Issue No. 170 of Your Weekly Staff Meeting features a book with 14 questions every board member needs to ask. (Ditto your staff members.) The author says that “if you have no appetite for risk, you shouldn’t be on a board; it will inhibit the CEO from making bold and necessary moves and potentially company-saving bets.” And this reminder, check out my Management Buckets website with dozens of resources and downloadable worksheets for your staff meetings, including my Top-10 Books of 2009 and the index to 168 book reviews archived here. Plus, thanks to our new blog sponsor, Christian Community Credit Union. Check them out!
CEO Shelf Life
The “go-to adviser” for corporate boards and CEOs, Ram Charan, says that boards must “own up” to its accountability for the performance of the organization and reinvent the content of their work and modus operandi. He preaches, “Governance now means leadership.”
Board governance often has fuzzy boundaries and is never easy—but this excellent author/authority has 14 cringe-type questions. If you’re a long-time reader of this eNews, you may recall my enthusiasm for two of Charan’s other books: the best-seller Execution: The Discipline of Getting Things Done, with Larry Bossidy, (Issue 29) and Leaders at All Levels: Deepening Your Talent Pool to Solve the Succession Crisis (Issue 73). His stuff is reliable, insightful and best of all, highly practical.
Charan doesn’t waste words—firing this question onto the board table in the first paragraph of Chapter 1/Question 1: Is Our Board Composition Right for the Challenge? He writes, “The role of the board has unmistakably transitioned from passive governance to active leadership with a delicate balance of avoiding micromanaging. It’s leadership as a group, not leadership by an appointed person.” He adds, “With the right composition, a board can create value; with the wrong or inappropriate composition, it can easily destroy value.”
He recommends that every board member and board prospect complete a “skill assessment matrix” to assess the board’s overall strengths and weaknesses. “The process is important because a board full of generalists is not good enough anymore,” he warns. Reference checking of board members (well beyond the basic level) is now an absolute necessity. The biggest red flag to avoid: a board nominee with a big ego.
The discussion of board member succession is worth the price of the book. Insights: 1) the process may take up to three years; 2) many CEOs are limiting their service on other boards to just two, or often just their own board; 3) to get the right mix of board members—for rapidly changing needs—many boards are encouraging incumbents to step down early. (Not easy—but critical.) Perhaps most critical: “Board service is always more attractive when the prospective director knows the board has its act together—that the board is thorough in covering its bases and functions well as a group.”
Effective boards will want to use this book at an annual board retreat—or address one or two questions per board meeting over the next year or more. The book can also be read topically, based on your current hot issues. I started with Question 13: How Do We Stop From Micromanaging? All 14 have zinger qualities to them. My favorites, based on my board consulting work, include:
• Question 11: How Can Executive Sessions Help the Board Own Up?
• Question 12: How Can Our Board Self-Evaluation Improve Our Functioning and Our Output?
• Question 2: Are We Addressing the Risks That Could Send Our Company Over the Cliff?
• Question 4: Are We Well Prepared to Name Our Next CEO?
• Question 5: Does Our Board Really Own the Company’s Strategy?
The best practices for the strategy question are both brilliant and practical—but the CEO will need to dramatically increase face time with board members. But the pay-off could be huge. He notes, “Strategy should always be in the back of directors’ minds. It helps to have the strategy brief or a two-page sheet of bullet points in the binder for every meeting.” Then Charan cautions us, “If the board and the CEO have lasting substantive differences, they have a choice: stay with the strategy or replace the CEO. Consider that management has a shelf life too, just like the strategy.”
To order this book from Amazon, click on this title: Owning Up: The 14 Questions Every Board Member Needs to Ask, by Ram Charan.
Your Weekly Staff Meeting Questions:
1) Charan says that “the business landscape has changed. The game has changed. What boards do needs to change as well.” From your perspective, is our board keeping up with the change?
2) The authors adds, “The financial crisis of 2008 laid bare a long buried truth: that many boards do not really own the strategy of their company.” Give our board a rating from 1 to 5 (5 is high). “How strongly does our board own our strategy?”
The 20% Investment - Insights from Mastering the Management Buckets: 20 Critical Competencies for Leading Your Business or Nonprofit
One of the big ideas in the Board Bucket, Chapter 14, in Mastering the Management Buckets, is to grow a great board. A Chinese proverb says that if you want one year of prosperity, grow grain. If you want 10 years of prosperity, grow trees. If you want 100 years of prosperity, grow people.
A common rule of thumb for large organizations is that CEOs invest about 20 percent of their time on board-related work, including meeting face-to-face with individual board members. That’s one day a week. If you’re the CEO, how are you doing on that best practice?
For more books, insights and resources, visit the Board Bucket webpage and click on the link to the “Six Board Best Practices” webinar I conducted in 2009 for Christian Leadership Alliance. It includes six downloadable templates and a PowerPoint to help the CEO and board grow a great board. And check out the 2010 dates for my Nonprofit Board Governance one-day workshops.
Coming Events With John Pearson:
- ECFA Reaching Higher One-Day Workshop, January 21. I’ll be presenting a workshop on “Goal Alignment: The Missing Link in Leadership Effectiveness” at this day for nonprofit executives and board members in Brea, Calif. (Orange County). I’ll also be discussing strategic planning and strategy issues in a workshop led by Dan Busby, president of the Evangelical Council for Financial Accountability. Visit the website.
- Entrepreneurial Leadership Summit: Feb. 21-24. Visit the website and download the brochure for information on the first ever Entrepreneurial Leadership Summit for Christians in business, nonprofits and churches, Feb. 21-24, 2010, in Phoenix, in partnership with the Walker Center for Global Entrepreneurship at Thunderbird School of Global Management, the world’s leading school of global business. I’m one of four presenters. Visit the website.
- 2010 Management Buckets and Board Governance Workshops. Check out the dates and locations for our 2010 workshops. Visit the website.