What are the five mistakes board directors make most?

Cross-01An article in Forbes magazine last week interviewed executive coach and mentor Kevin Sharer, asking him about his experience of working with senior executives.

Among the topics of discussion, he shared what he believes are the five most common mistakes made by directors.

We explore these five mistakes here and look at some strategies to avoid them.

1. Not doing their homework

The first mistake, according to Sharer. Board members ‘don’t do their homework, so they just come in with opinions, and they think they somehow have been promoted to omniscience’.

Key to avoiding this is to ensure your directors are fully prepared for meetings. Armed with fact, not just opinion, they can make more informed, rational decisions.

Make sure your directors are given board packs and any supporting information in good time before the meeting. Delivery in hard copy can be unreliable (as well as insecure) – consider whether an online approach might deliver more timely and professional board papers. Find out how your directors prefer to receive information, so you can present it in the most engaging way.

Check that your members are getting the information they need and avoid making these six common board pack mistakes.

2. Misreading the culture

The second mistake relates to understanding the make-up and dynamics of the board. This can lead – in the words of the article – to directors trying ‘to advance a position before understanding what the group dynamic is’.

This need for directors to be sensitive to their environment and able to consider all aspects of a decision is something we’ve previously identified when we looked at how a technique called situational intelligence can help boards to make the best decisions.

While there will be some attributes shared by many of your members, there will also be differences in opinions, backgrounds and objectives.

Being alive to the differing agendas of other members means understanding the different mix of perspectives and objectives you may have around your table. A board needs to have the right balance of debate and decision-making to be successful.

3. Not knowing where the power sits

Failing to realise ‘where the power on the board really lies’ is the third mistake. Related to the point above, identifying who holds the power to make or deny decisions is essential.

A whole raft of behavioural tendencies can hinder our ability harness the influence of those who wield power around boardroom tables. This in turn prevents boards from making good decisions. Read more about how to stop social processes undermining your board’s decisions.

4. Not getting to know the CEO

The fourth error Sharer identified is board members ‘not investing the time with the CEO to truly gain their trust and understand what they’re trying to do’.

If you can make time within your CEO’s hectic timetable to get to know them – to understand their aims, or any areas where they may need support – you will increase their trust in you, and also have a better feel for their perspective and personal agenda.

Last week we looked at how CEOs can best manage their time. If you can find a way to remove some of your CEO’s burden, you will not only gain their trust but their appreciation.

5. Not understanding the board’s remit

Sharer believes there are only three fundamental questions that the board exists to answer:

  • Is this company performing for shareholders?
  • Do we have a healthy environment – including social factors, compliance factors, legal factors?
  • Does the CEO have the judgment, deportment, and personal characteristics to lead this company?

Failure to appreciate that these three questions underpin the board’s entire purpose is, he thinks, the fifth most common mistake made by boards.

Maximise the effectiveness of your directors

Understanding these mistakes is the first step in avoiding them. Ensuring that your board is as effective as it can be means having a group of directors who all bring their own perspective to the table, and work successfully together to make the best decisions. Having insight into some common mistakes should help you on that path.

If you want to read more about how presenting information in the right way can help to deliver a more effective board of directors and better decision making, you can download our FAQs on Board portals – their implications and advantages. The whitepaper is free to download here.

Nothing in this document should be treated as an authoritative statement of the law. Action should not be taken as a result of this document alone. We make no warranty and accept no responsibility for consequences arising from relying on this document.

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