HOW TO OPTIMIZE YOUR BOARD OF DIRECTORS: a speech given to the Association for Association Executives by boardoptions.com. Slides feature "Aligning the Stars on Your Board."

1. OPTIMIZING YOUR BOARD Larry Stybel lstybel@boardoptions.com 617-594-7627

2. RULES OF THE ROAD Feel free to interrupt and express disagreement. Feel free to discuss how this conversation relates to your job. You do not need to “name names.”

3. OVERVIEW Do boards really make a positive impact—review of the research. Framework for optimization Framework for Board Structure Framework for aligning stars on the Board. Time to discuss

4. DESCRIBE YOUR “BEST BOARD.”

5. DO BOARDS MAKE A DIFFERENCE? Adding Outside Perspective (Board Diversity??) Improves Shareholder Value in Absolute and Relative Terms: the British Experience: http://boardoptions.com/boardcompositionandroi.pdf

6. DO BOARDS MAKE A DIFFERENCE? The Board is Part of an Effective Checks and Balances Decision Making System: http://boardoptions.com/headline_070205.htm

7. DO BOARDS MAKE A DIFFERENCE? University of Leeds Study on the Impact of Outsiders on Shareholder Value http://www.boardoptions.com/outsidedirector.pdf

8. DO BOARDS MAKE A DIFFERENCE? Impact of Good Governance on Nonprofit Financial Performance: http://nvs.sagepub.com/cgi/content/abstract/21/3/227

9. QUESTIONS/REACTIONS?

10. SIX QUESTIONS TO ASK EACH YEAR What percentage of time at each board meeting is spent talking about the past (staff reports, financial reports, etc.)? What percentage of time is spent talking about the impact the organization will make in the future. What is the ratio of time spent on audit/oversight versus advise/counsel/making it happen?

11. SIX QUESTIONS TO ASK EACH YEAR What percentage of time should be spent talking about the past? What percentage of time should be spent talking about the future? What should be the ratio of time spent on audit/oversight versus advise/counsel/making it happen?

12. REVIEW THE BOARD AGENDA FOR THE LAST FOUR MEETINGS. On a percentage of time basis: how closely does the actual agenda conform to the Board’s perceptions? How closely does it conform to the Board’s desired way to spend time?

13. 20 MINUTES A YEAR…….. What are we doing as a Board to advance the mission? Set ourselves up to be role models for continuous process improvement.

14. COMMENTS/QUESTIONS?

15. BOARD STRUCTURE Job Descriptions Agenda set one year in advance Term Limits

16. BOARD STRUCTURE We all get so focused on the weeds in our eyes we forget why we entered the swamp! Chairman begins each meeting by summarizing the mission. Chairman frames disputes within the Board by asking participants to relate their positions to the mission Chairman should be the Mission Maven.

17. QUESTIONS/COMMENTS?

18. RECRUITING BOARD TALENT Is the Nominating Committee thinking like recruiters or like college admissions officers?

19. Is there a Balanced Board Task Focus: homogeneous is best. Problem Focus: diversity is best.

20. BALANCED PERSPECTIVES? Increasing Value versus Minimization of Risk? L. Stybel & M. Peabody. “Leading Simply Without Being Simplistic.” MIT SLOAN MANAGEMENT REVIEW (in progress). Email lstybel@boardoptions.com for a draft copy.

21. ARE THE STARS ALIGNED? SUPER STARS– 1 OR 2 AND YOU HAVE ANCHOR TENANTS . STARS—SOLID CITIZENS NEEDED TO DO THE ACTUAL WORK. SETTING STARS---MIGHT WORK ON NOMINATING COMMITTEE AND BE TASKED TO CULTIVATE RISING STARS. RISING STARS—1:1 MEETINGS; YOU ARE SPECIAL; YOU WANT TO WORK WITH OUR SUPERSTARS.

22. SPECIAL CASE OF SHOOTING STARS Tenacious Board members can be a positive force when it is working for you. And a burden when it is working against you.

23. SHOOTING STARS Get in their cross hairs and you will find out why they are “shooters.”

24. REFERENCE QUESTION On a scale of 1-9 how would you describe this person’s tenacity: 1=Flexible 2= 3= 4= 5= 6= 7= 8= 9= Tenacious

25. Beware of 7,8,9s! Get two+ of these Shooting Stars on a Board and you can have a time wasting Wall of Negativity. 7,8,9s can be great in a task focused Board with homogeneous values. In turbulent environments, you would like people who are 1-3. In a problem solving Board, you would like people who are 1-5.

26. QUESTONS/COMMENTS?

27. SUMMARY Good Boards Make a Difference. Consider Asking Six Questions to get a mid-course evaluation. 20 minutes a year. Look at Board Structure. Think like a college admissions officer Align the stars of your Board: Super Stars, Stars, Setting Stars, Rising Stars, Shooting Stars. Reference question to identify Shooting Stars. Role of Setting Stars to focus on identification/cultivation of Rising Stars. Prompt Chair to be the Mission Maven.

28. QUESTIONS/COMMENTS?

29. THANK YOU! Larry Stybel, lstybel@boardoptions.coml. www.boardoptions.com