Mastering Boardroom Effectiveness: How to Elevate Governance, Decision-Making, and Collaboration through Efficiency

Time is the only resource you can’t buy more of. As a former boss of mine used to say, “You can hire more people, get a loan for more money, but you can’t produce more time.” Nowhere is this more evident than in the boardroom, where time must be used wisely to maximize effectiveness. Board impact hinges on knowing what to focus on.  Based on my experience, I’ve identified five critical areas that board members should master to optimize their time and elevate governance: asking the right questions, determining appropriate audit levels, reviewing the right incidents, refining committee reports, and strengthening collaboration with management.

1. Key Questions from Board Members: What to Ask and What to Avoid

Board members must ask insightful questions to fulfill their oversight role successfully. Good questions encourage transparency and strategic thinking, while unhelpful questions can derail discussions. Regrettably sometimes the dialogue becomes too tactical, focused on operational details, isolated personnel issues, and even inquiries into matters that have already been answered in board materials. On the other hand, useful questions may relate to the biggest risks facing the organization and how they are being managed, how decisions align with the long-term strategy, key performance metrics, how the company is anticipating emerging industry trends, and serious compliance concerns.

2. Business Unit, Corporate, and External Auditing

Auditing ensures transparency, integrity and compliance.  It is also a necessary ingredient for continuous improvement. Boards must stay high-level and generally pay attention to organization-wide results.  Audits conducted by the business units may be suitable for routine matters that would not materially affect the company, like process improvements.  This should be below the radar for Boards.  Corporate auditing is the routine focus of the Board for financials, compliance, and other material risks.  Reviews should be limited to key indicators and substantial deviations.  Financial third-party auditing is legally required for many organizations, but it may also be requested by the Board as an extra layer of protection for the analysis and prevention of catastrophic risks, to ensure that the corporation is truly managing those effectively, according to industry best practice. External auditing could also help minimize liability, should something go wrong.  Noteworthy examples include cyber security, process safety, and product safety.

3. Incidents to be Reviewed at the Board Level

The Board should focus on understanding the analysis of high-impact crises, while leaving minor setbacks to management.  Precious resources can be wasted debating short-term market fluctuations, temporary process upsets, or small employee complaints. Instead, investing sufficient energy in material incidents is an essential governance function.  Beyond understanding management’s response to the crisis, the Board should verify that no important factors were left out of the analysis, that the investigation went beyond obvious causes and considered any systemic and structural company issues, and that the learning and actions properly address all major deficiencies identified.  The biggest gaps I’ve seen pertain to implementing improvements in all applicable corners of the corporation, and auditing those improvement actions to verify they were put in place properly, to effectively prevent reoccurrence.

4. Committee Report Content

Committees play a crucial role in analyzing specific areas of governance beyond what the full Board does.  They can go into greater detail, in the end enabling the Board to run more efficiently.  Committee reports should be concise and actionable.  Certain matters appear sometimes that add little value, such as a description of committee activities, detailed technical information requiring highly specialized knowledge, and redundant information found in other Board materials or committee reports.  Committees should describe to the Board any findings, concerns, or emerging risks related to matters they reviewed, they should provide recommendations for the Board to consider, and should from time to time update the Board on how the committee is meeting its annual discussion topic schedule, allowing the Board to provide direction or issue requests to the committee.

5. Collaboration with Management

A strong relationship between management and the board facilitates governance and decision-making. Management should empower the board with relevant, prompt, and strategic information. Drowning the Board with excessive or irrelevant data is distracting. Failing to disclose key issues in a timely manner may impair the Board’s ability to offer opportune guidance and exercise its fiduciary duty, in some cases because unreported problems become crises. Transparency is a must, and to a reasonable extent having occasional access to staff can be helpful. In my view, beyond the typical new member induction, providing directors the opportunity to “see” the operations is critical to better support the company’s strategy. To be clear, this is a two-way street, and Boards must also aim to be useful, beyond just satisfying a governance requirement.  Offer strategic guidance, not micromanagement, advocate for the organization, focus on the long-term, and always challenge with the intention to offer useful insights.

I invite you to reflect on the Boards you belong to.  Are you focused on the most important matters?  Is the discussion at the right level instead of buried in detail?  Do you review relevant types of audits and incidents and avoid minutia? Are your committee reports disciplined, focused on exceptions and recommendations? Is the relationship with management mutually supportive? The answers to those questions can further unlock the potential for your Board to become as dynamic, effective, and value-driven as it can be. What changes can you implement today to make your Board more impactful?  Feel free to add your own stories, examples, and perspectives in the comments.