Marcus Ventures

Board Members: Rocket Fuel or Rocks?

A good board can be rocket fuel or it can be rocks in an organization’s pockets. Much of success and failure in the boardroom comes down to the way the individuals around the table — be it on a public company board, a small private board, or a non-profit boarddo their jobs. So what should an independent director do to contribute to making the boardroom a dynamic, productive place?

Here are five things to start with:

1. Know the boardroom
It is vital to know the issues with which the board is grappling, to know the people around the table, and to come to the room ready to engage. Addressing the first issue is pretty straightforward: read the board papers that are sent in advance of board meetings. All of them.

Get to know the people around the table. Why are they there? What are their skills? What do they bring to the table?

Be engaged & constructive. Boards work best when the people in the room are on both “receive” and “transmit.” Listening to one another and sharing their own thoughts, asking questions and genuinely integrating the answers into their own deliberations.

2. Know the people
This focus on people does not stop at the boardroom door. Today’s board directors must engage much more broadly and deeply — both inside and outside the organization. Hearing the voices from the organization directly means non-execs can form their own ideas and perspectives on the information they are receiving in board papers and reports, and not simply depend upon secondhand knowledge.

By being approachable and reaching out to people, board members are able to talk with, and to listen to, the organization’s senior managers, staff, and investors. They need to genuinely understand and respect their views, and help harness their passion and commitment to the organization. Only then can they help ensure its endurance and robustness.

3. Know the business
People focus, while important, is not all that distinguishes engaged directors. Understanding the nuts and bolts of the business also means, and indeed requires, asking the hard questions in the boardroom. It means not being satisfied with simply asking the questions, but to follow through and do something with the answers. An independent perspective means being sensitive to internal factors that shape the organization’s capacity to survive and thrive as it confronts current and future challenges.

4. Know the landscape
The nuts and bolts of the organization are internal, but they don’t exist in a vacuum. Non-executive board directors need to keep an eye on the global factors that shape the broader landscape in which their organization operates — from government regulation to customer expectations, and a constantly shifting competitive environment. This outside independent perspective is indeed one of the greatest values non-exec board members can bring to the table.

Keeping on top of these developments in an increasingly networked world is more possible than ever. To proactively seek knowledge I use social media like Twitter, LinkedIn, and Google alerts, and a variety of other sources.

Equally important is doing something with this information — seeking and recognizing opportunities for the organization to shape the environment in which it operates. This has meant great gains and enormous strides in boardrooms around the world, from a better understanding of new forms of communication like social media, to helping the organizations keep up, innovate, and move into issues around corporate social responsibility, sustainability, and other areas that will help future-proof the organization.

5. Know when to go
There is a debate about how long is too long when serving as an independent director on a board. Under the UK’s Combined Code, non-executive directors lose their independence after nine years on a company’s board. No matter what you think that time limit should be, there is no question that one’s usefulness as a truly independent member has a shelf life. Better that you ask the question of yourself than to force someone else to ask it.

Date

12 July 2011

Harvard Business Review: Board Members: Rocket Fuel or Rocks?

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