This is a follow up to the article we wrote on some of the functions of boards. This blog is seeking to be a bit more descriptive of what to do about it.
Some boards find their way to a highly effective position of simultaneously balancing governance issues, with helping to drive the strategy of the organisation. Mostly however, they do not.
The common pattern is as follows:
- Board meetings become less and less functional.
- Frustration creeps in. Trust and respect start going down. Focus and energy is lost.
- The Chair and/or the CEO commission an effectiveness report.
- The report uncovers a range of things that most people agree on.
- Suggestions for improvement are made.
- Nothing really changes.
- Good people leave, be it the Chair, the CEO or board members, once the dysfunction gets too great.
- The company limps along despite the board, not because of anything great coming from the board.
The board effectiveness reports are often very good and detailed, and everyone agrees mostly with what has been said. But the challenge becomes that there is no transition from information accumulation, into prioritisation, into decision making, into implementation, and then finally into change reinforcement.
The reports are generally put together in the following manner:
- A digital survey with various questions and ratings
- One on one discussions with various stakeholders
- A summary report with recommend next steps
- Presentation of the report and the recommendations to the board
But this is often where it ends. The recommendations get discussed but are often hard to implement or get traction.
If you have, or are experiencing the above symptoms, here are some suggestions.
You need the first step or what we would call the “accumulation & diagnosis phase”. Collect the responses from the relevant stakeholder on what is occurring. We recommend a team approach where the accumulation and diagnosis is done together in about 30min. Externally paid consultants prefer processes that take weeks and months, and need them to spend their time talking one on one with everyone. It’s unnecessary with the right process but choose which you prefer.
Irrelevant of how the accumulation is complete, here are the top 15 issues we see time and time again. Generally a board will have somewhere between 75 and 150 issues specific to them- these are the summarised patterns:
- Ineffective communication with shareholders
- Lack of trust and respect
- Lack of right skills at board level
- Board meetings are unproductive
- Conflict between board members
- Back channelling outside the board meeting
- CEO and management frustrated with board performance
- Lack of process to deal with complex and conflict laden issues
- Lack of relationship between board members
- People do not speak up in the board meeting
- Strategy is not supported by all members
- Board appointment process is ineffective and pulls from “mates”
- Lack of onboarding process and information
- Unclear strategic planning process
- Unclear roles and responsibilities
Fixing the issues
Now let us say all those issues are agreed, and a report is provided to board members that highlights those issues. Let’s go and solve them, right? Here is the challenge. Where should you begin? Should everything be handled the same? Who’s taking accountability for what? Do we have the resources right now? The questions become endless.
The report has illuminated the issues, but often does not give the rails to then run on to resolve the underlying issues that stop implementation. Things like conflict of interests, lack of agreement on priority, lack of clarity on accountability etc.
Here are some ideas on creating those rails.
Step 1: Distil long reports into an issue summary
The first step of the transitioning into resolution phase is distilling down the issues identified into some categories, and then organising those categories into a chain of causality. There are various ways you can do this, and Tribe uses a specific approach of linking systemic causes, to operational matters, and then into manifestations.
Here is the list of the 15 common issues raised above, however in a chain of causality sequence:
Culture and Climate
Structural i.e. roles, responsibilities
Managerial process and planning
Lack of trust
Lack of right skills at board level
Ineffective communication with shareholders
Board appointment process is ineffective and pulls from “mates”
Conflict between board members
Lack of relationship between board members
Unclear roles and responsibilities
Lack of process to deal with complex and conflict laden issues
Lack of onboarding process and training
CEO and management frustrated with board performance
People do not speak up in the board meeting
Unclear strategic planning process
Back channelling outside the board meeting
Strategy is not supported by all members
Board meetings are unproductive
All the systemic causality issues combine together to create operating symptom issues. All these issues then combine together to create resultant manifestations. If you do not get on top of your manifestations, they will flow around into your culture and climate over time. It becomes self-perpetuating and circular. We need to break that cycle.
How we deal with issues is also based on the column. A one size fits all approach to problem solving and implementation will cause problems, because how you solve a cultural issue is very different to how you solve a operating symptom. Yet most companies don’t separate issues into their groups, and therefore many issues get approached with an inappropriate methodology.
Step 2: Create a new board process around this chain of causality
Create space in the board report and agenda where the chain of causality lives. Divert energy away from large nebulous lists and different personalities, into a tool like this. Every few months the goal is to launch items to work on from this chain, and hopefully resolve them. Once resolved, the goal is to remove items from this chain. Think of the board create an air traffic control system that launches issues to resolve from this list, and adds new things to this list as they come up.
Will we ever get to an empty chain? No, because issues are a part of life and not everything can be solved immediately. But we want to see if things are getting better or getting worse. Not only that, the reward for solving issues is the arrival of new ones. It’s a part of life so if you plan on growing, get ready to deal with problems.
Step 3: Prioritise the right things, at the right time, with the right processes
Put your energy into “the middle”. When we facilitate boards through this process, we always ask “where should we start?”. The answer is invariably “lets start with all the big causality stuff! If we solve that the rest will solve itself!”. This tends to lead to failure, however. We find starting with smaller items and building up to bigger items more functional.
We suggest starting with the “middle” issues in the structural, managerial process, and operating symptoms issues.
If you choose the right issues to solve in these columns, the cultural causality issues, as well as manifestations, will start to melt away.
Solve vs short-term “arrest”
Now in some instances you need to do some small “hold the fort” type activities in these outer columns to create some short-term relief. But these issues will only disappear when the middle items are resolved. But sometimes activities are required to build some trust, reduce the frustration of the CEO, etc. Those can only be short term arresting type activities until the middle group items are solved.
Step 4: Agree the “how and who” as part of the prioritisation and launching process
When launching something to resolve, ask some questions as part of the decision finalisation:
- Do we have the capability and capacity to solve this right now? Sometimes you just need to have things on a list so we can all be aware of them, but it would be unwise to launch them.
- Do we need to be specific as to how this is going to be resolved? Do we have a recipe of process for taking something complex, turning it into a clear plan, and then driving implementation that is on time and on budget? Some issues need more how “scaffolding” than others.
- Who is the team that is required to actual solve it? Who has the authority to say yes AND no to the change? Who do I expect co-operation from in order to implement it? Who are the influencers who can ensure it’s a great decision and is implemented well? These are the people you need in the room.
Often companies make decisions on what to do, but do not spend time up from on the how and the who, which leads to problems down the track.
Step 5: Make it an operating rhythm: ‘Just the way we do things around here.’
Don’t think of it as a one and done thing. Embed it as a part of the board process. It does not need to be every month, but once every couple of months, or quarter. Create some space for this approach. Here it is with a bit more prescriptive detail:
- Launched issues: An update on the issues that have been launched from whoever is accountable for them. Where are they up to? What info needs to be shared? What questions do people have? Ideally an update would be in the board pack for people to understand. Open it for any questions from the board on the items.
- Unlaunched issues still in chain: Do we have the capacity to launch a new issue to be resolved? If we do, which is it, and who is required to solve it?
- Q D D: Questions, doubts and disagreements. Have board members write down their QDD. But they can only ask questions first. Doubts and disagreements are generally unanswered questions in their mind. If you allow doubts and disagreements first, it hurts trust. If after everyone’s questions are answered there are still doubts, OK. But we find 9 times out of 10 there are not.
One way to think about this suggested process is to think of air traffic control launching and landing planes. You do not want to launch something that risks a crash landing somewhere. You do not want something coming into your airspace you can’t handle. You want to launch stuff you can land.
Things to consider
- “When you’re in the painting, it’s hard to see the whole picture”. We recommend (the right) external consultants to accumulate the issues first time around. Doing it yourself often leads to things being missed, or biases accidentally creeping in.
- It’s hard to play a game and be the referee at the same time. We recommend either external support for the first few meetings to help embed this process, or at very least one of the directors needs to be appointed as the resource that is going to drive the process, but not participate directly in the game for the sessions they are facilitating.