Boards move between three stages in the past five years. Most boards prior to the Enron, Tyco, Global Crossing and others were in stage one: Mighty Proud to Be There. Mighty Proud to Be There is the stage in which directors occupied the chairs ceremonially, enjoyed each others company and the organization’s largesse, and in return for their retainers and meeting fees, they pretty much deferred to management’s thinking and recommendations without provocative questions or concerns.
With the advent of Sarbanes-Oxley, boards were jolted into the next stage of board development, which we call the Plateau. They are more fully aware of the seriousness of what shareholders expect of them and of the legal consequences to directors who do not treat their duties with sufficient care, loyalty and obedience. When the board reaches the Plateau stage, they arduously attend to ensuring that they comply with the letter of the law. Meetings last longer as directors scrutinize the financials more closely and ask more questions of management, demanding more and more information before making decisions. Some boards are reversing the trend in becoming smaller in size and are increasing their size just to handle the increased work load. This occurs at a time when so many organizations are feeling the press for earnings growth, and the board could and should be providing leadership that creates a competitive edge!
The next stage of board development will be High Performance. We will describe some essential steps the board and its leadership can take to move the board up the performance curve. Moreover, these steps will boost the return on investment of your board to the extent that you can realize the full potential your board has in order to become a competitive and strategic asset for the organization.
This collection of recommendations is not intended to be a recipe. You can implement any number of the steps and get an incremental performance boost. You can approach them in almost any order and see a difference. However, we can attest from working with numerous boards over time that this set of steps, if executed well, will combine to make a substantial difference in your board. You will break through the Plateau and begin your ascent to High Performance http://www.boardanddirectors.com.