The demands for managing highly complex corporations in today’s rapidly changing global economy, full of surprises and contingencies are too great for any one person. The most effective leaders recognize this reality and bring to the organization expert minds who complement exponentially their own skill-set. For decades, I have been fascinated with the process of constructing, developing and enhancing board of directors to advance the purpose of an organization. I regularly research this topic with the help of my working team. This past year we up-dated our knowledge data bank with respect to the task of structuring a better board of directors.
Following recent investigations on building better board by David Finegold, Jay Conger, and specially the clear mind of Edward Lawler III, we can say that state of the art knowledge on this management topic stresses the importance of boards as providing strategic advice, securing resources, coping with crisis, developing leadership and increasing shareholder value.
There are also five key attributes of effective leading units, teams or groups that can be apply to board of directors: give them some power to reach independent decisions; have them raise knowledge that is close fit with the organization strategic requirements; be sure that they have access to information from multiple sources and perspectives that is current and comprehensive enough to enhance decision making; give them time to accomplish its tasks; reward them to motivate performance.
The state of the art knowledge for designing and managing effectively boards of directors points to a 10 core steps. The question is not necessarily one of congeniality (which should be present!), but of knowledge, intelligence and expertise: 1. Identify key board members to contribute to organizational transformation. We are referring to individuals who are already leaders, who have respect for each other as well as deep knowledge in some key area of expertise; 2. Define clearly the board’s strategic priorities and purpose and have them focus on these issues. The directors should be clear that to certain extent they are representing the interest of the corporation’s wider scope of stakeholders, including the business, employees, community and strategic partners; 3. Determine the board’s talent needs. The idea is to establish strengths and weakness to fill the gaps through the selection of new directions or the replacements. There is great value on private, one to one discussions with individual board members on the bases of their expertise and experience; 4. Institute the annual evaluation of the management core team performance to be shared with the board; 5. Evaluate the board’s performance annually plus assuring they are clear about where they should focus their efforts; 6. Evaluate individual directors for helping members to see how to improve their contributions and polish criteria for future selection and recruitment; 7. Remove with elegancy ineffective directors by allowing them to complete their terms and then step down; 8. Provide timely information and training for enabling the board on issues that they have to work with; 9. Provide time to execute effectively, especially on key and delicate matters; 10. Align director’s interests with board purpose.
As the researchers said, “these are new strategies for adding-value at the top.”
Copyright 2001 QBS, Inc.