Tuesday, August 28, 2018

Best Board Books #5 - Owning Up: The 14 Questions Every Board Member Needs to Ask

Here’s a very, very practical book (in my continuing series on best board books)—with serious pokes-in-the-ribs for your board. Guaranteed!

Book #5: Owning Up: The 14 Questions Every Board Member Needs to Ask, by Ram Charan

Governance Guru Ram Charan wrote in 2010, “The financial crisis of 2008 laid bare a long buried truth: that many boards do not really own the strategy of their company.”  So rate your board on a scale of 1 to 5 (5 is high). “How strongly does our board own our strategy?"

That’s just one of 13 other pokes-in-the-ribs from the author of numerous other business and governance books including The Attacker’s Advantage and Boards That Lead.

The author says that “if you have no appetite for risk, you shouldn’t be on a board; it will inhibit the CEO from making bold and necessary moves and potentially company-saving bets.”
The “go-to adviser” for corporate boards and CEOs, Ram Charan, says that boards must “own up” to its accountability for the performance of the organization and reinvent the content of their work and modus operandi.  He preaches, “Governance now means leadership.” 

Board governance often has fuzzy boundaries and is never easy—but this excellent author/authority has 14 cringe-type questions. Charan doesn’t waste words—firing this question onto the board table in the first paragraph of Chapter 1/Question 1, “Is Our Board Composition Right for the Challenge?” 

He writes, “The role of the board has unmistakably transitioned from passive governance to active leadership with a delicate balance of avoiding micromanaging. It’s leadership as a group, not leadership by an appointed person.” He adds, “With the right composition, a board can create value; with the wrong or inappropriate composition, it can easily destroy value.”

He recommends that every board member and board prospect complete a “skill assessment matrix” to assess the board’s overall strengths and weaknesses. “The process is important because a board full of generalists is not good enough anymore,” he warns. Reference checking of board members (well beyond the basic level) is now an absolute necessity. The biggest red flag to avoid: a board nominee with a big ego.

The discussion of board member succession is worth the price of the book. Insights: 1) the process may take up to three years; 2) many CEOs are limiting their service on other boards to just two, or often just their own board; 3) to get the right mix of board members—for rapidly changing needs—many boards are encouraging incumbents to step down early. (Not easy—but critical.) Perhaps most critical: “Board service is always more attractive when the prospective director knows the board has its act together—that the board is thorough in covering its bases and functions well as a group.”

Effective boards will want to use this book at an annual board retreat—or address one or two questions per board meeting over the next year or more.  The book can also be read topically, based on your current hot issues. I started with Question 13, “How Do We Stop From Micromanaging?”  All 14 have zinger qualities to them. My favorites, based on my board consulting work, include:
   • Question 11: How Can Executive Sessions Help the Board Own Up?
   • Question 12: How Can Our Board Self-Evaluation Improve Our Functioning and Our Output?
   • Question 2: Are We Addressing the Risks That Could Send Our Company Over the Cliff?
   • Question 4: Are We Well Prepared to Name Our Next CEO?
   • Question 5: Does Our Board Really Own the Company’s Strategy?

The best practices for the strategy question are both brilliant and practical—but the CEO will need to dramatically increase face time with board members. But the pay-off could be huge. He notes, “Strategy should always be in the back of directors’ minds. It helps to have the strategy brief or a two-page sheet of bullet points in the binder for every meeting.”  

Then Charan cautions us, “If the board and the CEO have lasting substantive differences, they have a choice: stay with the strategy or replace the CEO. Consider that management has a shelf life too, just like the strategy.”

BOARD DISCUSSION: After reviewing Charan’s 14 questions, what is the most important question we need to address at our next meeting? Will answering that question require a spiritual discernment process--or are we just too timid about addressing it?

MORE RESOURCES: Follow the “40 Blogs. 40 Wednesdays.” color commentaries on Lessons From the Nonprofit Boardroom. Click here.

Saturday, August 25, 2018

Best Board Books #4: Stewards of a Sacred Trust

Here’s a very helpful book on CEO selection
—as part of my series on “best board books.” But note—read this well in advance before your current CEO retires, resigns, or is terminated.

Book #4: Stewards of a Sacred Trust: CEO Selection, Transition and Development for Boards of Christ-centered Organizations, by David L. McKenna

What makes this book, published by ECFAPress, so timely, practical and readable? Who but an octogenarian can get away with segmenting ministry CEOs into these six descriptive categories?  McKenna says that boards:
   • Love Patriarchs 
   • Admire Prodigies
   • Respect Achievers
   • Tolerate Caretakers
   • Pity Bunglers 
   • and Shun Pariahs. 

The book features informative and accountability-focused checklists at the end of each chapter. Twenty-two chapters. Twenty-two checklists. The lists alone are worth the price of the book.

McKenna ably defines and balances the solemn duty and sacred trust of a board member.  He writes, “Election of the CEO separates Christ-centered organizations from other organizations because it is a sacred trust. While the professional standards for the search process must be the same for all organizations, Christ-centered organizations have a spiritual dimension that cannot be denied. For good reason, ‘cookie cutter consulting’ should be vigorously resisted on presidential search in Christ-centered organizations. Likewise, attempts to spiritualize the process at the expense of professional integrity cannot be tolerated.”

Every board chair and CEO should order and read this book. You may not need it today, but unless your CEO is named Methuselah, you will need it eventually.

BOARD DISCUSSION: Dr. McKenna used six memorable names to label different kinds of CEOs. Do you agree with those categories or have you observed other types? 

BONUS QUESTION: In Ram Charan’s book (watch for my next review), Owning Up: The 14 Questions Every Board Member Needs to Ask, Question #4 asks, “Are we well prepared to name our next CEO?”  So…if our CEO ended up in heaven next week (good news/bad news), is our board prepared?

MORE RESOURCES: Follow the “40 Blogs. 40 Wednesdays.” color commentaries on Lessons From the Nonprofit Boardroom. Click here. And view the four short videos with your board in the latest ECFA Governance Toolbox Series No. 4 on succession planning. Click here.