Better Board Meetings

3rd June, 2014 No Comments Blog

Too often, board meetings are boring.  Management teams can feel burdened by them; by the preparation for them, the scheduling hassle, and the sense that they are somehow a form of audit.  Non-executive board members can feel that they are not fully engaged with the business or team.  Meetings can be mind-numbing marathons of numbers reviews or, worse, confrontational exchanges that help no one.

Board meetings should not be this way.  They can – and should – be productive working sessions that enable management to benefit from the perspectives and resources of their board members.  Management teams should feel that they got some utility from each meeting.  Unlocking that value is not difficult, provided that you have the right people on your board and that you prepare for and structure the meetings thoughtfully.

The balance of this post is about how to plan and execute effective board meetings.  I have written the post for a CEO or other management team member who prepares for and hosts meetings.  In particular, these recommendations are meant for companies with official boards of directors (e.g. those with non-executive members with fiduciary duties to the company).    Of course, organizations of other types may find some of these suggestions helpful.  I have further assumed that the board comprises a helpful mix of management team members, investors, and independent directors.  The people in the room are the most important ingredient to successful board meetings, but this post assumes that your board is already in place.  Board member selection should – and probably will – be another post.

Materials

Reporting Pack:  You should develop a standard reporting package that includes basic financials (highlights of income statement and balance sheet items) as well as key performance indicators (KPIs) that are relevant to your business.  This pack should include time series charts for KPIs where relevant so that board members can easily see trends.  This pack should be the same one – or a summary of the same one that the management team uses to track performance.

Deck:  Most CEOs find it helpful to use slides to illustrate information relevant to a particular board meeting.

Agenda:  The agenda should list the topics to discuss and target start and end times for each item.

It’s impossible to have a productive board discussion if you don’t send the materials sufficiently in advance of the meeting.  The reporting pack should go to the board no less than three days before the board meeting; ideally, it goes prior to the weekend preceding the board meeting.  The deck and agenda should go out at least two days prior to the meeting.

Meeting Content

There are two things that you should cover in every board meeting:  official business (approval of prior board minutes, votes on option or benefit plan adoption, etc.) and strategic discussion.  Cover these items first to ensure you get to them.  If you have sent out the materials with enough advanced notice, you should assume that all participants have reviewed the materials.  That will allow you to follow an agenda akin to the one below:

Official Business (15 minutes):  board discussion and votes on administrative items (option grants, approval of board minutes, etc.)

Strategic Discussion (1-2 hours):  dig into one to three strategic issues in depth.  These issues might include product strategy (should we launch a new product?  shut down an old one?), key hiring decisions (should we hire a COO?  replace a certain management team member?), geographic expansion, marketing strategy, or anything else that is timely and sufficiently meaty to make for a productive conversation.  Don’t hesitate to spend an hour (or more) on a single topic.  At the outset of each topic discussion, provide some brief context using the slides you sent around before the meeting.  Then pose one or more questions to the board for discussion like those mentioned above.

Executive Session (15 minutes):  the management team members present leave the room so that the non-executive board members can have a discussion without them.

Debrief (15 minutes):  The CEO returns to the room after the executive session.  The non-executive directors report on their session.  This conversation is an opportunity for the rest of the board to provide more cogent, considered feedback and suggestions to the CEO.

Q&A (15 minutes):  This is the time for board members to clarify any confusion with the reporting pack.  By putting it last, you ensure that only important questions are asked (otherwise board members will be ready to move on) and that you don’t use up time on these questions in case you run long on other items.

What Not to Cover:  Note that, notwithstanding the questions posed in the “strategic discussion,” no major decisions are actually made at a board meeting.  The questions are meant to spark discussion so that the management team can get input from the board and the board can see how management is approaching the issue(s).  Furthermore, the board should not learn of bad news at the meeting (a bad surprise typically derails a whole meeting).  If there are major decisions to make, or significant items of bad news, the CEO should speak to each board member ahead of the meeting to cover those items so that their discussion in the meeting will go as planned.

Fun:  whenever possible, schedule a meal or drinks after the board meeting (or the night before).  Developing personal relationships among the board members is critical to a productive board dynamic.

Timing

I like having 2 meetings per quarter.  One per month is often too large a burden on a management team, and one per quarter is not enough unless the company is very stable and mature.  One meeting each quarter can be a call (ideally video conference) if the board is geographically dispersed, but in-person discussions are much better.

The first meeting of the quarter should take place 1 to 2 weeks after the close of the books for the quarter.  This will allow management to send out the reporting pack with sufficient advance notice.  The second meeting should take place six to eight weeks later.

Attendees

Obviously, you want to work hard to ensure all board members are present.  In addition, it can be productive to include one or two regular observers (if the board has any),one or two management team members in addition to the CEO (typically the CFO or COO), and company counsel.  Beyond that, I find it’s best to limit the attendee list.  Many CEOs attempt to include other management team members to ensure they get exposure to the board and vice-versa.  I think doing so is a good idea, so long as it is done judiciously.  Include one additional management team member when s/he is relevant to a strategic item on the agenda; for example, include the CMO to discuss a marketing topic.

Other Sources

There is a fair bit of helpful content out there about making board meetings productive.  This post by Fred Wilson, as well as this one by Mark Suster, are both quite helpful in my opinion and influenced some of the themes above.

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