Creating and Sustaining High Performance Boards
The board’s role is to provide a company or organisation with ultimate governance and strategic approval. It ensures company prosperity while also meeting the interests of shareholders, and helps guide the organization towards clear outcomes that should be then carried out by management.
“It’s a pretty easy thing to understand,” said Elizabeth Aris, non-executive director of BNK Bank and advisory board member of Agility Executive Search. “You ask yourself, is the company being well governed? Do you tick all the right regulatory requirements? Do you have a clear strategy? Is there good rigour and financial control?”
Ticking those boxes might be enough for some boards, but when we talked to Aris, she said that getting comfortable in setting a business plan and strategy with a 3% growth is nowhere near good enough. Not if you want to create and sustain a high performance board.
So she walked us through what it means to create boards that give it 110% and tips to help your board get there.
Are you aiming high enough?
Aris says a board’s role should really be to look around and define what good performance looks like in your category. Ask yourself if you’re aiming high enough, because if not, you might be falling behind the competition.
“The world’s changing very quickly, and business models are changing,” she said. “If I’m not really stretching my organisation, then you can guarantee the competition is going to come up faster. So my job as a board member is to say, what does ‘really good’ look like and how am I going to help you guys get there?”
Understand what the most important topics to discuss are
Board meetings need to be incredibly focused if they’re going to make it through a really big agenda, so it’s important to clearly outline what the top priorities for discussion are. Usually, that’s the strategic plan, assessing and reassessing the organisation’s organic growth plan and whether it’s getting you far enough ahead.
“How much capital do we need for that, and when do we need to raise money again for growth?” said Aris. “And if that’s only going to get you so far, what are the other six options you might want to have so that you know you’re maximising the value of the business?”
When boards are thinking about growth, it’s important to have many plays in the book so that no matter what challenges pop up, you already have a plan in place.
“So if your job is to maximise value for the shareholders, how much value is it?” said Aris. “How fast can I get there? What are the alternative routes to get there? You know, you could work on a business for three years on the current trajectory, or you could try to accelerate that trajectory by doing a transaction, like an M&A, and getting there in a month. So which of those two choices do you want? We're constantly weighing up those options.”
It can be easy to get off-track while you’re brainstorming as a group, but Aris says beware straying from the agenda. Stay disciplined, and make sure you’re read up on all the relevant documents beforehand so you can get a full view on things before you go into the meeting.
Be prepared to be engaged in the board
Aris says it’s normal to have monthly board meetings, but on top of that, board members often have calls one or two times per week. At times, you might find the commitment being even more than that, depending on what changes the company is going through.
Your job is not just to show up at the board meeting once a month or quarter. Those meetings can run for several hours, but they’re tightly packed, so you really have to do pre-reading before you show up. This will help you with Aris’s next tip: Don’t speak unless you absolutely have something you must say. Know exactly when you want to pipe up, make your point and then stop talking.
“We can’t spend the time,” said Aris. “But that’s just experience and discipline and saying exactly what you mean and nothing else. Otherwise you’ll be there for a week.”
Build relationships with executives
“I do think there's real value in various board members spending time with key executives,” said Aris. “You obviously get a different lens into the business and, equally, they have the opportunity to perhaps get a different perspective from you, especially if it’s a one-to-one conversation.”
Management tends to put up proposals to boards for a number of things, whether it’s wanting a pay rise or to invest some money or pursue an opportunity. It falls to the board to ultimately decide to say yes or no. A really well-functioning company can really tap into the needs of management, and if they say no, they can at least have a good rationale, says Aris. This helps board members to maintain those relationships and the constructive engagement with executives, which is really important.
Get a confident crew at your table
When you’re looking for board appointments, you want to first think about what’s relevant to your business. Then you want to find people who have the mindset that says, I want to be great – I don’t just want to aim a little bit higher, I want to aim way higher, and even if I miss it, I’ll be much farther ahead of those who only went for the little bit, says Aris.
“It’s that willingness to be ambitious and courageous, to set high performance targets, and really think carefully about how you’re going to play and succeed,” she continued. “Find people who think about what makes them unique and different because there’s no point in being the same as everyone else and hoping you’re just going to be a little bit better. You actually have to be really clear about what you do that’s really going to make a difference.”
Experience with technology is invaluable
More often than not, people getting hired onto boards are ones who’ve got digital experience. Now, ‘digital’ can be a pretty vague word, but in Aris’s experience, it’s people who’ve worked largely across the tech stack, who are comfortable with data, who understand something about security and who have a mobile-first mentality.
That doesn’t mean the people you bring onboard have to have direct, hands-on experience as a software engineer. They might have some experience in the venture capital world funding tech companies, or perhaps they’ve had a business role which has relied on fundamental technology or they’ve had to define technology requirements, which someone else has delivered for them.
“It’s someone who can think about technology in a way that’s not tech just for the sake of it, but can actually help businesses use tech,” said Aris.
So is commercial experience
People who have heaps of business experience have a bit of a sixth sense in the boardroom. They can feel if the numbers are correct, if you’re strategically on a path that actually advances the company.
“You’re looking for someone who can get a grasp for the questions of: Is it within our capability? Do we have the skills and money needed to be able to do that?” said Aris. “Someone who’s confident answering those can weigh up a lot of different options on more of an informal basis because they’ve got a fair degree of know-how and experience dealing with similar problems.”
That doesn’t mean you have to rule out younger board members
While experience does count for a lot in leadership and strategy roles, you want to have a balance of age groups and diversity. Younger people will have a whole different lived experience and different set of expectations, and that can be the difference between make or break for some companies.
“Younger people are going to learn stuff from older and older are going to learn from them, and that’s a really good combination,” said Aris.
Keep the momentum going by trusting each other
Most boards have a few committees that are responsible for seeing through certain tasks and strategies, and that’s what really keeps the wheels greased. Often there’s an audit committee, which helps the board carry out its duties in financial reporting and compliance. There will usually be a nomination and remuneration committee, which helps create the criteria for determining qualifications and characteristics of a director. Finally, you’ll likely find a risk committee which oversees risk management policies and practices of the organisation’s global operations.
“Committees really do help you progress, but it means that the board has got to be comfortable delegating those roles to those committees,” said Aris. “Yes, things get sent back from the committees to the board to vote for final approval, but you're basically going to delegate three or four people on that subcommittee to do all the work, come up with the final position and put forward a recommendation. The board is going to have to be pretty comfortable to back what the committee comes up with.”
Bottom line: You’ve got to trust your colleagues to get the work done because no one member of the board can do everything, and delegation is the only way to sustain a high performance board.