Unproductive board meetings waste busy directors’ and management’s time and shareholders’ money, and can lead to poor decision-making. Tony Featherstone explores how meetings can be made more effective.
What does a board meeting in your organisation cost and what is the return on that investment for stakeholders? These questions, seemingly unpleasant and hard to answer, are a critical starting point for boards bogged down in compliance, routine and procrastination.
Boards should ask both questions frequently. A single board meeting in a large listed company can cost hundreds of thousands of dollars, given preparation and meeting time for directors and management, internal company resources to produce board information and myriad other costs.
Even board meetings in small companies and not-for-profit (NFP) enterprises have a significant opportunity cost if they chew up scarce company resources, such as management’s time. Having lower-paid or volunteer directors is never an excuse for not assessing board productivity.
The damage from an unproductive board is far greater than wasting shareholder funds on director fees or the time of volunteer directors who attend board meetings after work or at weekends.
Poor productivity reduces board effectiveness, exposes the organisation to greater risk, erodes management confidence in directors and gets in management’s way. At a personal level, an unproductive board reduces director satisfaction and sends a bad message to prospective directors.
Board productivity will be a bigger issue in coming years as directors’ workloads increase, governance issues become even more complex and risks magnify. Moreover, stakeholder focus on board performance will continue to intensify and directors with three or more board seats will need to be more productive than ever to fulfil their duties.
Of course, measuring board productivity and performance is far from clear cut. Board evaluations help, but no board can, or should, attempt to quantify the return it makes on each dollar stakeholders have invested in it. Good governance does not come with neat measurements or scales. Benchmarking board productivity across company size, industry or location is problematic.
Anecdotally, most experienced directors have encountered at least one board that felt like a chore, where compliance overtook common sense, routine overtook rigour and where they left the meeting exhausted and flat, and feeling nothing was achieved.
"I see too many boards that literally go through set-piece processes with their meetings, without checking the value they add after every meeting," says Dr John Harte FAICD, founder and principal of Integrity Governance, and a director and chairman of private and NFP organisations.
"Such boards become tenure- and process-focused rather than contribution-focused and they do not have a culture of adding value. It is healthy for boards to step back and ask: How are we using our time in board meetings and what return are we generating for the investment in a board? Another telling question is: If it was my company, would I hold meetings like this and invest my money in the board?"
Boosting board productivity is not a new issue. Boards generally have done a better job at streamlining agendas, ensuring important items are discussed first and moving to electronic board packs and minutes through iPads and other devices. But it seems many boards have only scratched the surface when it comes to productivity gains or have failed to consider the totality of the issues that influence productivity. Or their response to lifting board productivity has been to focus on the science of a good meeting and overlook the art, which is just as important.
"An obsession with the ideal board agenda, meeting pack and meeting structure can make some boards too mechanical," says Elizabeth Jameson FAICD. She is principal and founder of governance adviser Board Matters, chairman of BDO Group Holdings (Qld) and a director of the Board of Taxation, RACQ and some NFP organisations.
"The structure, focus and planning seemingly makes board meetings more productive, but it also inhibits the art of a good board meeting where directors can flesh out issues and occasionally go off-topic if it leads to better decisions on key issues."
Jameson breaks board productivity into macro and micro issues. Strong macro productivity means directors can consider if the right issues are being discussed, have sufficient time and flexibility to give their views on important strategic matters and reflect on their contribution.
High micro productivity means getting the "nuts and bolts" right: well-structured agendas, streamlined board packs, sufficient director preparation time, and so on.
"Too many boards focus on lifting micro productivity and forget about their macro productivity," says Jameson. "Everything becomes so streamlined and structured that we lose the finesse of a good meeting."
Jameson adds: "In practice, poor macro productivity makes directors feel the board is constantly moving in a circle and the organisation is not going forward. The board keeps covering old ground, directors keep asking for more information, too many decisions are deferred, more people are brought into decisions and there is an unhealthy aversion to risk. Directors leave the meeting feeling frustrated and unproductive, rather than energised and feeling they made a difference."
In many ways, micro and macro productivity go hand in hand. Improving operational efficiency should, in theory, free boards up for more constructive debate on key issues. Mundane procedures should become so efficient they almost vanish into the background.
That has been the case for the Cerebral Palsy Alliance board. Chairman Marelle Thornton AM FAICD says solid governance systems and planning have lifted the board’s productivity. It starts with a strong board charter and a deep committee structure with clear terms of reference.
"The committees add a great dimension to the board," says Thornton.
"Issues that require more in-depth, specialised debate can be heard first at a committee level. When a major strategic resolution is presented at board level, directors know the issue has been considered in detail by a committee. It is by no means a rubber-stamping process or a means for the board to abrogate its responsibility.
"Directors must still consider each issue on its merits, but the committee structure aids productivity by ensuring the board is not bogged down in unnecessary detail."
The Cerebral Palsy Alliance board has committees for nomination and governance, service delivery, human resources, finance and audit, community relations, marketing and fundraising and research. Working groups are added for issues that do not fit the committee structure.
Having too many committees is often seen as a productivity trap that bogs directors down in never-ending meetings. But Thornton says multiple board committees are needed for a complex organisation such as the Cerebral Palsy Alliance, which has 1,100 employees, $78 million in revenue, diverse staff and myriad stakeholders.
"It can be time-consuming to have so many committees," says Thornton. "We make sure the committees understand their roles and that there is good communication between committees and other directors. We share the workload across directors and run the committees fairly tightly."
Unlike most chairmen, Thornton is involved in most committees.
She adds that ongoing director development is critical for board productivity. All members of the Cerebral Palsy Alliance board have completed the Australian Institute of Company Directors directorship course and five have completed its Mastering the Boardroom course.
"The board is very committed to director development and has articulated that as a goal in the organisation’s strategic planning and focus on governance excellence," says Thornton.
The board uses iPads to receive board information, meeting agendas are carefully planned, there is a timeframe for each agenda item and each meeting ends with an evaluation.
The board looks as efficient and modern as most large listed company boards, but Thornton says it is the art of a good board meeting that makes the difference.
"As chairman, I spend a lot of time reading body language in board meetings and watching faces," she says.
"It’s really important to recognise when a director has something to say or perhaps needs an invitation to say it, if he or she is thinking something completely different or in opposition to the group view. Making sure all directors are engaged and contributing in the discussion makes for a productive meeting."
The Cerebral Palsy Alliance board has come a long way. Its predecessor, the Spastic Centre board, began with 16 members, most of whom were parents of children with disabilities, when Thornton joined it as a non-executive director in 1983.
"It was more like a board of a larger club, where the focus was much more operational and less strategic. Understandably, we were frequently bogged down in detail," she says.
The Cerebral Palsy Alliance board now has 10 members. Thornton, like many experienced chairmen, sees the virtues in smaller, more manageable boards.
Getting the right number and mix of directors is a critical factor in maximising productivity. Having too many directors risks creating factions and multiple conversations; too few means the board cannot adequately handle the workload.
Boardroom Partners managing partner Jane Bridge says board composition is the key to lifting board productivity.
"In my experience, not enough boards ask whether the skills and capabilities of their directors are appropriate for where the company is going. All too often they assess board composition against where the company is now or where it has been."
Bridge adds: "Poor board productivity often stems from having the wrong mix of directors. Boards that govern an organisation that has grown quickly are particularly vulnerable.
"An inexperienced director who joined a small company could suddenly be governing a much larger organisation with more complex issues. We see this with takeovers and amalgamations where some directors are dealing with operations way beyond anything in their executive experience. If they struggle to keep up, board productivity can suffer."
Bridge says experienced directors can also inhibit productivity.
"Too much ego in the room gets in the way of board effectiveness. It usually comes back to a lack of proper appreciation of the board’s role and the contribution required of directors.
"A classic problem is directors trying to second-guess management and catch it out, rather than working as a team to create value."
Bridge says too many directors take board processes and protocols as given.
"In every board review Boardroom Partners has done, at least 90 per cent of directors say they have an opportunity to contribute to the meeting agenda. But very few actually do. New directors, in particular, can just assume this is the way the board has always done things and make no input to the agenda or other matters that could enhance board productivity."
Bridge says good directors are always looking to become more efficient.
"Their time is limited and they have real opportunity costs if they get stuck on an unproductive, time-wasting board. They don’t want to join boards crawling with consultants or that have directors who are not fit-for-purpose."
Anne Skipper AM FAICD says directors getting involved in management tasks is a classic sign of an unproductive board. Skipper is the principal of governance adviser Anne Skipper & Associates, chairman of Silver Chain Group and Royal District Nursing Service SA, and a director of Plan International, People’s Choice Credit Union, Tonkin Consulting and the Qantas Foundation.
"Unproductive boards typically get into too much operational detail in meetings," Skipper says.
"The directors don’t have a strong understanding of their role, and the board lacks the process to handle complex, difficult decisions. The result is directors always seeking more information and trying to make decisions that should be made by management."
She adds: "Either management is supplying the wrong information to the board, or there is a symptomatic lack of confidence and trust between the board and management, or the board has some directors who are a poor match for it.
"Good directors quickly work out the key pieces of information needed to make decisions or they suggest ways to improve information presented to the board."
Skipper says well-planned board packs are the key to high productivity.
"Board papers need to be succinct and contain analysis rather than just data. There needs to be a good reason if the analysis and discussion of an issue in the pack is more than two pages. The analysis needs to be clearly presented and easily navigable for directors, to help them make a sound decision and move forward."
Skipper says presenting different scenarios in a board pack aids productivity.
"All too often, management steers the board to a course of action by presenting only one scenario. Giving different options for a decision gives the board a better opportunity to analyse alternative courses or actions, and reduces the need to have more information provided."
Skipper says board packs should be distributed well in advance – at least five days – so directors have sufficient time to study them, prepare and resolve smaller matters before the meeting.
"Too many boards forget to review their information packs or do so infrequently," she says. "The board’s governance committee should, at least annually, ask directors if the structure of the pack is still relevant and has sufficient clarity."
The length and timing of board meetings also affects productivity, says Skipper.
"You often find meetings held at the same time in the same place and even directors sitting in the same chair. I’m a big believer in changing the dynamic – for example, hosting meetings in different locations where practical, changing the seating and taking the opportunity to meet key staff. You need to consider ways to freshen up meetings."
Skipper also believes an evaluation of each board meeting is crucial.
"When I walk out of a board meeting I want to know we spent sufficient time on the right things, there was robust discussion between directors and everyone had a fair say, decisions were made and there are clear expectations of the next steps. Directors on unproductive boards can leave a meeting not knowing what decisions were made."
Ultimately, the chairman has the biggest influence on board productivity, says Skipper.
"Good chairmen set a structured agenda with time allocated for discussion on the key decisions and are able to tread that fine line between allowing enough debate and not wasting time on less important issues," she says.
"They know when the board is getting bogged down in detail or when issues should be taken to a sub-committee for further analysis. This chairman skill comes from good leadership, understanding of group dynamics and years of practice and life experience."
Harte says a good chairman creates an environment where every director’s contribution is valued, needed and expected.
"The chairman should have the process elements of the board meeting under control and be skilled at the human element to enable the contribution of fellow directors and lead the group to add value in discussions and decision-making. He or she needs to excel at reading the room in real time and know when to push or pull back on an issue."
Harte says overly long management presentations and verbatim repetition of content, which should be taken as read, hamper productivity and steal time from board discussions and decisions.
"Boards need to be more rigorous about papers and presentations. A long PowerPoint presentation from management that is 90 per cent about the content and has only 10 per cent for board questions, discussion and decisions can be very unproductive."
He also believes boards can make better use of technology. For example, a webinar for a management presentation away from a board meeting or a video of the presentation before the board meeting so directors can come to the meeting well prepared to make a good contribution and pose insightful questions.
Harte says the best tool to lift board productivity is a strong focus on value added by the board and the return on investment in governance.
"When boards think carefully about their performance, they start asking questions, such as: Does it make sense to have eight highly skilled and experienced directors watching a 45-minute PowerPoint presentation on operational issues? Does it make sense to have a room of directors sit through an hour of trivial questions or matters that could have been handled before the meeting, and does little for oversight and accountability, let alone strategy and policy?"
The lesson is obvious: "If a current board practice or routine does not add value, don’t do it," says Harte. "Constantly looking for ways to do things better and striving for a good return on the investment in each meeting is the sign of a healthy, productive board."
Signs of poor boardroom productivity
- Management lacks confidence in the board
- Directors get in management’s way
- Compliance overtakes common sense
- The focus is more operational and less strategic
- The board pack is large and keeps growing
- It contains irrelevant or unclear information
- Directors haven’t had enough time to read it
- Conversations often fracture and factions emerge
- Meetings go off track and discussions get bogged down in detail
- Directors are not engaged and struggle to keep their eyes open
- The board keeps covering old ground
- Directors keep asking for more information
- Too many decisions are deferred
- Meetings are full of long management presentations
- Directors leave feeling exhausted, frustrated and that nothing was achieved
20 tips to improve board productivity
- The chairman
A productive board and a strong chairman who can organise matters before, during and after a board meeting go hand in hand. When choosing a new chairman, ask if he or she can improve the board’s current governance structure or re-engineer it to become more productive.
- The right size
There is no hard-and-fast rule on the optimum board size. Different organisations have different governance needs. If your board has more than seven or eight members, ask why. There may be a good reason, but too many directors can impede board productivity if conversations fracture and factions emerge.
- Right mix and skill
High board productivity starts with having the right mix of people around the table: directors who understand their roles and are sufficiently skilled to fulfil them. Poor board productivity is often because directors are a poor match for where the organisation is heading.
- Board culture
An often understated factor in board productivity is a good culture of focus on contribution and outcome. It facilitates open, robust discussion and debate and helps find a consensus view. Such a culture promotes active, dynamic board meetings.
- Board structure
Sub-committees can be an invaluable tool to lift board productivity, with three caveats: sub-committees should have a clear frame of reference; they should not stray into management tasks; and there should be strong communication between sub-committees and the main board. Important decisions at a sub-committee level should never be rubber-stamped by the main board.
- Appropriate timetable
Some large organisations plan their schedule of board meetings two or three years in advance to accommodate directors who have multiple board roles. The key is to give directors sufficient notice of meetings and ensure key topics are discussed at appropriate meetings.
- Appropriate times
Some boards assume all directors have the same work habits – for example, that everyone is more effective in the morning than the afternoon. Midday meetings often make sense for boards that have career directors. A mid-morning session can be held with non-executive directors to discuss key matters for the board meeting or resolve other issues and a short lunch gives directors an opportunity to talk informally to management. Not-for-profit organisations that rely on volunteer directors might find meetings on Saturday mornings are more productive than at the end of the day when directors have already done a full day’s work.
- Meeting format
Find a balance between the familiar and the unexpected. Plan meetings well in advance so directors know what to expect. But don’t hold every meeting in the same format for long periods. Over time, it can exacerbate groupthink and create a sense of complacency or tenure. Find ways to freshen up meetings, within reason.
- Board packs
The board should be clear on the depth and format of information it prefers to receive from management. The chairman should spend time reviewing the board pack with the company secretary before its dissemination. The pack should be easy to navigate, succinct and have a strong focus on analysis that aids decision-making. Having a cover sheet for key issues is a good idea.
- Information distribution
Ideally, this should be done a week before the board meeting. Do not fall into the trap of sending board papers on Friday afternoon for a Monday or Tuesday meeting and assuming directors are happy if they have the weekend to review the information. Give directors enough time to resolve smaller questions with the chairman, management or the company secretary before the meeting.
- Director development
A strong board commitment to director development and lifelong learning is a key to high board productivity. Director education should extend beyond governance courses, to strategy or industry skills that help directors build specialist knowledge.
Consider using technology, such as iPads and videos, to aid information distribution and improve director efficiency. Recognise that some directors are more technology savvy than others and that iPads can come with other board risks, such as security breaches, if poorly handled.
- Directors’ preparation time
There is no simple rule on the time required to prepare for a board meeting. An inexperienced director or someone new to a board might allocate three hours of preparation for each hour of meeting time. An established director might allocate one to one and a half hours of preparation for each hour of the meeting. More time could be needed if a critical strategic issue is up for discussion.
- Encourage director input on the agenda
The chairman should ask directors if they are happy the right issues are on the meeting agenda and in the correct order.
- Focus on strategic issues first
Avoid bogging the board meeting down in procedural or less-important issues at the start. Focus on key issues first, when director energy levels are at their highest.
- Strategically plan breaks
A 10-minute break after a complex board item can be a godsend. Make sure directors stick to the time allotted; nothing is more frustrating than a 10-minute break that lasts half an hour. Keep refreshments light and healthy – a heavy, meaty lunch before a board meeting could make directors sleepy.
- Avoid meeting clutter
Don’t swamp the meeting in overly long management presentations or trivial matters better handled outside the meeting. Ensure management presentations are succinct and give directors sufficient time to discuss the information presented.
- Off-site pluses and minuses
Be clear on which issues are better handled in board sub-committees, and whether key strategic issues can be aided by board strategy sessions. A two-day board strategy session, now popular, risks becoming yet another board "must-have" if directors leave feeling nothing was achieved.
- Review, review, review
Boards can easily fall into the trap of reviewing everything to death. However, it makes sense to have a short review of each meeting as a standing item on the agenda. The governance committee should review the board pack annually and board evaluations can also improve productivity.
- Measure it
Although not easily measurable, boards should have a framework to assess the effectiveness of each meeting and track performance over time. It could be something as simple as a short director survey every quarter or every six months to gauge board productivity.
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