QUESTION 11: How Can Executive Sessions Help the Board Own Up?

Spoken Words and Unspoken Thoughts

Are you familiar with “Kim’s Rule of Committees?” It’s in the witty book by Arthur Bloch, Murphy’s Law Book Three: Wrong Reasons Why Things Go More!

“If an hour has been spent amending a sentence, 

someone will move to delete the paragraph.”

I’ve often shared my “Murphy’s Law” with CEOs (waiting anxiously outside the boardroom during an executive session): 

“There is no relationship between the actual length of an executive session and the substance of the governance work actually accomplished in that session.” 

QUESTION 11 of 14: How Can Executive Sessions Help the Board Own Up? Owning Up: The 14 Questions Every Board Member Needs to Ask, by Ram Charan (Order from Amazon)

While Ram Charan calls the executive session “the single most important innovation in corporate governance to date,” this closed door meeting of the board—without the CEO or staff in the room—is a delicate dance.

And caution! If your board chair is inexperienced or inept at leading an executive session, prepare for the worst. Your organization would never thrust a staff member into a critical role without coaching or mentoring (or at the least—reading something!)—yet boards venture into executive sessions often inappropriately prepared.

So…here are two resources. First, read Chapter 11 in Owning Up and be forewarned: “…if executive sessions are not run well, they can undermine trust and clog the flow of information and ideas, which makes it harder for the board to do its job.” Charan weighs in on the best time for executive sessions (he prefers before a board meeting), why the CEO should be in the room at the beginning of the session, and how to “loop in” the CEO after the executive session. 

My guess—this might be the first time you’ve read 11 pages on effective executive sessions—the good, the bad, and the ugly.

Second, read Lesson 17, “Botched Executive Sessions Are Not Pretty,” in More Lessons From the Nonprofit Boardroom, by Dan Busby and yours truly. (Click here to read the six-page chapter.) We recommend seven principles:

• PRINCIPLE 1: An executive session without the CEO should never include issues that are of a non-sensitive nature. 

• PRINCIPLE 2: A board should always meet in executive session in at least two situations: (1) when considering the CEO’s periodic review, and (2) when reviewing the CEO’s compensation. 

• PRINCIPLE 3: Board meetings should rarely be conducted unless the CEO is included in the meeting. 

• PRINCIPLE 4: The CEO should generally be present at the beginning of an executive session. 

• PRINCIPLE 5: Following an executive session, the gist of the discussion should be communicated to the CEO in a constructive manner. 

• PRINCIPLE 6: During the executive session, not every comment made by every board member will necessarily be appropriate or substantive. 

• PRINCIPLE 7: If feedback to the CEO is not provided right after the session, it should be conveyed within a day or two so that the discussion is fresh in the minds of board members sharing the report. 

When the board chair (and perhaps another board member joining him or her) communicates the important content of the executive session to the CEO, they should remember John Carver’s wisdom, “The board speaks with one voice, or not at all.” Under no circumstances should comments or feedback from an executive session be attributed to individual board members. Anonymity is of utmost importance.

In addition to these two resources, we pray that it comes naturally to your mind and heart to add a third resource—God’s Word. Perhaps you’ll begin your next executive session with Psalm 19:14 (TLB): “May my spoken words and unspoken thoughts be pleasing even to you, O Lord my Rock and my Redeemer.” 

BOARDROOM DISCUSSION: “Just as the board needs an agenda, an executive session needs an agenda.” What should be on the agenda for our next executive session? When should we meet—before or after the regular board meeting?

• READ: Lesson 17, “Botched Executive Sessions Are Not Pretty,” in More Lessons From the Nonprofit Boardroom, by Dan Busby and John Pearson. (Click here to read the six-page chapter.) Click here to read Philip Boom’s color commentary on this lesson.

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.