Successful CEOs Share Information With the Board
As the NCUA considers regulatory changes for board governance, I am struck by the amount of time and energy dedicated by volunteers at credit unions. As the business environment gets more complicated, boards and CEOs have to define and clarify their roles and responsibilities. This will require more direct communication and understanding of strategy.
Committing to an intelligent exchange of ideas with your CEO will require some discipline but will yield a stronger culture on your board. Defining board information that directors need to function more effectively is crucial to the security for members.
Visualize the board agenda full of presentations from senior executives in the credit union. It's important to remember that those people presenting that day probably have spent the better part of the last two weeks preparing their presentations. This is an important proving ground or opportunity to impress the board with their knowledge and skills. All too frequently, they become chock-full of PowerPoint slides and end up consuming more time than is necessary.
It's important that the agenda is crafted with discipline so that tactical questions don't slow up intelligent discussions on strategy.
We have all been in board meetings where the leader of a business unit had a 25-page deck that contained data that was too detailed and actually diverted board members to ask subterranean and tactical questions. This is a graphic example where the presentation consumed 200% more time than it should have, thereby eliminating important agenda items for the CEO to directly respond to strategic questions.
That example underscores the importance for structure and leadership on the board.
There is a duality of responsibility. The CEO has the responsibility to ensure that the senior executives who present to the board have the ability to develop material that is at a strategic level and delivered in a cut-to-the-chase manner. The chairman, throughout the meeting, has the responsibility to guide conversations to ensure integrity of the agenda. A well-crafted board agenda is planned to consume defined periods of time and ensure discipline throughout the meeting. There must be a dedicated time allocated in each agenda to direct conversation with the CEO that is open-ended.
My preference is to actually have that conversation at the beginning of the board meeting so that people aren't packing up at the end of the board meeting to leave and the meeting gets short-circuited.
Smart CEOs that I have worked with take the time prior to each board meeting to share the strategy of the company with individual directors and give those people a chance to create a dialogue that delivers a forum for feedback. Recently, I advised a CEO who was new to his role that he should dedicate 5% to 10% of his time to share information with directors and gather their feedback. This is the beginning of a journey that builds strong trust and becomes critical to the mission of the credit union.
Successful CEOs commit to sharing information with board members on a regular basis. A vehicle which is helpful for directors is when the CEO sends a very short update on current business activities not written by the investor relations or public relations people. This effort to share current information encourages the director to communicate directly with the CEO and vice versa. It is designed to keep the arteries unblocked and unfiltered by third-party distractions. Interactions do not have to occur at long lunches or dinners but instead can be 10-minute conversations that build on questions that the CEO or director wants feedback on. This builds on the integrity of a rhythm of communication and builds trust as well.
There is a difficult balancing act in this conversation. The CEO is responsible for results of the organization and developing and implementing strategy. Our experience is that when boards feel disenfranchised, the trust in the CEO is eroded and can be compromised. This thinking is sensitive and should be approached in a respectful way. As boards become more liable personally for actions of the credit union, they will demand more information, and the CEO will need an enlightened and engaged board to understand investments in technology and M&A activity to meet performance objectives. Proactive engagement helps eliminate eruptions that erode trust and create unnecessary distractions.
Recently, a credit union CEO and colleague of ours retired. He expressed frustration that the board in which he served lacked the fundamentals of financial literacy and strategy required to continue to drive member satisfaction in his organization. There is a shared responsibility. Board members should consider increasing their skills and learning and CEOs should commit to a rhythm of clear communication to keep board members informed.
Commerce today requires agility of thinking and continuity. In a void of information, people either feel disenfranchised or come to their own conclusions, which are not always correct. The rhythm starts at the top. However, what this is really about is an intelligent call for higher levels of collaboration between the CEO and the board based upon mutual respect and concern for members' well-being.
Stuart R. Levine is chairman/CEO of Stuart Levine & Associates.
Contact 516-465-0800 or stuartlevine.com