To get the most out of time together in the boardroom, management and the board need to leverage the time spent outside of the board room. In an interview with The Informed Board, Simone Wu, a director of Alarm.com, discusses ways to maximize the efficacy of board meetings. She is also the senior vice president, general counsel and board secretary of Choice Hotels International, Inc.
Q: How can a board get the most out of its time together?
A. I think this is such an important topic because boards typically only get together so many times a year and there are many demands on the board’s time.
To help the board maximize its meetings, the board and management should be aligned on the cadence for regular and special topics, with the assumption that board members will consume the pre-read materials they receive in advance. With that being true, management can limit presentations to hitting the highlights and providing context so that 60% to 70% of the board’s time together can be spent on discussion.
It’s also important to think strategically about time spent outside the actual meetings. An effective board is built on trust and relationships that allow for truly open discussion. Being thoughtful about things like meals and seating arrangements, transitions between sessions and coordinating travel logistics can create additional opportunities for interaction and relationship building.
Q: How should time be allocated during a board meeting?
A: The board should use its time together as strategically as possible, with intent. If board members are reviewing materials in advance, administrative topics can be dispensed with relatively rapidly, allowing more time to focus on strategic or hot topics relevant to the company. Management can also limit backward-looking operational updates in board meetings since these kinds of updates for the most part could be covered in pre-reads distributed to the board in advance. The board could then maximize the value of boardroom discussions and spend its time focusing on forward-looking challenges and opportunities. These are topics where the board can add the most strategic value while also exercising appropriate oversight.
Q: Are there topics that should be covered at every meeting?
A: The board will want to consider what standing topics should be on the agenda for each meeting, and how often the board should receive updates on other topics from management or the responsible committees, based on the company’s industry and business, and considerations of best practices and good governance. There should be a regular conversation at the board level as to the topics the board would like to talk about, and the cadence of those discussions so that the board is comfortable that it is spending its time on the right topics.
Regardless of industry, the CEO report is in many ways the most important part of every regular meeting. I want to hear what is top of mind for the CEO, including his or her perspectives on the business, its competitive positioning, and the challenges the company is facing. The CEO is uniquely able to provide a comprehensive view of the company’s performance and opportunities, and the CEO’s insights are critical to the board’s strategic discussions.
Certain topics like cybersecurity and ESG (environmental, social and governance) have evolved from being an occasional topic to a regular topic for most boards. Depending on the business, these may not always be an agenda item for the full board at every regular meeting, but could be covered more frequently in committee meetings.
Q: How can pre-read materials make a meeting more efficient?
A: Good pre-read materials are critical and it is important that directors have enough time to consume the information — ideally quarterly board materials should be distributed five to seven days in advance so that directors can block out the time to prepare for the meeting.
There needs to be a process of curation by management to balance between information sharing and volume. The materials should be concise, clear and strategically relevant. That’s easier said than achieved because different board members will define it differently in practice. But there is always the fallback of an appendix for materials that may be helpful background, or of interest to a subset of the directors with a specific area of expertise.
The context should also be clear. For example, are you asking the board to make a decision or discuss? Is this “fyi” or to challenge management’s thinking? I also find an executive summary to be helpful, particularly if it outlines why certain information is being provided and key takeaways.
Q: What are your thoughts about board access to management?
A: Boards and companies have different cultures. Some companies are open to direct outreach by a director to management between meetings if there are questions about the materials that may not be of broad interest to the board, while others prefer a more formal approach. However it’s done, I think deeper connections with leaders in the company enrich the board’s discussions on culture, talent, leadership and succession, and better ensure transparency and accountability. Management can also use these interactions as an opportunity to build mentoring relationships with directors that have expertise in their areas of responsibility.
Q: Are executive sessions valuable?
A: Executive sessions are where a lot of trust is built and leveraged. Directors can have more difficult conversations and speak freely on potentially sensitive topics, including board-specific governance topics, talent and leadership matters, legal and compliance issues, crisis management, or other confidential matters.
View other articles from this issue of The Informed Board
- Podcast: Mick Mulvaney Offers Insights on US Government Involvement in the Private Sector
- Would Your Company Want To Stop Filing Quarterly Reports if No Longer Required?
- Could Mandatory Arbitration Spell the End of Securities Class Actions?
- Watch Out for the Watchdogs
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