Inexperienced CEOs often make the same mistake when it comes to board meetings. They think they need to create all sorts of materials to educate the board about the business. This is where they go wrong. Spending too much time on ensuring everyone on the board is familiar with your business can often lead to a long boring meeting that doesn't get anything done.
So what should the CEO do to have productive board meetings? There are two angles on this, short term best practice and long term best practice. So let's break it down for you and start with the short term.
Assuming you have the right people around the table at your board meetings, here is a list of things that the early stage of software CEO should be doing to make board meetings easy and effective:
- Make the preparation painless
Don't create presentation materials just for the board. Instead, start by making sure that your senior managers are conducting insightful retrospectives on their portions of the business. Then have your senior team meet and discuss these retrospectives, focusing on what went well, what went wrong, and what should be the goals for moving forward. Make sure that you're using sound analytics to support the discussions. Lastly, have the team summarise the retrospectives and conclusions, and then use that material to get the board up to speed on the business.
- Prepare the board PRIOR to the meeting
Send the board all the available management or operational information that you have 3-5 days before the meeting. This should include your quarterly management retrospective, the goals for this quarter, the financials, and other critical information. Instruct the board members to read all the materials prior to the meeting, and privately call-out any members who were not prepared. Have the members send you their questions, and get those questions answered prior to the meeting. This way, the meeting can focus on the insights and the future direction of the company.
- Focus the meeting on 2-3 strategic topics
Start by thinking through what you would like the meeting to achieve. What are your key strategic goals as the CEO and what do you want to get out of sharing them with the board? Focus the agenda on these topics and leave anything else to be discussed at the end or outside of the meeting. Start the meeting by highlighting your goals and what you expect to get out of discussing them.
- Do the rounds with each board member prior to the meeting
This is vital if you have a key strategic decision that needs to be made in the meeting. Make sure the board can focus on making that decision, rather than the meeting turning into a forum for getting to speed and debating the issues. The idea is to know how each board member is going to vote BEFORE the meeting. This way you can manage the awareness and the debate before the meeting.
- Be sensitive to travel times
To help ensure the meeting runs smoothly, schedule the meeting at a time in the day that would make travel for board members easy. And schedule a dinner to give the board members exposure to each other, your management team and you in a less formal setting.
- Schedule the meetings early
At the end of the previous year, facilitate the scheduling of all board meetings and calls for the following year in advance. Although it can be painful, especially because VCs will be trying to coordinate meetings across all their portfolio companies, it is a lot more painful if you try to schedule the meetings on a quarterly basis.
Now let's move onto the long-term fix. The best way to ensure a productive board meeting is to make sure that the right people are sitting around the table. Here are a few things to consider:
Balanced and Qualified:
The key here is to find a good balance between management members, investor members and independent members. Keep the number of seats an odd number (to stamp out the chance of a deadlocked board). For early stage companies, a board of three seats is too small, and seven is too big. So perhaps consider a 5 seat board.
Here are four ways of controlling who sits in your investor seat:
- Only raise members from qualified and knowledgeable firms, preferably one or two
- Make sure you like the partner who's leading the deal and insist that he's the one that assumes the lead and takes a board seat
- Insist that the partner commits to attending all board meetings in person
- If your investor has two seats and has a junior person sitting in the second seat, ask that the seat be used for an additional independent member instead and the junior investor can take an observer seat.
As for the management seats, make sure that every seat is occupied by a qualified and value-adding member. Co-founders don't qualify, unless the co-founder is experienced and can add value to the meetings. By the way, the same goes for the founding CEO.
The best way to control who fills your independent seats is to run a retained search and look for the best and most qualified candidate who can help you with your next stage of growth. We like to find one independent who can act as the CEO mentor (usually an industry expert). Another independent can be recruited to give the CFO leeway as the company matures.
Each board member needs to be completely engaged in the discussions. Typically, board member attention span lasts about two years at which point they start getting board. Make sure that once you recognise these symptoms, start recycling board members. It's hard to do this with investor members, but it won't hurt to try. When recruiting independents, we suggest having them on a three year vest, which gives you leverage to keep them focused. If not, sack them.
Engagement relates to two things: first, each member needs to come prepared and needs to voice their opinions and concerns whilst adding value to the meeting. Second, get board members to work! Each board member should be taking on a project on your behalf. For example, senior management recruiting is a good one. Strategic networking is another. And even CEO/CFO mentorship.
Ensuring your board members are cohesive is vital to holding a productive board meeting. Apart from making sure you have the right members in place, and that they are engaged, you also have to make sure their personalities complement one another. You will need to spend time before and after the meeting to make sure that every member is aligned with and respectful of other members. Though that doesn't mean everyone has to agree with one another. Often enough, respectful debate is good. Intrusive, opinionated, disrespectful conflict is what you want to avoid. Bad conflict tends to happen with an arrogant investor senior partner and also happens with an aggressive CEO.
If you are a CEO seeking further business advice, speak with our Managing Partner - Steve Lockwood on 02 9299 7044 or email us at email@example.com.