What do Boards of Directors do besides earn a five-figure income for attending four meetings a year over a weekend, play golf, and smooze with each other, developing their own network of buddies who make them privy to "deals in the making?" Directors of large corporations perform many valuable functions, a few of which are listed below (credit to Anne Durand, MCC, of MentorCoach for allowing me to use this information).
Board members can do the following:

 

1) hire the CEO (Executive Director for non-profits). This also entails performance reviews, setting compensation including stock options, bonuses, salary, fringe benefits, retirement accounts, annuities, etc. Oftentimes Directors will request an executive coach to coach the CEO in areas that are not up to standardse.g. long-range planning, employee morale, developing new markets, etc.
2) Responsible for profits and fund-raising (if non-profit). Directors have access to investors and revenue streams through various financial institutions. They also are responsible to the stockholders to make sure their investment is secure and making money for investors in the company, including the employees through ESOPs, etc.
3) Attend regular meetings (usually quarterly) to address organizational planning, regulatory agencies, and resource management. Financial and operational audits are part of big business and stock prices depend on strict adherence to accounting principles, ISO 9000 safety guidelines, industry guidelines (FDA, if pharmaceutical company, or American Bureau of Shipping if commercial shipping company who transports hazardous materials).
4) Monetary oversight of financial resources to insure that the company remains viable in the long-term, not just quarterly dividends to stockholders. This encompasses a long-range financial plan for developing new markets, increasing resources, cut-backs when business is off.
5) Lobby for trade associations or Congress. Most non-profits have trade associationse.g. American Automotive Association (AAA), AARP, American Society of Petroleum Engineers (ASPE), etc. and must keep up with the latest information on industry standards and trends to remain competitive.
6) Meet in lush placese.g. Palm Springs, Hawaii, Cabo San Lucas to provide a respite for tired executives from other companies who serve on the Board. This is a benefit for sometimes meager pay for their worthwhile efforts and managing company assets.
7) Generally Directors are politically connected, are well positioned to contribute their own areas of expertise (and resource knowledge) to the company. Most are from banking, petroleum, automotive, food, health, and service industries.
8) Set policy to assist with a consistent strategic plan that incorporates both financial and employee resources to produce a given product (e.g. computers) or service (e.g. accounting).
9) Review reports presented to the Board by company staff with particular emphasis on fiduciary responsibility to keep the company solvent (witnessed Enron and WorldCom disasters).
10) Reviews potential litigation, complaints, governmental policy, industry trends as affects the company.

 

Also of interest is what is referred to as "dead smelly cats," which are power games played out at board meetings. This might involve split votes on keeping the CEO, mergers, slowing down growth, increasing market share, etc. The game playing typically involves the more politically connected board members who have a greater financial stake in the company they're directing. Many Boards contract with a coach "facilitator" who oversees group process, while the CEO manages the agenda for board meetings. The facilitator insures that all views are heard, no one board member dominates meetings, staff are appropriately prepared to present before the board, the CEO is prepared to deal with the group dynamics and keeping the members on task, while respecting individual egos and contributions (a tough job to say the least). Finally the make-up of Boards depend on the type of business. For the most part, many board members for-profit companies are drawn from the financial world. For non-profits, celebrities, politicians, and fund-raisers make up the membership because of their ability to raise money.

 

 

"Helpful Hints" is a monthly feature of The Executive Connection. In this section of our Newsletter, we will discuss accountability structures necessary to stay focused on your business plan and objectives.

 

"This Month's Helpful Hints"

 

• Go to the library and pick up a book on managing group dynamics. This is an invaluable tool for what goes on with high-performance groups. MentorCoach has an excellent training module on how to facilitate groups.
• Call a local firm and see who has oversight over them. Determine where board members come from and gain insight into their contributions to the non-profit or for-profit business.
• Interview a board member (this may be tough) with confidentiality intact for both the company and the member to see what goes on at board meetings. Much of the information is pre-packaged and presented by staffers, but other members might take on a more proactive role in company vision, growth, and direction.