Can We Talk? Tips for Improving the Feedback Loop from Board to Management

Gary Golding . September 30, 2014

I have been on more than 30 boards in my career, including 4 public company boards, and the issue of improving communication between board and management has been front and center in every single situation. I had the pleasure of moderating a panel on this topic at Edison’s 2014 Directors College. The panel included Gr8 people CEO Diane Smith, former Gain Capital COO Chris Calhoun, and Fiberlink COO Chris Clark; all have impressive backgrounds as not only having been founders, but also key executives and board members. (View full session below.)

While CEOs and outside directors (especially VCs) spend a lot of 1:1 time together, there is an inherent group dynamic that goes along with the board of an emerging growth company. And, while many board meetings focus on the recent and upcoming quarterly performance, it is also important to keep perspective on the ultimate goal - industry leadership and shareholder value. (We touched briefly on this in another Director College panel, When Good Boards Get it Wrong.)

CEOs and management teams can benefit immensely from a strong working relationship with their board members. At this year's Edison CEO Summit, we discussed improving board effectiveness in great detail in a session around How to Build an All-Star Board. At the Director College, Chris Calhoun, a director for SciVantage, made a great point during the panel that board members who spend time building relationships early on will be trusted by management when the company hits a rough patch.

Another important point made by Chris Clark was that, as an independent board member at NEAT, he felt he could add balance to the conversation between the CEO and investor board members. Diane Smith, a director at Billtrust and RealMatch, pointed out that working with an evolving board is part of the ongoing education for a CEO and she found it very helpful as a first-time CEO to attend Edison events to speak to her peers.

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Building a feedback loop that is effective takes commitment from both sides. Following are a number of tips for both CEOs and boards that will lay the foundation for a long-lasting and successful communication process.

Tips for CEOs

  • Use a CEO Summary slide to demonstrate company and industry macro perspective. Be sure to detail any key challenges inside the business that are impactful.

  • Don’t surprise the board with bad news. Be candid, open and honest. One best practice is a concise monthly CEO report sent by email to board members.

  • Don’t be a stranger to Compensation and Audit Committee Meetings and key issues.

  • Give your management team air time in board meetings and find venues for board members to meet the executives at the next level down.

  • Create a customer voice for board education, inviting a customer to talk with the board, e.g., once per year.

  • CEOs must drive board momentum and develop an inspired board. Establish a framework of trust and transparency.

  • Get involved with peers for ongoing personal development (e.g., Edison hosts an annual CEO Summit for its portfolio company CEOs)

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Tips for Boards

  • Hold executive sessions without the Management team present, and then summarize a follow-up discussion list. The goal is to be open, civil and productive.

  • Work as a team with the Lead Director, Compensation Chair and Audit Chair in synch with priorities and messaging.

  • Volunteer time and contacts to be a problem-solver for the CEO and team.

  • Build relationships with the management team members individually and know the business well.

  • Following the board meeting, consider sending CEOs a short 3-4 paragraph email with your individual observations, and it will inevitably help reveal the roadblocks the CEO is facing.

There are always new challenges facing management that require insight from a knowledgeable board. It takes work in the early years to create the environment that produces an inspired board. With inspired boards, feedback becomes second nature and a key organizational asset.

For the full discussion on this topic, watch the session on Youtube and let me know what you think by commenting below, or share your own insights on this topic with me directly at ggolding@edisonpartners.com.

 

 
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