By Stuart R. Levine, Chairman and CEO, Stuart Levine & Associates LLC
Credit Union Times September 2024
Accountability makes some directors uncomfortable. It takes character not to feel threatened by an independent review of board performance.
Board service is becoming increasingly complex. To face the significant challenges ahead, it’s important to not only plan, but to truthfully look in the mirror to strengthen your board’s culture. Organizations must either transform the way they work based upon leaps in technology, global competition and growing consumer expectations, or risk being left behind. Strategic governance transformation and oversight is required to ensure compliance with the evolving regulatory environment as well as changes in investor expectations and potential shareholder and class action lawsuits.
By defining the criteria for productive board relationships, board culture and adherence to strong governance principles and continuing to engage all participants in this process, leaders will create the requisite ownership required to embrace change. Having one non-performing asset on a board, or one that creates ongoing turbulence, impacts a board’s ability to perform effectively.
Conducting a board assessment process is not a check-the-box exercise. Board assessment processes that generate confidential data and non-attributable insights will be the cornerstone of keeping momentum moving forward in terms of improved board performance and enhanced board culture.
Having had the experience of serving as chair and member on over 12 different boards, as well as being a global CEO, has increased my firm’s ability to conduct a board assessment process that effectively lays the foundation for improving board performance in a privileged manner, while understanding any unnecessary liability.
Respecting people’s time and understanding the responsibility that is entrusted through this important activity leads to an outcome that will strengthen the board’s ability to make the right decisions, with faster speed and greater strategic insights. Open communication and efficiency are key factors for running this process to ensure the constructive information gathering.
In addition to providing overall score averages to the answers to approximately 25 – 30 well-crafted questions, distinct and varying opinions of board members can be captured as well as meaningful improvement suggestions in key segments such as committee chair communications, board succession and the board’s oversight role versus management’s role. By capturing comments concerning board management, board composition, governance and culture, the identification of key issues provides a path for improvement in board performance and culture. Hearing from the CEO and members of the executive team can often be an important subtlety that provides nuances that can improve board effectiveness.
Developing a firm governance foundation positions organizations and boards of directors to act with resolve on key strategic priorities to deliver value to stakeholders. Making real and lasting changes requires extraordinary focus, not only on strategy, but with the people responsible for governing the organization. Revitalizing the board of directors will result in strengthening the culture of the board, as well as the strategic priorities identified through board of directors and CEO collaboration.
Very often a key component of this process becomes coaching and mentoring the CEO. The creation of a CEO dashboard that identifies priorities will be accretive to the future growth of the organization. This mentoring should focus on enhancing the CEO’s ability to communicate effectively and strategically with the board of directors as well as with their team. Prioritizing the utilization of energy creates momentum for the recruitment of the next generation of C-Suite officers as well.
By working in tandem, the board and CEO will be enabled to develop and create sustainable governance processes and platforms for which they will be responsible. Through a highly inclusive process, directors can take ownership, understand their responsibilities, and make any transformations a success.
High quality board assessments are some of the most effective tools for ensuring high functioning boards, organizational resilience, and long-term value creation. Allowing board members to share candid feedback in a trusted environment will lead to superior board dynamics, clearer agendas, streamlined processes, enhanced meeting material, and more suitable board and committee compositions. What’s more, identifying board strengths and areas for improvement can lead to enhanced learning programs, individual director coaching and succession planning to guarantee the appropriate skills matrix required by regulatory trends as well as to evolve new strategies.
Change is hard. But looking in the mirror will stimulate discussion in a constructive manner and provide recommendations for board optimization and effectiveness. Highly functioning, engaged boards do all they can to up their game. Board assessments, when run most confidentially and with a high level of engagement, are a critical tool for providing significant value to both the board and the CEO, which in turn will increase shareholder value.
