Roles & Responsibilities of an Effective BOD
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Transcript of Roles & Responsibilities of an Effective BOD
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Roles & Responsibilities of an Effective BOD
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“A really good board is one that only reduces the efficiency of the company by 20%”
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5 Key Roles for a BOD
1. Financial Oversight
2. CEO Management
3. Setting Long-term Strategy
4. Succession Planning
5. BOD Governance
To build an effective and successful organization through…
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1. Financial Oversight: The Watchdog Role
Prudent
Ethical
Reasonable
Legal
GAAP
Auditor’s Report
Monitoring Health, Performance and Risk…
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However…
Unless the business is in a financial crisis, the BOD should spend no more than 20% of a BOD meeting on reviewing and approving the financials.
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2. CEO (President) Management
• To select, encourage, advise, warn, evaluate, compensate and… if need be… replace the CEO.
• The BOD directs NO staff but the CEO.• Most BODs do a VERY poor job in CEO evaluation, development, and
performance coaching.• An important role of the BOD is the informal advising and coaching
of the CEO between BOD meetings.• The most important thing the CEO needs
from the BOD is honesty and candor.
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The five keys to accountability
1. 100% Clarity + Appropriate Authority
2. 100% Agreement
3. Track & Post
4. Coach, Mentor, Train and Support
5. Reward Success / Punish Failure
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3. Setting Long-Term Strategy
Discuss, debate, adjust, review and approve strategic direction
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What the BOD does NOT do…
Build the planGet into tacticsEstablish policies
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BOD as Strategic Thinkers
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Five Foundations of Effective Strategic Thinking
Business Acumen
Personal Experience
Pattern Recognition
Strategic Insight
Disciplined Execution
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The Four – I’s
Ignorance
Inflexibility
Indifference
Inconsistency
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How to avoid the Four I’s
• Aggressive external market focus.
• Aggressive customer focus.
• Keep the “Main Things” the main things.
• Bullish on knowledge sharing and learning.
• Passion and commitment at all levels.
• Foster a healthy paranoia.
• Revel in change.
These are ALL key roles of an effective BOD
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From the CEO of a little 182 billion dollar company…
“Look, what is strategy but resource allocation? When you
strip away all the noise, that’s what it comes down to.
Strategy means making clear-cut choices about how to
compete. You cannot be everything to everybody, no
matter what the size your business or how deep its
pockets. You have to figure out what to say “NO” to.”
Jeffrey Immelt
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4. Succession Planning
Talent
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How the BOD facilitate succession planning
• Assisting the CEO in identifying top talent.• Ensuring the CEO has formal talent development and succession
plans in place.• Ensuring those key individuals get the support, guidance,
resources and experiences needed to fully develop them.• Offering direct support, advice, mentoring and encouragement to
the key leaders.
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5. BOD Governance
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THE most important responsibility of the BOD
• Attendance• Agenda• Information Flow• Focus on Strategic Issues• Committee Work• Accountability• Decision Making• Behavior• BOD Evaluations• Continued BOD Development
These are ALL peer-to-peer BOD issues
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When properly self- governed the BOD can be an incredibly valuable strategic resource
ExpertiseExperienceNetworkPerspective
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Ram Charan: Three Key Drivers
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Ram Charan: Contributions that Count
• The right CEO and succession
• CEO compensation
• The right strategy
• The leadership gene pool
• Monitoring performance and risk
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BOD as High Performance
Team
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5 Dysfunctions of a Team
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• D• M• C• C• M• D
irect ion – vivid, clear, inspiring --- shared
easurements – specif ic, observable, focused
ompetence – very good at what they do
ommunication – open, honest, courageous
utual Accountabil i ty – all team members
iscipline – do this every day
Elements of a High Performance Team
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An Effective BOD… 1 - 10
1. Has full attendance -- everyone has done their homework -- all committee work has been completed.
2. The financials have been thoroughly reviewed by all in advance.
3. Keeps each other out of the weeds – stays on the strategic issues.
4. Requests the appropriate type and amount of information from staff.
5. Asks the tough questions and challenges the CEO and each other.
6. Pushes hard to look at issues from multiple angles, plays Devil’s advocate, explores possible scenarios.
7. Has an effective decision making process and a strong sense of urgency to make key decisions in an appropriate time frame.
8. Engages in rigorous debate – but speaks with ONE voice after the meetings.
9. Maintains the balance between control and support of the CEO.
10. Takes BOD effectiveness, evaluation and development VERY seriously.
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Workshop
• In your teams, determine what you all agree are the top FIVE most important characteristics of a highly effective Board member? What do you need to do in order to be a stellar BOD member?
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Strategic Workshop
What does your team feel are the THREE most important strategic issues facing your industry in the next 5 years?
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THANK YOU
If you have any questions at all please do not hesitate to send a note or call. My email address is: [email protected]
Also, you might find value in the ideas I share in my blog. You can sign up for it at:www.johnspence.com/blog
These slides have already been uploaded to:
www.slideshare.net/johnspence