Home Featured The Art and Science of Creating an Effective Board

The Art and Science of Creating an Effective Board

by Keerat

Dr Sabine Dembkowski, Founder & Managing Partner Better Boards Limited, London

 

The challenges that companies face are evolving rapidly. Digitisation, climate change, geopolitical shifts and supply chain challenges to name a view pose strategic risks for companies of all sizes, in every industry, in every country. The landscape is uncertain and must be navigated with care. The challenges for boards have not been greater for decades. Boards and individual Directors can only succeed and navigate their organisation through the maze if they are effective in the boardroom – individually and collectively.

 

What Makes A Board Really Effective?

In a recent report from PWC and The Conference Board the authors wrote “To be an effective board, the participants need to understand what constitutes an effective board.”

Herein lies the crux of the matter. In the same report it is stated that only 29% of C-Suite executives rate their board´s overall performance as excellent or good! A rather sobering result that indicates that the understanding of what makes a board effective is not as well developed as one might think. In this article we will address the issue.

 

The 7-Hallmarks of Effective Boards

The 7-Hallmarks of effective boards are emerged from extensive research that include an analysis of the Anglo-Saxon and German speaking academic literature and in-depth interviews with Investors, Directors and Executives. Subsequently we have put the results of the research through international peer-review processes.

 

The Strength of the Board

What are the strengths of the board and its individual members? Does the board really understand, appreciate and leverage the strengths of all of its individual members and the collective?

Most boards meet about eight to twelve times a year. When they come together in the virtual, hybrid or physical world they face a full agenda that leaves Directors with little time to think about their individual strength, the interplay of these strength and how they could put them to use to resolve the challenges and yet research indicates that boards that understand their strength and how to leverage them are more effective.

 

Composition of the Board

When you mention composition of the board most immediately think about gender diversity. Gender diversity might be part of it but composition of know-how and preferred roles and resulting behaviours in a group setting are far more important.

In our work with boards we find that at present most boards have significant know-how gaps in Digital, Cyber, Transformation. ESG and Climate. Boards have signed off strategies but do not have the know-how, skills and ability to challenge and ask the right questions.

 

Clarity of Roles and Responsibilities

The documentation of roles and responsibilities has greatly improved over the last years and yet on many boards their roles and responsibilities and that of its individual members are not clear. Ill-defined roles and grey areas of responsibilities are the norm rather than the exception and often the breeding ground for disagreements and conflicts. It is clear that clarity of roles and responsibilities is a mark of any effective board.

 

Vision, Goals and Focus of the Board

In an uncertain landscape it is really challenging to have a clear vision, clearly defined goals and a clear focus. It is even more challenging for a board to align and sing from the same hymn sheet.

In our work we find that boards are struggling to keep on the top in being clear about the vision, goals and focus.

 

 

Structure and Organisation of the Work of the Board

Effective boards have good structures and processes for their work in place. The digitisation of the boardroom and the use of board portals have helped to streamline processes.

However, it is seldom that we see a board that is happy with the way the board work is organised. Most often boards are dissatisfied with the length of the papers, the distribution of the papers and the time members of boards have to read them. Similarly, most boards criticise that there is not enough time allocated to strategic discussions and the allocation of time to agenda items always leaves some Directors baffled.

 

Ability to Resolve Conflicts

Effective executive boards and their members understand how to resolve conflicts in the boardroom, between the board and management and crucial share- and stakeholders.

In our work we see that many boards are risk averse and try at time to kick the can down the road instead of addressing issues when they emerge and are still quite small.

 

Regular Reviews and Reflections About the Work of the Board

Research is most clear about this hallmark. Boards that take regular time out, conduct reviews and reflect on how they work together are more effective.

The practise of conducting board evaluations is very advanced in the UK. Nowhere else do more boards conduct fully facilitated external and internal evaluations on a regular basis and yet the follow through is poor. Boards could improve their effectiveness by taking the time to discuss the results and create individual and collective action plans not for one hour in the boardroom but for half a day or a day in the countryside. Old-fashioned maybe, but effective!

The 7-Hallmarks of effective boards are more than a theoretical model. Each hallmark is a leaver the board and individual Directors can pull to increase individual and collective effectiveness.

 

Dr Sabine Dembkowski is Managing Partner of Better Boards www.better-boards.com in London.

Better Boards provide its clients with board evaluation and board development services. Amongst its clients are some of the most admired FTSE and DAX organisations. B

ased on the research the firm has created an innovative board evaluation platform clients can use as part of the fully facilitated external and internal board evaluations.

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