Each quarter they file into a wood-paneled boardroom and hear management go over the numbers. There will likely be a dinner, cocktails, perhaps a golf outing, and when it is over a collective sigh of relief from the management team if they survive the ordeal without any tough questions.
Unfortunately, this scenario defines many corporate boards in America – a closely knit group of well-positioned, carefully selected corporate executives, recruited for their business experience, who over time, become complacent and passive.
However, it does not have to be this way. In fact, a corporate board can be one of a company’s most valuable intangible assets, contributing in a measurable way to growing shareholder value, if it follows this six-part assignment.
1. Foster a Culture of High Expectations
The single most important role for a board of directors is to foster a culture of high expectations and accountability. In this setting, management team members who produce results are rewarded, while those who only talk, but never achieve, are encouraged to pursue other interests.
This culture of high expectations – following through on goals and objectives with positive, quantifiable results and doing what you say you will do – begins with the board of directors. It is the board’s responsibility to set the bar high in every area and raise it every year without exception.
2. Define Superior Performance as Results, Not Intentions
In the movie series Star Wars, the sage Yoda advises a young Luke Skywalker “Do or do not. There is no try.” A board of directors would be wise to adopt this philosophy.
A board of directors that is intent on becoming a valuable intangible asset communicates clearly to the organization that a valiant effort without success is worthless. The board must insist on the adoption of a demanding definition of superior performance across the organization. Under this definition, impact and results are deified, while effort and good intentions alone are considered the safe harbors of low achievers who do not belong in a dynamic organization.
3. Champion Profitable Sales Growth as the Driver of Success
Profitable sales growth is the one and only driver of long-term success. Any company can cut costs and improve the bottom line over the short term, but without a track record of profitable sales growth and a vision for its sustainability, the viability of an organization cannot be assured. Every corporate director should bring to his seat on the board a heritage of achieving profitable sales growth and utilize that heritage to drive shareholder value creation.
4. Serve as Change Agent – Anticipate, Recognize, Create
Board members are in a better position than anyone else in an organization to anticipate, recognize and create change. One, they are not burdened with daily operational responsibilities and two, as a whole they represent a broad base of varied experiences. Seasoned board members have an acute awareness of economic, social and technological trends. For these reasons, board members should serve as agents for positive change and create a dialogue with the management team and other directors earlier, rather than later, on how external factors are having an impact on the company. Board members should emphasize ongoing corporate transformation as a necessity for continued success.
5. Function as Coach, Mentor, Supporter of Senior Management
Board members should be recruited not only for the richness of their management careers but for their ability to coach, mentor, and support the senior management team. Utilizing their own experiences, board members should work to advise and motivate the management team. While mentoring can be one of the most rewarding functions for a director, it is also one of the most overlooked. Board members should never forget that they were recruited as resources for senior management to tap into for knowledge and inspiration.
6. Confront Denial, Distractions, and Delay
The role of mentor and coach also carries with it the responsibility to confront management and other board members when tough issues arise. Management may fail to recognize a problem or refuse to act. Yet, it is the board member’s task to immediately detect and confront these cases of denial, distractions, and delay.
Creating a Legacy
Those directors who are ready to go beyond the social setting of the traditional boardroom and vigorously pursue these six imperatives, truly make a difference for the organizations they serve. It is an invigorating challenge worthy of a director’s time, talent, and commitment, and creating a legacy of success.