Thursday, September 29, 2022

The 6 C’s for Cultivating a More Engaged and Effective Board of Directors

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Shreya Christina
Shreya has been with for 3 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider team, Shreya seeks to understand an audience before creating memorable, persuasive copy.

James Langabeer Ph.D. is a decision maker and the founder of Yellowstone Consulting, LLCa strategic consultancy.

All public corporations and most nonprofits and small businesses have: a board of directors. Even private companies often have a small group of advisors they trust to serve as fiduciaries. This group oversees the executive management of a company and plays a central role in oversight, auditing and strategic decision-making. Yet signs are a resource that is often overlooked and underused.

As a former chief executive officer, I know how easy it is to hold the board of directors in details like sales funnels and product pipelines. This leads to board members who are either not involved or do not have the information to actively contribute. Boards have enormous potential to provide creative, strategic input, and when properly aligned, they can play a much greater role.

The importance of trust between executives and their board

Really effective boards are used as a strategic advantage. The key is to know how to effectively use the expertise of the members.

The first step is to create trust. A good relationship between board and CEO is cultivated over time with continuous communication. Too often CEOs and executive teams don’t know what information – and how much of it – to share with their boards. Information is often monitored or closely monitored, which limits the effectiveness of governance. I’ve seen many corporate leadership teams treat the board more like a customer or investor than a true strategic partner.

To easily gauge whether your relationship with your board is effective, ask each member, “Do you feel you are contributing all of your talents to this role?” If not, step up and make some changes to your board’s overall roles. Use strategies such as questionnaires or audits to determine how board members perceive their access to critical information and the level of trust with the team. If you decide to conduct a full audit, consider hiring a third party, such as a strategy consultant, so the board feels comfortable providing direct, candid feedback. Then use the results to guide changes in board governance and corporate management.

The Six C’s for Effective Signs

There are six dimensions that can help guide board performance. I refer to these as the “Six C’s.”

1. Composition

This is probably the most talked about aspect of boards. Concept the ideal structure of your beard – such as composition, rules and procedures – helps you figure out who is a good fit for your board. Think about how diverse your board is from a skill, gender, race and experience perspective. Also consider the size. Smaller boards tend to be more involved, while larger boards are more diverse but less effective. If you expect to have a large board, consider splitting it into multiple committees.

2. Charging:

Think about what you expect from your board of directors. What charge, or mission, officially keeps it out of the fiduciary base and hiring and firing the CEO? Establish a payload that focuses on strategic performance and direction, as well as control. While the chairman of the board typically sets the agenda, their working relationship with the chief executive helps outline the executive teams’ priorities in terms of strategies, performance, or direction.

3. Communication

What is the level of information symmetry between the executive team and the board? Does the board receive all the necessary strategic information to be able to manage well? Do members feel they could use more in a particular area? Proactively providing drivers with all the necessary information in advance makes better use of their time. Ask the board regularly if what they are getting is reliable, valuable and sufficient.

4. Consistency:

Consistency of the information and governance process leads to better results. Boards that meet routinely and are provided with the appropriate level of information in advance are more likely to contribute strategic input and value than boards that lack consistency.

5. Contribution

Boards must feel that they are actively contributing and adding value. Most board directors will be candid about contributing more, so work to help them become more engaged and forward-looking. Make sure they have the freedom to bring any problem or opportunity they’ve noticed to the chairman and the executive team.

6. Control:

The boards of directors bear ultimate fiduciary responsibility because their power lies in the ability to make important decisions about hiring and firing CEOs, overseeing finances and other controls. Make sure your board has processes and infrastructure in place to properly manage the business.

Cultivating a more engaged and effective board of directors is vital. By focusing on the 6 C’s, you and your board can positively influence the future of your company. Business Council is the leading growth and networking organization for entrepreneurs and leaders. Am I eligible?

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