As seen in the Governance Institute of Australia’s Governance Directions Journal.
Becoming a high performance board has never been more important to the performance, sustainability and reputation of your organisation, particularly during these recent times when so many organisations including AMP, Crown, Rio Tinto and Westpac have had significant governance failures. The Commonwealth Government with its workplace sexual harassment challenges and its culture of silence has also not been immune.
Most directors and executives would argue that the board’s performance and effectiveness, the tone they set and the shadow they cast, has a significant impact on the motivation, engagement, culture, character and performance of the CEO, executive team and their organisation.
Boards either set a high, medium or low tone from the top and that tone permeates every nook and cranny of their organisation. Just as better boards make for better organisations, poor performing or dysfunctional boards act as a boat anchor and jeopardise the performance of their organisation.
But high performance at board level doesn’t just happen. It requires a deliberate intent to become high performing and a sustained leadership commitment to continue the journey once started.
Insync, in association with Board Benchmarking, has determined the 6 key steps to becoming a high performance board, having measured and helped improve the performance of more than 250 boards.
These 6 steps are illustrated in a practical case study of Vision Super’s journey to improve the performance of their board.
These 6 steps can and should be used by all boards to improve their performance which will ultimately also improve the performance of their organisation.
Step 1: Get a good measure and a deep understanding of your current performance and effectiveness and the main areas for improvement
It is now generally accepted as best practice for organisations to carry out an annual review of the performance of their board and of individual directors with an independent externally facilitated review at least every three years.
You can’t improve what you don’t measure. But not all measurements are created equal so it’s important to understand the benefits and disadvantages of the measurement approaches available. Best practice involves the use of a validated and benchmarked tool that measures most, if not all, of the 20 discrete factors that recent research showed are important for a board to become high performing.
A good independent externally facilitated review of a board’s performance would normally involve:
- Completion of a validated benchmarked Board Effectiveness Survey by directors and by executives who regularly attend board meetings
- Completion of a Director Effectiveness Survey that enables directors to rate themselves and their colleagues in one well designed online survey and then provision of a Director Effectiveness Report for each director for the Chair to discuss with them individually
- Interviews of around one hour with each director and the main executives who attend regular board meetings with an independent governance expert
- Synthesis of the results of the benchmarked Board Effectiveness Survey, the interviews and the overall strengths and areas for improvement for directors as determined by the Director Effectiveness Surveys, into a concise report identifying the three to five main issues and the governance expert’s recommendations of the most practical and effective ways to improve the board’s performance
- A debrief of the results of the review by a governance expert with the Chair and subsequently with the board.
Step 2: Board unity and sustained commitment to the agreed action plan
As with any independent report that identifies areas for improvement, the board needs to jointly own the problem, demonstrate a collective desire and commitment to deal with the issues raised and the collective will and judgement to turn the recommendations into a practical action plan. This can be done with or without the help of the independent governance expert.
But it is rarely as simple as carrying out one or two steps and sitting back. Many desired improvements involve iterative changes and improvements over time which are supported by a deliberate and sustained leadership commitment, regular check-ins to measure the impact of the agreed actions and with appropriate adjustments made as necessary – also see Steps 5 and 6 below.
Step 3: Chair to demonstrate leadership and vulnerability during the change process
As well as receiving his or her own Director Effectiveness Report, the governance expert would normally provide the Chair with an unattributed list of the views expressed by interviewees of the Chair’s strengths and a list of suggestions for improvement. A great way to demonstrate acceptance of this feedback is to for the Chair to summarise in their own words those views and suggestions for improvement.
Some courageous chairs go one step further and share the full list of strengths and suggestions with their fellow directors. Those chairs ask the directors to help him or her capitalise on their strengths and work on the suggestions made for their own benefit, the benefit of the board and of their organisation. In this way the board helps the chair to be accountable for their improvement plan.
The Chair’s boldness, transparency and act of vulnerability in openly sharing the list of strengths and suggestions sets the tone for other directors, the CEO and executives about the importance of feedback, self-awareness and continuous improvement.
Step 4: Focus on individual director improvement as well as board improvement
It is difficult to conceive that a board could achieve high performance if individual directors don’t also demonstrate their commitment to improve their own performance and contribution. This is why most legislation, regulations and guidelines in relation to the review of a board’s performance require a review of the performance of individual directors as part of the process.
The Director Effectiveness Reports that are provided following completion of the Director Effectiveness Surveys referred to in Step 1 identify areas of strength and where each director can improve. This provides a great basis for the Chair to have a discussion with each director and to help them to put together their own development plan. When the Chair is transparent about his or her areas for improvement it emboldens other directors to do the same.
Step 5: Regular check-ins to measure the impact of the agreed actions and adapt accordingly
Improvement initiatives should be backed up with regular board check-ins and a review of progress made in the key areas identified for improvement. Those check-ins and the review will identify where great progress had been achieved and where additional effort is still required.
Extra time needs to be carved out to continue the check-ins at board meetings, make further iterative improvements and to further embed continuous improvement, both collectively and individually, into the board culture and DNA.
Step 6: Never cease the journey of improvement – it’s a journey, not a destination
Those who have observed improvement journeys know that it is an ongoing journey – you never arrive, there is no destination. And if you think you have arrived, that is when arrogance, complacency and hubris set in which brings the whole journey and everything that has been achieved undone.
High performance is often found in the last 10% where very few go. It will involve a sustained and disciplined commitment to seeking out those things that can result in a step change whilst at the same time searching for and finding those things that might only result in a 1% improvement. If that sustained and disciplined commitment to high performance is maintained for long enough high performance can become your new way of life.