First published in the Financial Times on 16th September 2014.
Keep the numbers down to a handful if possible and impose a two-hour limit
Over the decades I have attended hundreds of board meetings. I’m still not sure what all the afternoons stuck in airless rooms have accomplished. I suppose important matters were discussed and vital decisions reached. But sometimes I feel the whole process is a rubber-stamping ceremony, with the real business having been done beforehand. There ought to be a better way to supervise organisations, but governance experts haven’t discovered one yet.
Board meetings are the time-honoured, legally enshrined, core mechanism for reporting and directing companies and institutions. There tends to be lots of ritual in their procedures. From minute taking to drawing up the agenda to the timing of meetings and choosing who speaks, masters of the art know how to play the game. But that doesn’t necessarily mean their companies and non-profits do well – simply that they understand the politics and psychology of these eccentric groupings.
The most unsatisfactory meetings are those with too many attendees. Typically big corporates such as large banks, public bodies and the like are the worst. Academic institutions seem to suffer from especially unwieldy boards. Within reason, the productivity of these sessions is inversely proportional to the number of people in the room. Once it reaches about 20, then any such gathering is almost impossible to conduct in a productive way. Cabinet meetings of the UK government involve 33 politicians; I rest my case.
Big boards mostly work via committees. Such smaller units can meet more frequently and get stuff done swiftly. But this type of model is unsatisfactory because almost no members attend all meetings, so they miss out on crucial deliberations.
By contrast, probably the most efficient board meetings I take part in are those with just four or five participants – the typical format in fast growing private companies. The mood is more informal, the structure flexible, the atmosphere less political. Moreover, there is nowhere to hide: if mistakes have been made, they will be found out. It reminds me of the rigour of the tutorial system of teaching at Oxford: if you had not done the work, you were held to account.
Board meetings swing between the mundane and high drama. While the former might be boring, incidents of the latter indicate trouble – for staff and shareholders. Challenge is fine, but open conflict is a sign of a poorly managed entity and bad leadership. When it descends into frequent disputes requiring a show of hands, then you can be sure the board is highly dysfunctional. The worst rows happen when the chair and the chief executive are at war. When that happens, one or both need to depart.
The wholly serious board meeting is a dull affair. Humour can be introduced to lighten the tone. Of course board meetings are not social get-togethers: the directors have legal duties and powers they must honour. But if all the subjects are relentlessly dry and lifeless then engagement can be lost. Businesses tend to concentrate too much on financial points; non-profits not enough. There always has to be a balance between the short term and the extended future; between the pressing concerns and the meaning of the whole undertaking.
Certain boards on which I’ve served have suffered from obsessives who focus on one topic exhaustively. Typically it’s their area of special interest, and they fail to see the bigger purpose of assembling everyone in one place. Gresham’s Law – bad money drives out good – applies with boards, where one or two terrible members can undermine the efficient functioning of the whole. One of the reasons I like board meetings to last no more than two hours is that then there is only time for the imperative issues. Boards should never get into minutiae or bother with fluff – they need to concentrate on the significant stuff: strategy, budgets, major investments, acquisitions, divestments, appointments and so forth.
The best board meetings have good directors present who believe in substance over form, prefer action over hot air, and deal honestly and openly. Bad boards are riven with subterfuge and cumbersome protocol, emphasise process over results, and achieve little when they meet. Lord save us from such wasted hours.