that Board members should have a term limit and in this episode Paul convinces Andrew that this topic is not only important but actually pretty exciting. Term limits offer an opportunity for Boards to develop leaders within the Board, plan out skill development, and help Board members focus on making an impact that outlasts their years of service. Prepare to be on the edge of your seat for a solid half hour and thank you for listening.
We have very big, very exciting news! We’ve been informed that the Governance Guys is the 41st top-rated management podcast in Japan! With your continued support, we look forward to continually climbing the ranks.
We discussed a local news story that touches on governing in the pandemic, managing reputation, and conflict between a Board and CEO. An important observation is that sometimes board will have one hand tied behind their back when managing reputation. When legal proceedings are involved or where ethical considerations require the organization to protect employee or beneficiary privacy, the board will be limited in its ability to make sure its version of a story is heard. Sometimes reputational perception will be unfair. Board members need to have the tough skin to deal with this reality. To feel more comfortable making tough decisions, board members should make sure they have channels to hear different perspectives on organizational values, priorities, and strategies. As outsiders hearing these stories, we should recognize we likely are not hearing the whole story and show empathy to imperfect people trying to run complex organizations.
On board orientation, we recommend orientation for all new board members with an open invitation to returning board members. Inviting returning board members offers an opportunity to refresh their understanding of their role, but also allows an opportunity for creating shared understandings. New board members should connect with more experienced board members in a mentoring relationship and regular board development sessions should happen throughout the year. We’ll continue the conversation on board development in our next episode.
Andrew and I also discussed what we like to see in a board meeting package. I tried writing out a list of everything we mentioned. When I saw it, it occurred to me that we are demanding guys. Those high expectations though reflect a belief that good process can influence good decisions for the organizations we care about. Those high expectations also demonstrate that much is expected of those entrusted to oversee and manage organizations that have the potential to make important contributions to our communities. Listen to episode 15 to hear more.
Are you wondering about how to put together a plan to develop the governance skills of your Board members? Are you wondering about how you might increase your competency as a Board Director? Paul and Andrew discuss their experiences and some strategies to consider in your Board development plan. What skills are you hoping to develop? How should you provide education/formation to your Board members? Who should lead the planning and the sessions?
Paul and Andrew chat about some important lessons to be learned regarding a recent governance issue that was reported in the news. Plus we respond to two listener questions about Board Orientations and what to expect in your Board meeting package. Email in your questions to firstname.lastname@example.org