Issue No. 244 of Your Weekly Staff Meeting features a “Best Practice” article from the Harvard Business Review. Thanks to a challenging travel schedule with wonderful clients, I’ve had this eNews on the back burner for several weeks—but get your Kindle warmed up. I have some fantastic book recommendations coming this month! Plus, this reminder: check out my Management Buckets website with dozens of resources and downloadable worksheets for your staff meetings.
Great Boards: No Meddling or Back Channels
Not every leadership issue, challenge or problem needs a book-length solution. Sometimes the big idea can be skillfully articulated in an article. So about twice a year, I recommend an article instead of a book.
Note: If you’re not a CEO or a board member—don’t be tempted to skip this review. Chances are—if you’re interested enough to read these books reviews (and some of the books), you’ll likely get that tap on the shoulder down the road, “Would you leverage your strengths on our board?” This article is a good starting point for your life-long learning journey in good governance.
In 2002, after the Enron and WorldCom corporate meltdowns, Jeffrey Sonnenfeld wrote his Harvard Business Review masterpiece, “What Makes Great Boards Great.” John Walling, president and CEO at Christian Community Credit Union gave me his thumbs-up on this HBR “Best Practice” article. It’s brilliant—so that’s four thumbs-up now!
After studying board performance and CEO leadership for 25 years, Sonnenfeld’s conclusion is startling. “It’s not rules and regulations. It’s the way people work together,” says this associate dean for executive programs at Yale School of Management, New Haven, Conn., and the founder of the school’s Chief Executive Leadership Institute in Atlanta.
After researching the common wisdom on effective governance (board size, age of board members, independence, active committees, etc.)—and discovering that these “pillars” made little difference in effectiveness, the author asks, “So if following good-governance regulatory recipes doesn’t produce good boards, what does?”
“The key isn’t structural, it’s social.”
He adds, “The most involved diligent value-adding boards may or may not follow every recommendation in the good-governance handbook. What distinguishes exemplary boards is that they are robust, effective social systems. Let’s see what that means.”
Virtuous Cycle of Respect, Trust and Candor. It means, says Sonnenfeld, that it is the soft side of board governance that distinguishes high quality boards from the rest of the governance rat race. He calls it a “virtuous cycle of respect, trust and candor”—but, he warns, even that can be broken at any point.
Phone-book-size Board Reports! “What kind of CEO waits until the night before the board meeting to dump on the directors a phone-book-size report, that includes buried in a thicket of subclauses and footnotes, the news that earnings are off for the second consecutive quarter? Surely not a CEO who trusts his or her board. Yet this destructive, dangerous pattern happens all the time.”
“Another sign that trust is lacking is when board members begin to develop back channels to line managers within the company. This can occur because the CEO hasn’t provided sufficient, timely information, but it can also happen because board members are excessively political and are pursuing agendas they don’t want the CEO to know about.”
“If a board is healthy, the CEO provides sufficient information on time and trusts the board not to meddle in the day-to-day operations. He or she also gives board members free access to people who can answer their questions, obviating the need for back channels.”
The author says that effective boards must do five things:
#1. Create a climate of trust and candor
#2. Foster a culture of open dissent
#3. Utilize a fluid portfolio of roles
#4. Ensure individual accountability
#5. Evaluate the board’s performance
A Good Fight Now and Then. He adds, “If a board is to truly fulfill its mission—to monitor performance, advise the CEO, and provide connections with a broader world—it must become a robust team—one whose members know how to ferret out the truth, challenge one another, and even have a good fight now and then.”
I underlined a couple dozen more paragraphs and points in this eight-page article—it’s that good. I hope you’ll invest in your board or in your own board service future—and download the article.
To download this best practice article from Harvard Business Review, click on this title: “What Makes Great Boards Great,” by Jeffrey A. Sonnenfeld, or search for the article at www.hbr.org, Reprint R0209H, September 2002.
Your Weekly Staff Meeting Questions:
1) In this article, the author writes that “almost no one wants to be a skunk at a lawn party.” He notes that “directors are, almost without exception, intelligent, accomplished and comfortable with power. But if you put them into a group that discourages dissent, they nearly always start to conform. The ones that don’t often self-select out.” How do great boards counteract this tendency?
2) “I can’t think of a single work group whose performance gets assessed less rigorously than corporate boards,” says Sonnenfeld. When is the last time that your nonprofit board has conducted a serious self-assessment process? (I encourage my clients to do this annually.)
Plan A: Collect the Wood. Assign the Tasks.
Plan B: Inspire People!
Insights from Mastering the Management Buckets: 20 Critical Competencies for Leading Your Business or Nonprofit
One of the big ideas in my book, Mastering the Management Buckets, is to build a team-crafted strategic vision statement, often called a BHAG (per Jim Collins—a Big Hairy Audacious Goal. You may prefer a Big HOLY Audacious Goal.
The right BHAG (if created through an intentional strategic planning process involving a wide range of stakeholders) will inspire your board, your staff, your volunteers, your donors—virtually everyone.
Antoine de Saint-Exupery said, “If you want to build a ship, don't herd people together to collect wood and don't assign them tasks and work, but rather teach them to long for the endless immensity of the sea.”
For more resources in The Strategy Bucket, and a downloadable staff worksheet on “The 7 Reasons Why Strategic Plans Fail," visit The Strategy Bucket webpage.
P.S. ECFA Blog on “Governance of Christ-centered Organizations” – Add your thoughts and comments to John Pearson’s weekly blog posts, including, “Eight Best Practices for Recruiting New Board Members.”