A board of directors is there to keep your company on track and protect the interests of the company shareholders. It is not their job to run the company, that’s the responsibility of the CEO or Director and their team, however, it is their job to ensure the company is delivering on what it has set out to achieve.
The Institute of Directors’ suggest that “Successful companies use board meetings to create and improve key business strategies”
How you run your meetings has a big impact on your business’s success. We set out a few suggestions for best practice below.
Prepare your paperwork
As Benjamin Franklin has been quoted many times ‘by failing to prepare you are preparing to fail’.
Preparation is so important, from making sure you have the right board members in the first place (we’re going to assume here that you have!) to preparing and circulating board papers in advance. We’ll go into more detail about setting your objectives in a moment, but first lets just focus on the practicalities.
Board members will need to have an agenda. You’ll need to ensure you cover things in enough detail to make it meaningful, so think carefully about what you want to discuss and prioritise the most important.
– Board pack
Your board members will need to receive the information that will be discussed before the board meeting, and in plenty of time too. Board members are often busy people; 24 hours’ notice is not going to give them enough time to digest what you have sent them and provide valuable input in return. Make sure you have a system you can rely on to distribute board papers quickly and effectively so everyone is prepared well in advance.
Minutes must be kept of a board meeting, but they don’t have to be War and Peace! Make a note of the key points, decisions, and actions so you can keep track of what has been discussed. Minutes are also used as evidence in audit trails or legal issues, so they are important to get right.
Set your objectives
Done well, board meetings help a company:
- work out a business strategy
- execute it successfully.
It’s, therefore, crucial to set out the objectives for your board meeting.
– Agree on a strategy and assess its effectiveness
The management should present strategy proposals at an early stage in the planning process. The board can then provide first reactions and direction. To do this, the board must understand:
- The key ‘drivers’ for the business. For example, the key driver for a manufacturing business might be product innovation. In a more mature market, it might be cost-efficiency.
- The strengths, weaknesses, opportunities and threats relevant to the business.
- The changes occurring in the industry and marketplace. To make sure that company operations are in line with strategy. For example, a consultancy business may be taking on many small projects, despite its agreed strategy of concentrating on fewer, larger projects.
– Monitor financial performance against the budget
Financial reports should be on every board meeting agenda so the board can review the company’s income and expenses compared to the budget. Key factors either positive or negative should be discussed to help measure current performance and help with future budget setting.
– Make sure procedural and compliance issues are properly dealt with.
- legislation, such as the Companies Act and health and safety law
- declaration by directors of possible conflicts of interest
- codes of conduct (eg the rules set up by your trade association)
- compliance with customer requirements
– Don’t forget to use non-executive directors as sounding boards for new ideas
Take full advantage of non-executive directors as a source of alternative approaches to problems and opportunities.
Manage the meeting
You’ve sent out your agenda and papers and set your objectives. The last thing to do to make your board meeting effective it to make sure the meeting on the day runs smoothly.
Your preparation will have got you halfway there. Your board members should arrive knowing what you want to achieve from the meeting, what topics for discussion have been prioritised and have been given plenty of time to prepare.
Your chair will play a strong role at this point in controlling how the meeting runs. They set the tone for the meeting, and will ensure discussions stay on topic, and to time. A good chair will make sure everyone has equal ‘air time’ and be able to summarise important messages or actions for the purpose of the minute taker.
Finally, it might sound obvious, but however you choose to run your meeting, make sure your technology and information is sound – there’s nothing worse than lagging internet, poor PowerPoint or bad coffee!
As part of miacademy, we are thrilled to offer you a range of board and director improvement tools to help you to build your confidence as a Director, strengthen your business and its resilience, and develop your leadership team and their performance. All MIA members have free access to a ‘Director statutory duties’ course, with more content available. Find out more here