The Non-Executive Director’s role in Board Assessment

by Betty Thayer, Director, Across the Board

When I first joined a UK board in 1995 as a Strategic Director, I naively thought that the board just ‘ran itself’. Board papers miraculously appeared from nowhere. Agendas materialised as if by magic. I had no appreciation of the significant effort that the Company Secretary made every day to ensure the smooth running of the monthly board meetings.

Over the past 15 years I have served on and worked with a wide variety of boards. Of course each have had their unique characteristics. But looking back I can see that there are some common features:

• Most Non-Executive Directors (NEDs) are passive bystanders in the organisation, running and evaluation of boards; responding to requests and participating at invitation

• Board papers generally suffer from the issue of ‘more is better’; those preparing the papers assume that those reading the papers want to know every minute detail

• There is a skill in preparing agendas and board packs that is difficult to learn unless one has the experience of having to use the information to make decisions

• Boards are generally stuck in a rut with respect to agendas and discussion mechanisms so it is no wonder many of them do not have the time, or indeed interest, in doing board assessment.

I also observe that there appear to be several different camps when it comes to board assessment:

• Statutory obligation as a listed company. As with most things that are mandatory the level of excitement in conducting an assessment is akin to a long wait in the dentist’s office.

• Crisis-led assessment. When a major event triggers the need to re-assess the whole board – its members, activities and purpose – assessment becomes an interesting and meaningful activity.

• Chair-induced assessment. An undesirable or unusual behaviour prompts the Chair to use assessment to achieve an outcome. Often leaves an aversion to assessment in the minds of the recipients.

• Evangelical board reformer-led assessment. Someone on the board (often the lone woman) passionately believes in the need to ensure boards are robustly managed. Drags the rest of the community with them but generally in the end there is head-nodding that it was worthwhile.

• Vacant lot. Blank canvas. Never done it and has no idea what all the fuss is about. Usually open to be persuaded as long as the cost is reasonable.

So where are you in this varied landscape? And more importantly, where do you want to be?

The enthusiastic participation of the NED in board assessment is critical to success. But sadly many assessment processes tend towards the inevitable box-ticking that we all dread.

How do you avoid an unrewarding process?

• Ensure that the whole board understand the purpose for the assessment and are clear as to the expected outcomes.

• Poll the participants in advance about their positive and negative experiences with assessment. What can you learn to apply to this effort?

• Do the assessment in a relatively short period of time. A process that drags out because people’s diaries won’t accommodate it is doomed to mediocrity.

• Engage an enthusiastic facilitator who can make the process insightful, appropriately rigorous and enjoyable.
How do you know if the process has been a success? The proof is when the participants become mini-evangelists on their other boards.

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Betty Thayer is an entrepreneur, writer, lecturer and executive coach. Visit www.bettythayer.com for more information. Across the Board works with directors to ensure their board process are fit for purpose. Visit www.acrosstheboard.co.uk for more information.

Selling Your Business Before You Start - Lessons from a Successful Entrepreneur

Are you thinking of starting a new company? In the midst of a start-up? Looking for an exit for an existing business?

I successfully sold my internet-based company to the Financial Times in 2007 (Exec-Appointments Ltd). Here are a few tips to consider when you are thinking about your ultimate exit:

• Brainstorm a list of possible buyers including specific companies and types of companies. Research the kinds of companies that they have bought, what they paid and what happened after purchase. What is the 'voice' of the website of each of the companies (for example: elegant, value for money, fun, serious, etc.)?
• As you develop your business concept and website keep your shortlist of possible buyers in mind. Would they feel an affinity with your style? Would they naturally consider your business as a possible purchase? Would their customers see your business as complementary to what they do?
• Get advice early on from those who have 'been there, done that'. My accountant was in his late 70's when he started advising us. His experience was invaluable in ensuring our financial position was attractive.
• Become part of the industry 'grapevine'. Every industry has one. Make sure your company is mentioned in influential publications where buyers will see your company and be tempted to learn more. Either learn the industry inside out or make sure someone in your team is an expert.
• Spend money like it is your own (in most cases it probably will be!). Having new desks may seem like a nice idea at the time but spending your money on ensuring your product is the best it can be will yield more dividends that a plush office.
• Hire the best people you can afford. An A+ person can do the work of two C's. Don't compromise just to fill a seat.
• Find out early how businesses in your sector sell - is it on revenue or profit? You could end up chasing the wrong goal (for example trying to become profitable when the market just wants growth and revenue).
• Cut your losses quickly. I fired one sales person after she had been with the company four hours. I could immediately tell that she was a liability not an asset by listening to her speaking to potential customers.
• Understand the customer experience. Walk in your customers' shoes every day. This is exactly what potential buyers will be doing.
• Keep a due diligence book. A good example can be found at http://smallbusiness.findlaw.com/business-forms-contracts/be3_8_1.html. This will ensure you have all the documents you need to hand when a possible buyer is interested.