Staying engaged

18 Mar imageDirectors facing increasing pressures of regulation, activist shareholders and business complexity are committing more time to their roles but face some resistance to what executives may see as “micro-management”.

However, “more time” does not necessarily mean “more effective” warned the Harvard Business Review at a chief executive officer (CEO) forum in New York City.

The constructive lessons for directors included:

  • Being engaged with the business between board meetings – even on an informal basis.
  • Being involved in the formation of strategy, not simply its approval – directors’ experience can add to strategy development and increase board buy-in.
  • Looking further than the CEO for talent both within the business and outside – actively reviewing the business’ top executives.
  • Acting as a conduit or mentor in different operational areas of the business – while being careful not to interfere in operational matters.
  • Asking the difficult questions on industry specifics in cases where they hold industry knowledge – challenging the CEO.
  • Anticipating the thinking of an activist shareholder. At least one director should be thinking in this way to reduce the chance of being caught unawares.

Surprisingly, the article also suggests that directors should all understand how the business or its divisions make money, demonstrating that a good board will never make assumptions.

The full article can be read here.