Drawing the line - how to refocus board time

Principal consultant Peter Allanson says a board’s role is to look ahead, assess risks and work on culture and values

Einstein suggested that “everything should be made as simple as possible, but not simpler”. Of course, it’s the words after the comma that deliver the killer blow.

Boards often have a tendency to over-complicate and to assume interest and responsibility for matters that should sit outside their sphere.

Generally speaking, private sector boards aim to spend about 70% of their time on strategy and 30% on other matters, including gaining assurance on executive delivery. Given the regulatory environment within which they operate, public sector boards aim for a 60:40 ratio. It’s open to question whether these ambitions are achieved.

Unless an organisation is running well, meeting its plans, budgets, targets and performance indicators, it has no basis for thinking about the future and its strategies. Being holed below the line often leads to being sunk. Boards need high quality information (rather than just the base data) in a digestible form, sprinkled with a commentary demonstrating that the executive has a firm grip, knows where the problems lie and is addressing them – or asking for help and advice.

Assurance is key

As Andrew Corbett-Nolan wrote recently in a series of three articles (Metamorphosis, Plausibility and the rule of thumb, and Where does the pyramid point?), assurance is the name of the game. With good assurance, the board can focus on what it does best: looking to the future, assessing risks and working on culture and values. It helps the board to use its time productively; meetings are expensive, and we do not check often enough that we are receiving value for money for the commitment we are making.

However, not every board accepts the gift of time in the spirit in which it is offered. Most if not all non-executive directors used to be executives. Most had rich and fulfilling careers and now want to offer a lifetime’s experience to others. This can lead to an unhealthy interest in the management of the organisation rather than its direction. And these nostalgic trips down operational alley can often lead to disappointment that all is not as it was.

One of the activities we see far too much of when observing boards in action is the amount of time spent discussing and approving papers to note, sometimes for ‘assurance’. This is akin to looking in the rear-view mirror – essential from time to time but if you devote too much time to it you are likely to collide with something in front of you that you should have seen.

If a paper is labelled ‘to note’ – and we would argue that there are far too many of these – then there should be nothing to say; as a conscientious director you should have read and absorbed the message but it should need no discussion, thus freeing up time – the gift that keeps giving.

Above and below the line

One practical step is for the meeting secretary to put a line in the agenda, with items for decision and discussion above it and those for noting below. A helpful convention is to allow board members to request an item to be promoted above the line – but there may not be time for an additional discussion, so the options are to discuss this at a future meeting or at a different forum or with a named individual with the outcome subsequently reported to the board.

Ensuring that the papers provided to the board are in the same, professionally written livery is as important for papers to note as it is for discussion or decision papers. Producing short, well-written papers takes practice and discipline but it’s well worth the effort so that the board can face the organisation with a deep understanding of what is going on.

A high-performing board will make sure it has its arms around the totality of the activities of the organisation it leads. Periodic reviews and consideration of hidden corners can be invaluable and may save the board from problems later.

So Einstein’s seemingly straightforward plea may not be quite as easy as it first seems. But that doesn’t make it any less apt. ‘But not simpler’ marks out the difference between managing and directing.

A good win is to use time more productively – what’s above the line and needing our attention and what’s below the line that we can leave to others? And have we put the right assurance mechanisms in place with an executive team that is open, transparent and ready to talk about problems and issues as they arise?

Taken together, these steps will underpin good, cost-effective governance. They will simplify and clarify the role of any board, saving time – and of course time is money.