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Roles and Responsibilities of an Effective BOD

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  • 1. Roles & Responsibilities of an Effective BOD
  • 2. A few of my clients:
  • 3. “A really good board is one that only reduces the efficiency of the company by 20%”
  • 4. 5 Key Roles for a BOD To build an effective and successful organization through… 1. Financial Oversight 2. CEO Management 3. Setting Long-term Strategy 4. Succession Planning 5. BOD Governance
  • 5. 1. Financial Oversight: The Watchdog Role Prudent Ethical Reasonable Legal GAAP Auditor’s Report Monitoring Health, Performance and Risk…
  • 6. However…Unless the business is in a financialcrisis, the BOD should spend no morethan 20% of a BOD meeting onreviewing and approving the financials.
  • 7. 2. CEO (President) Management• To select, encourage, advise, warn, evaluate, compensate and… if need be… replace the CEO.• The BOD directs NO staff but the CEO.• Most BODs do a VERY poor job in CEO evaluation, development, and performance coaching.• An important role of the BOD is the informal advising and coaching of the CEO between BOD meetings.• The most important thing the CEO needs from the BOD is honesty and candor.
  • 8. 3. Setting Long-Term Strategy Discuss, debate, adjust, review and approve strategic direction
  • 9. What the BOD does NOT do… Create the strategy Build the plan Get into tactics Establish policies
  • 10. BOD as Strategic Thinkers
  • 11. Five Foundations of Effective Strategic Thinking Business Acumen Personal Experience Pattern Recognition Strategic Insight Disciplined Execution
  • 12. The Four – I’s• Ignorance• Inflexibility• Indifference• Inconsistency
  • 13. How to avoid the Four I’s 1-10 • Aggressive external market focus. • Aggressive customer/member focus. • Keep the “Main Things” the main things. • Bullish on knowledge sharing and learning. • Passion and commitment at all levels. • Foster a healthy paranoia. • Revel in change. These are ALL key roles of an effective BOD
  • 14. From the CEO of a little 182 billion dollar company… “Look, what is strategy but resource allocation? When you strip away all the noise, that’s what it comes down to. Strategy means making clear-cut choices about how to compete. You cannot be everything to everybody, no matter what the size your business or how deep its pockets. You have to figure out what to say “NO” to.” Jeffrey Immelt
  • 15. 4. Succession Planning Talent
  • 16. How the BOD facilitate succession planning• Assisting the CEO in identifying top talent.• Ensuring the CEO has formal talent development and succession plans in place.• Ensuring those key individuals get the support, guidance, resources and experiences needed to fully develop them.• Offering direct support, advice, mentoring and encouragement to the key leaders.
  • 17. 5. BOD Governance
  • 18. THE most important responsibility of the BOD • Attendance • Agenda • Information Flow • Focus on Strategic Issues • Committee Work • Accountability • Decision Making These are ALL peer-to-peer BOD issues • Behavior • BOD Evaluations • Continued BOD Development
  • 19. When properly governed the BOD can be an incrediblyvaluable strategic resource Expertise Experience Network Perspective
  • 20. Ram Charan: Three Key Drivers
  • 21. Ram Charan: Contributions that Count• The right CEO and succession• CEO compensation• The right strategy• The leadership gene pool• Monitoring performance and risk
  • 22. An Effective BOD… 1 - 101. Has full attendance -- everyone has done their homework -- all committee work has been completed.2. The financials have been thoroughly reviewed by all in advance.3. Keeps each other out of the weeds – stays on the strategic issues.4. Requests the appropriate type and amount of information from staff.5. Asks the tough questions and challenges the CEO and each other.6. Pushes hard to look at issues from multiple angles, plays Devil’s advocate, explores possible scenarios.7. Has an effective decision making process and a strong sense of urgency to make key decisions in an appropriate time frame.8. Engages in rigorous debate – but speaks with ONE voice after the meetings.9. Maintains the balance between control and support of the CEO.10. Takes BOD effectiveness, evaluation and development VERY seriously.
  • 23. What does it take to be a valued member of a team? Develop and display competence. Follow through on commitments. Deliver required results. Ensure your actions are consistent with your word. Stand behind the team and its people. Be enjoyable to work with. Be passionate about your work and those you serve. Communicate and keep everyone informed. Help the other members of the team. Share ideas, information and credit. Hold yourself 100% accountable.
  • 24. • Lack of TRUST• Lack of candor• Lack of commitment• Lack of accountability• Lack of results
  • 25. John Spence High Performance Team Model• D irection – vivid, clear, inspiring --- shared• M easurements – specific, observable, focused• C ompetence – very good at what they do• C ommunication – open, honest, courageous• M utual Accountability – all team members• D iscipline – do this every day
  • 26. 11 Key Team Competencies: Workshop Page41. Setting clear, specific and measurable goals.2. Making assignments extremely clear and ensuring required competence.3. Using effective decision making processes within the team.4. Establishing accountability for high performance across the entire team.5. Running effective team meetings.6. Building strong levels of trust.7. Establishing open, honest and frank communications.8. Managing conflict effectively.9. Creating mutual respect and collaboration. 1 – 1010. Encouraging risk-taking and innovation.11. Engaging in ongoing team building activities.
  • 27. Workshop• Read the “Discipline of Teams” HBR article.• Look over the slides and your scores on the various audits.• In your teams develop a list of the FIVE most important elements (behaviors /attitudes/skills/responsibilities) of a highly effective Board of Directors.• Assign a scribe and someone to present.
  • 28. Final Workshop• VERY carefully read the Board survey results.• In your teams, discuss the results and compare them to the list you just created for a highly effective Board of Directors.• What are the top THREE action steps this Board MUST take right away to improve?• Assign a scribe and someone to present.
  • 29. THANK YOU If you have any questions at all please do not hesitate to send a note or call. My email address is: john@johnspence.comAlso, you might find value in the ideas I share in my blog. You can sign up for it at: www.johnspence.com/blog These slides have already been uploaded to: www.slideshare.net/johnspence