Managing the Board's Time
Board meetings can get bogged down with a host of basic information, formalities and reports. Is the board just going through the motions? What’s the best use of the valuable time directors spend together?
If you’ve asked these questions, then you’ve already recognized an opportunity for improvement.
That’s where the chair of a family business board can step in to help prioritize the use of the board’s time.
A public company board’s priority is to represent the interests of all the shareholders, whether inside or outside of the business. Financially, shareholders are interested in competitive returns for the risk undertaken and liquidity, when they want or need it.
But private business shareholder (particularly family businesses) interests can be much broader than financial. They include an interest in family (whether they are owners or not), employees (many of whom are also family or “like” family), community, suppliers and customers. Private business shareholder interests also include values and culture, resulting in shareholders’ concern that people representing or associating with the company fit and exemplify the family’s legacy.
Ownership and leadership succession are ongoing priorities for family business boards, but they take on prominence in certain years during the generational life cycle of family ownership, including when the current leader of the business announces future plans to retire, when the founder or current generation decides to broaden or trim ownership, and when the next generation family members expresses interest to enter or advance in the family business.
Board roles in meeting efficiency
At the beginning of the meeting, the chair can lead the board to be fully present by helping them focus and be ready to energetically discuss the highest priority issue(s) or opportunity(ies). Of course, turning off mobile phones is important. A quick round table, where each director expresses one sentence about what they’re thinking or feeling can uncover issues or concerns that can be dealt with immediately. The idea is to set the stage for productive board interaction.
Board chairs can see that board books, distributed in advance frame the most important owner, business and leadership issues. In the agenda, the chair can put the most important issue or opportunity first, reserving ample time for discussion and letting the board know specifically what the chair would like from them.
Management presentations can act as a natural warm up for the board by allowing directors time to get their head into a business where they do not regularly work. But too much “show-and-tell” can rob the board of precious time to deal with major issues. When provided with well-thought-out materials in advance, directors can come to meetings prepared and ready to contribute.
Structurally, board committees can help protect time in full board meetings. Committees can grapple with functional specifics or issues requiring detailed inquiry. The committee can then make recommendations to the full board.
Families can create a council that interacts with the board through their family council chairperson. The family council works through issues and communicates with the board in one voice or at least an organized array of voices. That allows the board to focus efficiently on how the business will meet owner goals.
How does a chairman decide the most important priorities for board involvement? A first step may involve participative inputs — in other words, data collection. Here are a couple of examples:
Advance email iteration: The chair can ask each director to email the two or three most important owners about business or leadership issues, or opportunities for the company. The chair consolidates the feedback and sends the email back out to all directors, inviting them to resubmit what they then think are the most important issues or opportunities in light of all the ideas. With those submissions, the chair decides on prioritization, scheduling the most important for discussion at the next board meeting. Alternatively, the chair can email a draft agenda to the board three weeks in advance and ask what changes, additions or deletions the directors would like to see.
In-person voting. Typically this method is used in the context of a strategic planning retreat where top management is driving the process and the board is asking insightful questions and sharing experiences. Vision, values, mission, culture, market trends and owner goals are reviewed along with strengths, weaknesses, opportunities and threats. Participants voice what they feel are the most important owner, business or leadership issues or opportunities for the company. The chair, CEO or a scribe writes each of the issues on a flip chart, consolidating duplicates or similar ideas with participant consensus. Each participant receives five dot stickers or Post-it Notes to vote. They can use all five dots on one idea or allocate them anyway they’d like. The issues and opportunities are then prioritized according to the number of votes.
Through these or other methods of collecting input, the chair can decide what topic(s) to put first on the board agenda. To the extent there are competing interests for board attention and for the investment of shareholder capital and management time, the chair may employ deliberative models to help establish priorities. For instance:
Compare and contrast. The chair can present lenses through which board members view priorities. One lens could be shareholder interests and/or values. Another lens could be potential long-term returns on invested capital. Ask board members to write the two or three most important owner, business or leadership issues, or opportunities through the perspective of each lens. The differences can be used for discussion and consolidated prioritization.
Shareholder focus. Family companies with large shareholder groups often create family councils and sometimes family assemblies to organize and support family interests. The board chair can rely on the chair of the family council to conduct a participative process to identify and prioritize the owner, business and leadership issues and opportunities most important to the shareholders.
Prioritization matrix. For each issue or opportunity identified, participants rate them against specified attributes on a 1 to 10 scale (For example, attributes such as importance, urgency, value creation, time and effort). Add up the total score for each issue or opportunity as a basis for discussion and consolidated prioritization.
A combination of these can be used to create a hybrid method. The idea is to create well-supported priorities that can focus board activity where it will produce the most value for shareholders, their families and the company.
There is no right answer for how the board should prioritize and deal with the issues that come up in their family enterprise. But there is a practical need to prioritize the use of the board’s time.
Otis Baskin has worked with family-owned businesses in the United States, Middle East, Europe, Asia and Latin America over the past 24 years and is a frequent speaker throughout the world on family business topics. He was the founding director of the Family Business Forum at The University of Memphis and is Emeritus Professor of Management at the Graziadio School of Business at Pepperdine University, where he served as dean. He has been a director and committee chair for public company and private company boards as well as a family foundation.
Rob Sligh was in brand management at SC Johnson Wax for several years and went on to become majority owner, Chairman & CEO of Sligh Furniture & Clock Company, a manufacturing and marketing enterprise whose Board included a majority of independent directors. Sligh has served on twenty business fiduciary or advisory boards and non-profit boards, serving on many as Board Chairman or Chairman of the Compensation, Finance or Nominating Committee.
Both Baskin and Sligh are consultants with The Family Business Consulting Group, Inc.