Complacency is easy to settle into in the boardroom. It is tempting to see your board as doing just fine and leave it at that. When you begin talking about accountability and assessments, tension usually fills the air and board members tend to get nervous or defensive.
To be the best board possible and make the best decisions for your company, a board must be united and have strategies to tell them when they are not being effective. This is where accountability and assessments come in.
When approaching a new assessment strategy, CEOs or Chairs should start by reminding the board of their goals, values, mission, and vision. This will reset the board expectations and reaffirm why they are all participating on the board. When directors believe in what they are doing, they become much more proud of their work and an assessment feels more like an opportunity to shine rather than an attack.
Your strategy should be simple, but thorough. To start, you can develop a set of questions (or use Level Five Executive’s proven survey) to ask all of your board members. These questions should address the board member’s experience throughout the meeting. Did they feel like their opinion mattered, did they feel like they got a chance to speak, did they feel comfortable expressing their opinions openly and freely with the group or CEO? Did they feel like they were understood and heard? The answers will give you insights into whether or not you are providing a safe environment for your board.
Your survey can also include questions about how the board member perceives their fellow directors and CEO.
Because the surveys are confidential, directors are more likely to be open about their perception and provide the most honest feedback. Directors become more accountable for their work because they know that their involvement makes a difference in board’s performance.
We suggest that you repeat this survey annually and review the progress semi-annually. You can track the improvements in the board and see what areas you still need to work on.
The key idea is that you want to have your board prepared for questions from shareholders, management, and investors. Assessments increase accountability and the overall strength of the board. When the board is holding itself responsible, it is easier to work with investors, the management team, and other stakeholders in addressing concerns and maintaining open lines of communication. This concept is illustrated in the case of Bank of New York Mellon (BNY Mellon). Their activist investor, Edward Garden, has recently sung their praises as they have been able to cut costs and increase profit margins over the last year.
Garden says, “The board holds management accountable and is not interested in mediocrity” – this culture starts in the boardroom.
Directors and the CEO hold each other and their management team accountable.
By regularly assessing board performance and how directors are working together, the CEO and Chair can work to positively develop the board and improve performance. They can also enter into interactions with shareholders and the public with the confidence of knowing exactly where their board’s strengths lie.