If as a founder and CEO, you have ever experienced the frustrating effects of inefficient board communication, you are not alone.
In particular small-medium-sized businesses often fall short of an effective communication strategy between the executive team and the board.
If not addressed such inefficiencies cause a level of board friction which is value-destroying.
What are the consequences?
- erosion of trust
- costing the executive team unnecessarily time and energy to manage board relations
- frustration and misalignment between the executives and the board
- slow decision making
- risk of negative disruption for the business from activist shareholders
It can get messy quite quickly, particularly if the company goes through difficult trading conditions.
Thankfully such risks can be heavily reduced by establishing a communications strategy.
Effective board communication forms the basis of transparent decision-making, collaboration and alignment.
Most SMEs limit board their communication strategy by agreeing to yearly pre-set board meetings and a rule that board papers need to be shared a specific number of days before each meeting.
An effective board communication strategy needs more than that.
Here are some best practices in specific aimed at CEOs of SMEs:
1. Utilise appropriate communication channels and tools.
Implement a board portal.
A portal that serves as a central hub for sharing documents, agendas, minutes, and other board material is a much better way than emails. Using emails to share board papers is frustratingly impractical and insecure. As a director, I want to be able to review historical and current documents without having to search for documents hidden in emails. In such cases, directors often create their own company-specific data room in order to have all information in one place. Having such company-sensitive information on multiple private devices and/or clouds is not the best practice for dealing with sensitive data.
A board portal is the better solution. It does not have to be an expensive board software subscription. Document collaboration and sharing tools like Google Docs or Microsoft Office 365 are a good starting point.
Instant messaging platforms like Slack are very effective for quick and informal communications among board members. Great way to facilitate real-time discussions, file sharing, and collaboration.
Although video calls are now common practice for Board calls, regular face-to-face meetings are still crucial for establishing an effective working relationship with the Board. In-person meetings are a must when dealing with mission-critical decisions.
Whether it is the portal, video calls, instant messaging or emails, tailor the channels to suit different board communication needs.
2. Establish shared responsibility between the CEO and Chair
All too often I’ve experienced that it is unclear to the CEO and the Chair who takes which responsibilities with Board communication matters. As part of an effective relationship both need to define and communicate clear roles and responsibilities for both the Chair and the CEO. A well-defined division of duties helps minimise ambiguity and fosters accountability.
The CEO and Chair need to collaborate to establish protocols and guidelines for board communication to ensure consistency and define expectations regarding communication frequency, format, content and confidentiality.
3. Expand communication beyond board meetings and cultivate personal connections with board members
Regular communication outside of board meetings is essential to avoid surprises and maintain alignment with board members. By reaching out between meetings, the CEO and the board members can clarify perspectives, ensure alignment, and increase the effectiveness of decision-making processes. Such interactions well in advance of board meetings allows for buy-in, feedback, and a greater chance of achieving objectives during board discussions.
One-to-one interactions outside board meetings help the CEO to foster genuine connections with board members.
4. Pre-empt any questions and seek individual input on key matters from each director before the board meetings
Avoiding surprises during board meetings is crucial, as presenting new information can put the CEO at a disadvantage, particularly for strategic matters. It is always a good practice to pre-empt any questions and to seek individual input from each director before the board meetings.
Even more so for strategy decisions.
The actual board meeting is best aimed at deciding on a strategy and giving the CEO the mandate to execute accordingly. It is not, however, the best place and time to brainstorm and get valuable contributions and buy-in from the individual board members.
Being aware of your position prior to the board meeting maximizes your opportunity to effectively convey your objectives during the session.
Holding strategic sessions with the board outside of the regular board meetings is a good practice to make sure all valuable contributions from directors are captured and to achieve alignment.
Effective board communication forms the basis of transparent decision-making, collaboration and alignment. The CEO and the Chair should regularly review and adapt the board communication strategy, making sure that communication practices stay impactful as the company evolves.