How to Hold an Effective Board Meeting
Board meetings can be key in shaping the direction of the business. Learn how to conduct a successful one here
The time when key decisions are made about the future of the business, how a board meeting is conducted is often indicative of how someone runs a company as a whole. Get them right and they can be a key tool in developing smart business strategies.
Although this article is most useful if you run a company large enough to have board meetings, small business owners can quite easily carry the lessons learned over to strategy and other general meetings.
What are the objectives of a board meeting?
Although board meetings can have many different topics, they broadly fall under five general objectives shared in common. If you are conducting board meetings that don’t cover any of the objectives below, it might be time to look at how effective they really are.
Agree on a strategy
The board must have a good understanding of the market and competitors to understand how key business ‘drivers’ can underpin a good strategy (such as product innovation, and cost effectiveness).
Ensure company operations reflect strategy
This involves looking at the operations on the ground and ensuring they are actually in line with the overall strategy of the business. For example, there might be a strategy to target the high end of the market but the company has not changed its price point or quality to reflect this.
Monitor financial performance
Fairly self-explanatory; how do your actual figures measure up against your budget?
Ensure legal and compliance issues are dealt with
This can take in a wide range of areas, such as health and safety law, potential conflicts of interest by directors, and compliance with codes of conduct.
Allow non-executive directors to have their say
This might be the only time non-execs can have their input in to how the company is run, so you should take full advantage of the opportunity to hear an outside viewpoint.
Who should be on the board?
Avoid the temptation to pack your board with yes-men. An effective board is one with a complementary mix of skills who can consider fresh approaches to problems. In particular make sure to choose a good chairperson.
The managing director might run the day-to-day affairs of the company, but the chairperson has a similarly important role in running the board, so choose them wisely. They should be strong leaders with a deep understanding of the business, who can listen to all opinions and manage strong personalities.
Also make sure to use non-executive directors. They can provide a valuable objective viewpoint and an unparalleled depth of industry experience, amongst other benefits. Furthermore try to mix your meeting members’ skills and backgrounds – experienced workers with youth and pack in as much specialist expertise as you can – and finally select board members on merit. Try not to let personal feelings affect your appointments.
Good board members should be able to work well with others, take a long-term view, and put the company’s interests above their own.
The benefits of non-executive directors
Non-executive directors, or non-execs, can vastly improve the effectiveness of your board meetings without the cost of taking on a full-time employee.
There are various benefits a non-exec can bring to your board, such as independence, as they can step back from the day-to-day running of the company to provide an invaluable objective insight, and experience, they might have experience of other companies in your industry, the sector as a whole, or good management practice in general. Also non-execs can offer completeness and freshness – if you have a weakness in a particular area, such as marketing, a non-exec can be brought in to specifically address this and non-execs can be used to shake up tired company practices and provide a fresh approach.
Finally non-execs can help with decision-making and succession planning, for instance draw on their objectivity and experience to help you in tough decisions, such as laying off employees or deciding on directors’ pay.
When appointing a non-exec, you should be mindful of these potential benefits, as well as their character in general. A good non-exec should be strong enough to give their honest opinion of ideas and strategy, without being overbearing.
How do I prepare for a board meeting, and what should I do during the meeting?
To ensure an efficient board meeting, it is essential that your fellow board members come to the meeting well-prepared and with an idea of the issues on the table.
To help them with this, you should provide them with ‘board papers’, which typically contain an agenda (this should contain specific areas for discussion, fit within the five objectives for board meetings, and be short and to the point, and they should also contain clear cross-references to any additional documents you will be using), minutes of the previous meeting, most useful management accounts and any specific documents related to topics – if you plan to discuss a major new contract or strategy, a note summarising the main points can greatly aid discussion.
What to be aware of when running the meeting
As the person responsible for managing the board of directors, it is the chairperson who has the most responsibility for conducting how a board meeting is run. Their responsibilities include deciding the agenda, briefing the non-execs before the meeting (on the state of the company in general, but especially on sensitive issues), deciding on the order of agenda items and creating open discussions. Note that chairpeople should introduce items on the agenda free of bias and in a way that encourages productive discussion rather than confrontation, and encourage quieter directors to have their say.
The person in charge should also give their own view, this should wait until the other directors have had their input, summarise decisions – extremely important so everyone is clear on what exactly has been agreed – and allocate responsibilities for carrying out decisions – and making sure they are actually carried out as agreed.
You should also remember the importance of choosing a good venue for your board meetings. Choose a location outside your own premises to signify a wider strategic view, and be especially aware of the importance of a seating plan – make sure everyone is given equal prominence.
The frequency of board meetings is another consideration to take into account. Larger companies with more complex operations may benefit from monthly meetings, whilst quarterly meetings for small companies might suffice – hold too many, and you limit the effectiveness of the decisions you come to. At times of turbulence or rapid change, such as a public listing, it makes sense to hold more meetings to keep up.
Remember that limited companies must hold an Annual General Meeting (AGM) if any director asks for one, or if more than 5% of members request one. This meeting is used to check the accounts for the year and examine the main decisions taken by directors over the last year.
You should have had someone taking minutes of the meeting – these cover the decisions made and other key moments, as well as anything someone has specifically asked to be recorded (like an objection). In addition, you should normally inform employees of any decisions made that are likely to affect them.
What can I work on to improve the effectiveness of my board meetings?
Firstly, you should look at the skills of your directors – a little training can go a long way in making a board more effective.
As well as identifying which directors are carrying out their duties as the company’s representatives, try and see who could benefit from training in a specific area to increase the value of their input.
You should also examine how well your chairperson is doing their job, consider using a non-exec to take an objective view of this, and get feedback from the rest of the board.
Non-execs themselves should be briefed on the state of the company when they join – if you appoint non-execs on a regular basis, consider putting together an information pack about the company’s goals, operations and financial state. It is obviously also a good idea to introduce non-execs to the rest of the management.
Meetings can be an important tool and can help your business to focus its goals, come up with business strategies, gain perspective, and utilise perhaps untapped talent in the company. For more help on how to run productive meetings in your small business, check out our six tips here.