Revisiting Board Ownership

Working on my newest book, “The Board-Savvy CEO,” over the past six weeks, I’ve been doing a lot of thinking about how critical it is that CEOs make a real effort, on an ongoing basis, to transform their board members into strong owners of their governing decisions and judgments, as opposed to being a passive-reactive audience for finished staff work.  Every truly board-savvy CEO I’ve ever worked with keeps this high on the list of executive responsibilities because she knows that when board members own a decision they’ll stand by it and not leave the CEO out on a limb – especially when the decision involves enough change to kindle significant resistance.  CEOs who are really board-savvy also know that the best way to foster feelings of ownership is to involve board members intensively in doing important governing work, early enough to make a difference.  Merely asking them to thumb through a finished document near the end of the decision-making process won’t cut ice where ownership’s concerned.

So a call I got from a CEO a few days ago was really timely.  He’s just come out of a meeting with his board’s new performance monitoring committee, which had spent several minutes going over the most recent financial report.  Not having much experience or expertise in reading and assessing financial information, several committee members, feeling a bit at sea, asked my CEO friend what he thought about their putting together a subcommittee of non-board financial experts to advise them.

Ownership was fresh on my mind when I responded.  My answer in a nutshell:  not a bad idea to create an advisory subcommittee of experts, but – and it’s a big but – be very careful about how you implement it.  If your monitoring committee just hands the whole financial monitoring job to the experts on the subcommittee, and passively listens to their input, you’ve missed a wonderful opportunity to turn your committee members into owners of an extremely important, albeit demanding, governing function:  overseeing financial performance.  And you shouldn’t forget that board members who don’t feel very expert or comfortable looking at financial information will really appreciate learning how to do the job well.  Bottom line:  go ahead with the subcommittee, but make sure the mother committee members are actively engaged in going over the subcommittee’s work – and make sure the mother committee – not the subcommittee – reports financial performance at full board meetings.

This is definitely the board-savvy way to go!

Doug Eadie