Building a more effective board

“Khun Kriengsak, I came across an interesting Reuters blog recently by Lucy P. Marcus, who wrote an article entitled ‘You’ve got to know when to go’,” Tanong tells me.

“Basically, she wrote about ‘deadwood’ board members and suggested a number of reasons why one should consider stepping off a board:

– You’ve served too long.

– Your expertise is no longer required.

– You’re not pulling your weight.

– You’re ‘obstructively disruptive’.

– Your actions, inside or outside the boardroom, bring distraction or disrepute.”

“Khun Tanong, that’s an interesting article. What’s your point?” I ask.

“Well, our company has a situation with two board members who fall into the first three categories. What should I do with them?”

“What do you have in mind?”

“Coach, as the chairman I won’t consider them for the next term.”

“That makes sense.”

“I know, but here’s my problem: how do I tell them?”

“Why don’t you tell them the truth?”

“Coach, I will be kreng jai (considerate). After all, we have some history. I invited them to join the board because they showed boon koon (favours) to me. I did it as an act of reciprocation. They helped me during the startup of my company.”

“How long have they served on the board?”

“Ten years now.”

“Khun Tanong, how long a time do you think is appropriate for reciprocation on your part?”

“Coach, 10 years is long enough.”

“What’s your concern then?”

“What would be an appropriate way to inform them?”

“Khun Tanong, maybe we can brainstorm some alternative ways to inform them. How many options can you think of?”

“First option, I can tell them directly. Second option, I can ask one of the board members who is most senior to tell them for me.”

“Which one do you think is more practical?”

“Maybe the second option, I guess?” he replies with a doubtful tone.

“What’s on your mind?”

“I’m still not comfortable. It may hurt the feelings of the two members since they would be getting the message indirectly from me,” he says and pauses. “On second thought, I think I will have to tell them myself.”

“What kind of the tone you plan to use?”

“Coach, I think I will use a counselling approach. But I will do it one by one.”

“Could you elaborate more?”

“I will approach each individual with this message: I need our two most senior board directors to be the chairman’s mentors. I considered them since they have a deep understanding about our business. These two mentors will have to step off the board. It will be an opportunity for me to bring in fresh perspective. This, I think, would be face-saving for both of them.”

“When do you plan to tell them?”

“This needs quite a diplomatic approach. I’ll ask them to play golf with me separately. I think that at the golf club, there will be several moments when I could bring this issue up. What do you think, Coach?”

“I can’t answer that. You know what works best for you.”

“Coach, I think this is a good plan.”

“Khun Tanong, what would be the other benefit from today’s discussion?”

“I think this is a great learning point for me. I also chair the boards of two subsidiaries. These two companies are new joint ventures. I should not repeat this same mistake. By the way, do you have any resources I could use to help create great boards?”

“Yes, there’s one book in particular that I think would help you. It’s called Great Companies Deserve Great Boards, by Beverly Behan,” I say.

Here are the author’s conclusions about the characteristics of high-performing boards:

– When you ask the chief executive and the executive team how the board adds value to the company, they can answer that question right away _ positively _ and give you at least three examples of how the board has made a difference in terms of challenging their thinking, offering useful perspectives or helping them in other ways that have genuinely affected board-level decisions.

– When you ask individual board members _ in confidence and candidly _ how the board adds value for the company, they can answer the question and provide specifics. The specifics pertain to significant issues that validate that the board is spending its time on the most important issues affecting the company and its shareholder value _ such as strategy, succession planning, risk oversight and financial oversight.

– When you ask individual board members if the board can improve in any way, they are able to make at least two or three worthwhile suggestions to further enhance the board’s performance. High-performing boards become that way by adopting a mantra of continuous improvement. They are always thinking about ways to be even better _ that’s what makes them so good.

– The board meetings are typically characterised by openness and vibrancy.

  • The company achieves good results _ financially, operationally and strategically.