The board of directors makes a significant contribution to increasing the value of the company by increasing profitability and reducing the risks of opportunistic behavior of managers. The board of directors pays significant attention to strategy and adds value to the company through the quality of strategic decisions. Keep reading and learn a step-by-step plan to improve board performance.
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Secrets of a Productive Board Meeting
We all live in a new reality. Changes are happening very quickly, new technologies are emerging, the level of uncertainty is increasing every day. Planning horizons are shrinking, strategies written for 20 years ahead are losing their relevance.The things that made board performance prosperous in the past no longer guarantee its success in the future. Below you’ll see the algorithm for preparing an effective meeting of directors.
A Well Chosen Board of Directors
An effective board of directors is made up of professionals who have the knowledge, skills, experience, and qualifications in matters within the competence of the board of directors. The challenge is to form a balanced board of directors, where the experience, knowledge, and skills of one member of the board of directors would complement the experience, knowledge, and qualifications of others. The more balanced the composition of the board of directors is, the more successfully it will cope with its tasks.
One of the main qualities of an effective board of directors is its ability to conduct a constructive discussion, analyze different options for decisions and their consequences. To ensure such a performance, the board should include people with different professional and life experiences. The board members should differ from each other not only by professional qualifications but also by demographic characteristics: gender, age, nationality.
The Atmosphere of Openness and Respect
For the board of directors to truly become a platform for constructive and meaningful discussion, it’s necessary to create the right atmosphere in the meeting room, which involves open dialogue, mutual respect, and encouragement to ask questions and express opinions.
Chairman Sets the Tone
The Board Chairman sets the general tone. The atmosphere in the meeting room, the culture of discussion of issues, and the group dynamics of the board of directors largely depend on his/her professionalism, experience, authority, leadership qualities, and communication skills. The ability to listen and hear, to aggregate opinions, to encourage discussion, and, at the same time, not to go beyond the issue under discussion – this is an incomplete list of what the chairman may need during the most ordinary meeting of the board of directors.
Efficient Work of the Committees
The board committees are created for the deep and high-quality study of the most significant issues related to the competence of the Board of Directors. Each of these issues may require many hours of discussion, involvement of experts, and management representatives, “honing” the wording in draft decisions and documents. The better the committees work, the more chances the board of directors has to make thoughtful and high-quality decisions on company management issues.
Best Practices for Making Board Meetings More Fruitful
The recommendations are simple. For board meetings to become an effective tool for managing a company, an interconnected and systematic solution of the following tasks is necessary:
- analysis of meetings and elimination of obvious errors and losses;
- the usage of the best board portal software;
- regulation of meetings;
- meeting automation;
- training (education) of board meeting participants;
- embedding meetings in the planning and management of the company;
- continuous monitoring and improvement of the meetings.
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