Don’t make decisions in board meetings

In the comments on How we run board meetings at Seeking Alpha, Chang asks: If decisions are not made in board meetings, when are they made? My answer:

I think the relationship between a board of directors and a CEO is the same as the relationship between any manager and their report: you need to empower the person to do their job, and to make decisions. The role of the manager (in this case the board) is to:
— ensure you’ve got the right person in the role, and monitor them to ensure that hasn’t changed;
— agree on goals and metrics, so the person has a clear definition of success;
— provide perspective which the person doesn’t always have when they are in the thick of the job day to day;
— help them think through challenges;
— be supportive — be a good listener, and be sympathetic to the pressure of their job.
None of these things entail decision making, other than the decision to fire someone if they are not right for the role.

Very rarely, a major strategic issue comes up which requires the participation of other stakeholders in the decision. For example, if there’s an offer to acquire the company and the company is trying to decide whether or not to sell, the investors clearly have a direct stake in that decision.

But even then, my guess is that group discussions aren’t very effective. The CEO should speak to every board member individually before the board meeting, and should try to know each person’s viewpoint before the meeting.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s