In many cases, directors and executives are dissatisfied with the outcome of board meetings. In many such cases ‘the board seems disconnected from their core function.’
Too often, boards that centre their meetings around the CEO report suffer this problem. Whilst it’s a given that chief executives report to their boards, the way it’s done is equally important. Below are some of the issues that arise in situations where the CEO report dominates or distracts the board meeting.
- Board members gravitate to topics where they can add value and too easily pick up on the activities and events going on in the organisation, distracting from their ‘oversight role’. The board mainly has the responsibility of looking at the organisation’s big picture and ensures that the targets and goals become reality. It’s important that the CEO report doesn’t sway the board’s focus away from its core functions of ‘insight and foresight’.
- It makes the directors seem like ‘de facto managers’. This is because the report sometimes contains administrative and operational matters that have occurred in the organisation, which when presented to the board, get the directors questioning the managers’ or CEO’s decisions. The board might begin to confuse its main duties with some managerial responsibilities. Even worse is the unprofitable use of valuable time by the board members on such unrelated issues. The CEO report steers the compass of the meeting but not in a productive way.
- When the CEO report is taken at the beginning of the meeting, the tone of the meeting drifts to the direction of the report. Directors tend to refer continually to it through the meeting. This encapsulates the board in the web of ‘narrow and shallow’ thinking rather than ‘broad and deep’ thinking.
- When the board has not given the CEO enough guidance on what it expects to see in the report; the CEO has to guess what the board needs. With guessing, one is as likely to be wrong as right. This means that the matters discussed in the meeting can miss the heart of what the board needs to address; and discussion can ramble and react through the meeting.
- The random and unprepared tone of the meeting initiated by the report can lead to decisions and resolutions that are not based on solid facts, and are sometimes ambiguous.
- Often the CEO report will focus on an ‘unalterable’ past rather than possible futures. As a result, the board, which is supposed to guide the future, can get bogged down in looking backwards.
- Inviting the CEO to detail how he/she spends their time is the perfect recipe to make directors into critics. Even when some side with the CEO, the board can rally around those that have vocal complaints about the methods employed by the CEO. In response, many CEOs will argue in their defence, too often ruining the atmosphere of the meeting. In some cases, this leads to friction between the board and management and can crack the trust between them.
All this points to the CEO report lacking depth and not keeping the board on track. Fortunately these issues can be solved. There are approaches that can be taken to fine-tune the CEO report and draw the best out of the board.
- Reexamine the core purpose of the CEO report
The CEO report could address matters beyond the day-to-day. It should steer the board towards forward-looking issues. In that case, the report would hit on some matters that the CEO needs the board to look into. The operational details of the organisation can be included as a highlights report that serves as a backdrop to the main discussions.
Here’s an example for a technology business:
See a full example in the downloadable template below.
2. The content of the CEO report should address governance issues
We know the CEO report can steer the board meeting. It’s imperative then, that it steers the board in the direction of its core duties. Its content should be ‘criterion-referenced’. The report should cover priorities that the board has pointed out in advance, typically during its process of formulating policies or structuring its plans.
This will be quite different to the kinds of report which are heavy on operations’ reports and extracts of line managers’ reports.
3. The CEO report should be viewed as a ‘support’ document for the board
The report should be viewed as a document that sets a stage for the meeting. Burying information that is crucial to a board decision or key discussion should be alien to the CEO report. Decisions and key discussions should have their own agenda item and be supported by their own specific paper or a clearly labelled section in the CEO report. (if succinct enough)
4. By putting the CEO report toward the end of the agenda
By placing the CEO report towards the end of the agenda, you automatically elevate and focus attention and energy on the items before it – typically your key decisions and discussions. The board will look to the CEO report as a background or context setter for the main discussions anyway – often reserving their opinion on decision items until they’ve checked all is otherwise well in the organisation via the CEO report. And where the meeting timeline is getting stretched, the CEO report could just be ‘taken as read’.
5. The CEO report should be concise and easy to understand
CEOs of resource constrained organisations (i.e. your average SMB or nonprofit) can fall into the bad habit of being ‘too busy’ to prepare their report in plenty of time or even being resentful of the time needed for the job. A concise and easy to understand report delivered with plenty of time for board members to digest will boost the board’s confidence considerably. A hastily prepared, vague report, delivered late (a frequent board complaint) will do the opposite.
6. Ask board members to point out any issues in the report before the meeting day
By doing things this, neither the CEO or board chairperson will feel caught off guard on the day. By notifying the CEO before the meeting, the chair can look at the matter and decide if it demands the attention of the board and the course of action to take in tackling it. The CEO can get the opportunity to consider the feedback and formulate a response and recommendation. This enhances the cooperation and confidence between board members and the management team. This is also a great way to save time during the meeting
7. The report should not be regurgitated during the meeting
Reading every detail from the report word-for-word should be avoided. The assumption is that all board members have consumed the content of the report prior to arriving. Under this likely true assumption, reading the report both wastes the time of the board and devalues those directors who have taken time to fully process the report before coming.
Used unwisely, the CEO report can be a big problem for a board meeting. As a rule of thumb, the management and board should frequently talk about what is expected of the report. While bearing in mind the power of the CEO report to distract, they should ensure that the CEO report adds value and helps the board discharge its duties efficiently.
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Author’s Acknowledgement: This blog has been adapted from an article from Graeme Nahkies of BoardWorks International. Graeme is an advisor to BoardPro and the content is used with his permission. Learn more about Graeme and his work here.