In the blink of a summer firefly, the six highly-informative July 2019 board governance sessions are behind us. For those of you who attended, and also for those who weren’t able to be there, Maine Venture Fund distilled our own “Top 15 Lessons for Boards” below. After so many engaging conversations, we’re already laying the groundwork for more in the spring.
First, some brief context. Two different event series took place this summer in Portland, Maine:
1. The National Association of Corporate Directors(NACD) held their annual Maine panel forum, and Maine Venture Fund piggybacked on that event with an additional gathering specific to our portfolio companies and their board members; fourteen MVF portfolio companies were represented.
2. Verrill Danahosted a four-part Summer Director Series each week throughout July featuring various guest speakers and topics of interest.
In a nutshell, all of this activity was aimed at improving board (and company) performance. Suggested best practices and techniques came from all quarters and offered perspective for managers and directors alike. Our Top 15 Lessons (drum roll, please):
- From day one, define director term limits and start planning CEO succession.
- The moral and ethical dilemmas board members sometimes face can be complex. The Golden Rule: a board member must always act in the best interests of the company. More specifically, directors have a duty to act always in good faith, with due care and out of loyalty (e.g. avoiding self-interest).
- “Nose in, fingers out” – operational decisions are up to the CEO, while the board’s job is to guide strategy (focusing on risks and opportunities), ensure legal compliance, evaluate and approve budgets, and hire/fire the CEO.
- Once a board member is no longer adding value (as will happen), the lead director should be very direct in communicating this in a one-on-one offline conversation.
- Do not keep ex-CEOs in the business – this almost never works.
- CEOs need to trust that the board will support them in order to feel comfortable focusing on the challenges rather than the successes. To CEOs: Don’t sell the board, engage them.
- CEOs should feel comfortable asking the board to do homework in between meetings.
- Recognize that joining a board is an unquantifiable commitment. When crisis occurs, time commitment can grow significantly, including participation in legal proceedings, emergency communication and other intensive activities. Directors (for profit and non-profit) should be ready and able to participate at this increased level when they join any board.
- Company culture starts at the board level, and should be of conscious design rather than a byproduct. To that end, board members should invest in communication and relationship building outside of the board room, both with CEOs and among each other. Relationship building is more important than having the right structures and processes in place.
- Boards should invest in developing CEOs through continuing education and networking.
- Primary existential company risks should be delegated to board subcommittees to investigate and propose mitigations. Risks depend on each company, but can include macro-economic threats, key licenses/contracts being canceled, cyber crime, fire/explosion, catastrophic product failure, terrorism, and key management incapacitation, among others.
- Boards should evaluate themselves at least annually. There are several scoring templates that boards can use to effectively facilitate this. More regularly, 10-minute post-mortem 360 feedback sessions should be conducted at the end of every board meeting.
- While tolerating discrimination within a company is unacceptable, zero-tolerance policies can also create problems. Companies (and boards) should design clearly communicated action plans, both for holding employees responsible for inappropriate behavior, and for maintaining an open, honest and engaging work environment.
- Lead directors should add one “bunker buster” agenda item per meeting to maintain focus on non-urgent but important issues.
- Top features of a great board member: low ego, cooperative, participatory before, during, and between board meetings, willing to expend social capital to help the company, and aligned philosophically with the company.
Any words of wisdom to share from your own experiences, either at the workshops described or otherwise? Please share!