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Monthly Reflections Blog: Four essentials for value adding Board Effectiveness

Monthly Reflections Blog: Four essentials for value adding Board Effectiveness

When considering how best to maximise the value of a Board Effectiveness Review there are four key principles to take into account:

Firstly, the Review must be forward looking. It must help the Board to consider how ready it is to take on future challenges and how aware it is of changes occurring within its "systemic context". Of course it can provide an opportunity for the Board to reflect on what it has, and must continue to do well, but that said, the Board must be alive to the fact that what has served it well to date may not meet the demands of the future. And that even if it carries on doing well what it has always done well there is no guarantee that it will continue to be an effective Board.

If we consider the example of succession planning, a subject generally high on the watch list of the Board, it is critical that it be seen in a relevant context and the future has to be a key part of that context. No matter the Board has comprised a group of able and suitably skilled people to date: much more relevant is whether this collective group has the appropriate mix of experience and personal qualities going forwards. So if a Board is not cognisant of what the future might hold, it becomes very difficult to answer adequately the succession question well.

Second, the timing has to be right. Regulators and others are tolerant of Boards delaying effectiveness reviews under the “comply or explain” principle if it is clear that they will ultimately get more out of the process by so doing. If the Chair or CEO is about to change or if there are about to be other significant changes in personnel, it may make sense to delay until the new appointments are bedded in, so that a balanced view can be taken. Equally, if the Board is in the middle of a crisis or major issue, it may not have the time that is needed to devote to an extensive review and there will be an element of lost opportunity in the process.

Third, and arguably most crucially, the Board must have the appetite for learning about itself and developing how it is currently operating. This requires a degree of collective ‘open-mindedness’ to doing or thinking about things differently. "You can take a horse to water but you can't make it drink" is apposite. Going into the process prepared to adapt and learn is a key element in ensuring true and lasting value is derived.

Of course ultimately, the extent to which a Board chooses to act upon the findings of a Board Review is very much within its gift and can be unpredictable. Sometimes boards can appear hungry for a journey that might involve difficult conversations or challenging decisions and yet "cometh the hour" retrench and become resistant to changing the status quo. And yet the reverse can be true also. Boards can appear nervous throughout the process and cautious about any changes yet embrace them energetically when the recommendations are made.

 

Boards are dynamically so different one from the next. Yet what is fascinating is that the “process” and way of operating that a Board reviewer observes during the review, if it is a thorough review, can be indicative of the way in which the Board will engage with the findings. If a review reveals a Board that starts lots of initiatives for example but is not always good at completing or evaluating them, there is a significant risk that this will be its response to the Board Review. If the Board Review reveals a dynamic where difficult issues can be ducked or not properly faced into, this pattern may well manifest itself post review.

And so the fourth and final critical element is that the Chair must show strong leadership during the process. He or she needs to look closely at the feedback given to them by the review process and avoid “more of the same” if that is not in the interests of the Board as a whole and its stakeholders. It is an opportunity for the leader of the Board to steer the collective firmly towards the future and not have it reside in the past or the present.

Posted by Judith Nicol on


Judith Nicol

Judith Nicol

Director, Leadership Services

Judith joined Warren Partners recently and heads up the leadership coaching practice, which works exclusively with boards, board directors and senior leaders.

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