Boardroom Burnout: Is there a pill for that?
The challenge: It’s no secret that there are an increasing number of demands on boards. Directors are expected to keep abreast of the organization’s business model, performance, strategic challenges and risk environment, understand the industry, understand the legislative environment, be knowledgeable of and ensure compliance with regulatory and reporting requirements and changes, evaluate the CEO and board’s performance, has a compliant and effective compensation program, be current on applicable accounting rules and ensure that the organization has a solid succession plan and effective culture.
Consider that most boards meet approximately 6 times per year for 1 to 2 days per meeting, with half of the time allotted to committee meetings (Audit Committee, Compensation Committee, Governance and Nominating Committees, etc.) and you might begin to appreciate the challenge that Board Chairs and their support teams face when they try to fit in business and industry updates, financial reviews, required board voting/approval matters, board member education, succession planning, executive compensation and strategic discussions into six days.
And that’s just the workload for times when the organization is running “business as usual”. In the event of a CEO transition, M&A activity, shareholder activism, an internal or a regulatory agency investigation, and the time demand on board members starts to increase exponentially.
Further, consider that the most sought-after board member is a sitting CEO and that most board members also have their own ‘day-jobs’ and are already heavily burdened aside from their outside board duties.
One of the most common complaints I hear from board members is that when they consider the amount of time and effort required as a director, they do not feel the majority of the time that is spent on topics that create value or address strategic challenges. Board members who are least satisfied and most ‘burnt out’ feel like their time and service is not valued by the organization.
Tips on Avoiding Director Burnout:
In interviews with over 30 board members, when asked the question “Why do you serve on a board?”, the responses were consistently centered on adding value, helping the organization grow and achieve its goals. When asked “why were you selected to join Board XYZ?”, board members answered because their experience makes them a good fit to advise the organization on its strategic challenges. My interpretation: board members understand that part of their role is to satisfy their fiduciary, regulatory and compliance roles, but, they believe they add the most value when they are working on strategic issues.
To achieve that goal, the board members interviewed would overwhelmingly like to have as much of the meeting time as possible spent in strategic conversations with the CEO and leadership team.
The challenge is to satisfy thoroughly yet efficiently the ever increasing number of compliance requirements, yet allow ample time for strategic discussions. Here are some practical ideas on how to create more time!
Tip 1: Don’t waste precious meeting time presenting information that was distributed in the board materials
As a board member, this is one of my pet peeves. Board materials frequently include a business update, current financial statements, functional updates, competitive updates, etc. and the majority of board members read the material, make notes and form questions to ask in the meeting. Nothing is more annoying than coming to the board meeting prepared only to have the CEO or leadership team present all of the information to you that you’ve just read.
Effective Board Suggestion: Skip the presentations of the information that was distributed and move directly to questions on the material distributed. (PS – make sure you get your materials out well in advance of the meeting! Do not distribute materials on a Friday afternoon for a Tuesday board meeting; board members do not enjoy spending their weekend reading board materials.)
Tip 2: Utilize Committees Effectively
Boards often establish committees to address specific and specialized topics, e.g. the Audit Committee is formed to address the review of the organization’s financial controls and reporting. The committees often spend a significant amount of time on relevant education and in-depth reviews and committees bring the conclusion of their work to the full board in the form of reports and recommendations.
Review your board’s committee structure and assignments to ensure that you have the appropriate committees and that they are being effectively utilized. Effective Board Suggestion: Rely on your committees and avoid repeating the committee work with the full board.
Tip 3: Annually Assess the Work of the Board
As any organization grows and evolves, it is important to continuously review and assess the organization’s priorities/strategies to insure that the organization’s work assignments match the priorities/strategies. Organizations often assess their work assignments by considering the following: “What should we start doing or do more of? And, what can we do less of or even stop doing?” This process allows organizations to evolve and expand their work activities without unchecked headcount growth.
Effective boards undergo a similar review in their annual assessment process. Effective Board Suggestion: As part of your annual board assessment process, take the time to review how the board spends its time vs. the organization’s strategic priorities. Is your board focused on your strategic priorities? Do you have special purpose committees that are no longer relevant? Are there things your board can stop doing? Review the materials you are sending out in your board book. If you send it, you are obliging your board members to read the material; don’t send 60 pages of financial information if 15 pages will suffice.
These simple changes will help your board feel valued and create more value for your organization…save your board members from ‘boardroom burnout’!
Kaye O’Leary is the Governance Editor for Innovation Excellence and is a founding partner of Tevera Consulting. Tevera where she has served as the interim CFO of Shock Doctor Inc. and Caribou Coffee (NASDAQ: CBOU), and has advised many public and private companies on a variety of board governance and strategic growth projects.