Carol Ward, Author at Foresight - BoardOps

CEOs often complain about their boards’ intrusion into management’s affairs. During over 150 extended interviews we did of CEOs, directors, and General Counsel, one CEO said it best: “My board is meddling in the minutia! They need to let me run the company.”

How does that CEO help his board get out of the minutia? By looking at the decisions he is asking the board to make; that is, from board and committee meeting agendas. We analyzed the complaining CEOs’ agenda from a year of board and committee meetings. We saw that he was asking his board to spend time on many topics that management can handle better. In short, this CEO was unwittingly filling board and committee agenda with “Execution” agenda topics. Execution is one of three major Board Priorities that we use in Foresight’s proprietary board analytics. (The other two Board Priorities are Leadership and Strategy. More about those in later posts.)

Execution agenda topics tend to have a short time horizon: today, this quarter or this year. The board, as a body, has the least impact on these agenda topics as they require day-to-day attention. The board’s role here should generally be “noses in, fingers out.”

The Execution priority includes monitoring (but not managing) three focus areas:

Profitability and Disclosure	Balancing short-term profits and long-term growth/gain. Ensuring integrity and accuracy in disclosures.
Compliance, Quality & Integrity	Leveraging these to create a competitive advantage.
Transactions	Evaluating and approving transactions consistent with the company’s strategy.

These agenda topics are not about the goals, processes, systems, or people to spur a company’s future growth and innovation. These Execution agenda topics relate to the past. They are indicia of results – and management’s success or failure. They are well suited to scorecards and summaries. These Execution topics are suitable for vigilant monitoring by the board rather than deep intrusion. The key is management’s ability to summarize the relevant information in pre-meeting materials in a manner that the board trusts so the board can spend less meeting time to effectively monitor management’s performance.

Here’s one important exception to the “fingers out” maxim: if as it monitors these Execution agenda topics, the board sees a warning sign of business or leaders going off course, then it must address an emerging problem. More importantly, if the board doubts management’s information, quick board action is required.

Companies must strive to establish the appropriate balance among the three Board Priorities: Leadership, Strategy, and Execution over time. No one of the three Priorities should dominate the others. That is why we developed Foresight as a tool for understanding, analyzing, and adjusting the board’s agenda. Our analytics tell the CEO, the board and its leaders, the General Counsel and the rest of the C-suite what the annual, meeting by meeting priorities of the board were as the year progressed, compared to their intentions.

Overemphasizing Execution agenda topics deprives the board time and energy for agenda topics in Foresight’s Leadership and Strategy Board Priorities. The board can add more value when considering these agenda topics and should elevate them above Execution.

So, to the CEOs who complain about their boards “meddling in the minutia”, we say “You must measure how you are asking your board to allocate its attention amongst the three Board Priorities (Execution, Leadership and Strategy).“ Let Foresight help you rework your board and committee agendas and get your board working on the agenda topics that can better leverage your board members’ strengths and drive your company’s success.

Do your directors go off topic; asking about subjects that you already plan to cover later in the year? An annual agenda calendar solves that problem and helps management and board leadership better guide the board’s work.

Annual agenda building is about encompassing it all. And, no matter who does the annual agenda planning and later revisions, they face the same dilemmas:

How to fit in all the required, appropriate, and aspirational Agenda Topics and decisions into the limited time the Board is together — giving each agenda topic enough time for deliberation, debate, and decision?
How to organize the Agenda Topics in a logical flow and budget the right amount of time for effectiveness?
How to achieve the appropriate balance between topics that build the business, and topics that protect the Company from loss?
How to achieve the right emphasis on the most important agenda topics?
Is the Board making the best possible use of its valuable time?

Best use of the board and committees’ limited time requires thoughtful and rigorous agenda planning, followed by prioritization of agenda items. This can be implemented using four important principles.

First, a well laid out annual agenda establishes clear cadences and allocation of responsibilities (between the board and committees) for the board’s key processes — such as

Strategic planning
Annual budgeting and business reviews
Management evaluation, development, and compensation
Investor engagement and annual meeting planning
Board evaluation process and leadership decisions

Second, good board and committee agenda planning results in annual agenda items synchronizing with the Company’s business cycle. Information comes to the board and committees at the appropriate time, when it is needed for advance planning or decision-making, and when it is top of mind for management.

Third, the annual agenda should align each committee with its charter responsibilities, to ensure that all committees are covering their assigned duties.

Fourth, each committee and the full board should review and provide input into the annual agenda. Recent shareholder governance codes urge boards to proactively adopt good agenda-setting habits.

If both the board and committees engage in annual agenda planning, the result should be better alignment, and less time lost to wondering (or worrying) about when the board and committees will do what.

How to do all of this? Foresight brings board support into the 21st century, giving management a powerful planning and compliance solution – speeding management’s work in preparing for, executing, and reporting on board and committee meetings.

Foresight streamlines and elevates the annual and individual meeting agenda planning process for and follow-ups to the calendar of board events.

Before the new fiscal year begins, Foresight helps plan the board’s year, meeting by meeting, to ensure both compliance with the minimum requirements and a clear business purpose for each agenda topic, using either Foresight’s best practice template or your own annual agenda which Foresight compares to its database of requirements and goals.
Before each board and committee meeting, Foresight helps adjust the agenda for each meeting.
During each meeting, Foresight automatically documents the decisions made and generates draft meeting minutes suitable for editing by the General Counsel or Corporate Secretary.
At the end of each meeting, Foresight helps identify and assign follow-up items from the CEO, the chair, the General Counsel, and others.
At the end of the year, Foresight generates compliance checklists, helps evaluate the board and helps to identify ways to improve board performance the following year by providing analytics regarding agenda prioritization.