Board Level effectiveness is good business
At the first hint of corporate size or ambition, Chief Executives will usually create an Executive Board, and seek to design a formal strategy writes Tony Crouch, Outstand’s Risk and Strategy expert. The formation of a board extends the CEO’s reach, improves the quality of decisions, and is vital to the management of risk. Less obviously, but more importantly, they are important to the creation and essential to the delivery of the strategy. Ownership of the enterprise strategy is a feature that distinguishes the Executive Board from other senior leadership teams.
Executive Boards are no different to other teams in that; while we may enjoy working in teams, we may not all be as effective as we could be. Because of the Board’s influential position in the enterprise and their strategy focus, the size and scale of their impact should they fail is much greater. It is essential to get this right.
Weakness and poor control
Ineffectual executive boards distract and demotivate their members, and encourage them to be inward and backward looking rather than anticipating opportunities and risk that lay ahead. Strategy can become poorly scripted and poorly applied, control is weakened and as a result, ambition and confidence are drained throughout the enterprise.
Increasing the complexity of organisations must always be handled with care. Executive Boards are very complex structures and need particular care in their design and introduction. Membership, roles, responsibilities, and accountability will vary across enterprises. They therefore require clear definition and delineation to avoid confusion. This requires creating time for robust discussion between Board members to ensure complete clarity.
CEO leadership is critical to Executive Board performance. Entrepreneurial and tactical skills do not always translate into leadership ones. Most senior managers will have anecdotes about the poor team and meeting management practices of their CEO – for example using valuable Board meeting time to sort out the CEO’s inbox of problems, or to hold a series of bilateral discussions with individual Board members leaving the rest to sit around and wait for the discussion to end. This can extend to an inability to manage conflict constructively.
Organisations often know a lot about what makes a successful manager, but they know much less about what makes a successful director or member of the Leadership team. Executive Board members will presumably have the skills and competencies necessary for their functional or divisional roles. They will not necessarily have those required to participate in the management and oversight of the enterprise as a whole. A common example is the degree of financial literacy of non-financial executives. Also, Division or Region “A” members must have a knowledge and understanding of Division or Region “B”. They need to devote time, care, skill and diligence to become an effective director. Without this they will tend to be defensive and parochial.
One of the most important competencies of an Executive Board member is strategic thinking and planning. This is rarely obtained “on the job” and its absence disqualifies the member from the distinguishing responsibility of the Executive Board – the creation and delivery of the enterprise strategy. It is essential that prospective members undergo training in the purpose and process of strategy formulation.
It is also essential that the Executive Board owns the enterprise strategy. This means that they must participate in its creation, understand it, accept it fully; promoting it within the organisation. Without this participation, the strategy’s quality is greatly impaired. More importantly, the implementation will not follow. This does not of course mean that the strategy must be “created by committee”. But the Executive Board must participate in each of the key stages i.e. setting of the business mission, internal and external assessments, target setting, listing of strategic tasks, and risk assessment.
It’s possible to design a check list and plan of action. An ideal starting point is to bring the Executive Board together and ask them to assess their effectiveness.
We will be looking in greater detail at developing the effectiveness of Executive Boards and Leadership in future articles. If you would like to learn more about how you can develop the capability of your Executive Board and it’s members please contact Outstand on 0203 697 12 16 or email email@example.com