Bood on Board is a must-read monthly newsletter that shares governance stories and tips for leaders who want to add more value to their boardroom experience.

Unintended consequences: Governance “best practices” are often cited as the best way to protect an organization from poor oversight and conflicted decision-making. I have been reading a few books and article that argue there is a lack of evidence behind some governance practices, and how some may even result in unintended consequences that undermine long-term organizational success. [Recent read: Eric Ries “Incorruptible”.] For my governance work, I encourage clients to think about what would help the board function better rather than merely whether their governance infrastructure and practices meet best practices.

Following [worrying about] my daughter’s first solo trip to Europe : My youngest is half-way through a 10 day trip to Germany and Austria as a post-grade 12 adventure. She planned to go with a friend, but that fell apart. She was determined to go anyhow. How has it gone? She has had a couple of normal panic moments, but they have not been significant and she has gotten through them. She sends me texts only when I reach out, and they usually focus on how to solve something. I am definitely not living vicariously through her - as I don’t receive detailed travel descriptions and pictures. 😏 However, I no longer wake up half way through the night in a panic to check my phone for messages. This trip will make us both stronger. Right?

Directors know when a report is not working. It may be too long, too operational, unclear about what matters, or missing the information needed to assess performance and risk.

Sometimes, the harder part is explaining what needs to change.

Comments such as “This report is too long” or “We need more detail” identify dissatisfaction, but they do not give management enough direction to produce a better report next time. Management is left to interpret what the board wants, and may respond by cutting out the wrong information or adding in unhelpful details.

However, directors should resist rewriting reports themselves. The goal is to clarify the board’s needs while leaving management accountable for determining how best to meet them.

Effective balanced and specific feedback helps management understand what the board needs to know, why it matters and how the report could better support oversight or decision-making.

Providing specific feedback can also help directors assess why they are asking for the information. 

This ensures that the information is connected to the board’s responsibilities and focuses on material risks, strategic priorities and other areas where board attention is required.

Here are four practical approaches.

1. Describe the reporting outcome you need

Instead of saying, “We need more detail,” – or even identifying specific information you think will help - identify what the additional information should help the board assess.

For example: “We need enough detail to understand whether the project’s milestones and expected outcomes are at risk.”

This helps management identify the information that best supports that goal.

2. Identify what is unclear

“This report is not clear” is difficult to act on. Be more precise about where the report lost you.

You might say: “Please distinguish between activities completed, outcomes achieved and progress against the key objectives.”

This directs management toward greater clarity without prescribing the entire format.

Management often involves the board when it must: approvals, budgets, formal oversight, compliance matters and major decisions.

Those are necessary touchpoints. But during periods of change, they may come too late to capture the board’s full value.

When the operating environment is shifting, a major initiative is under pressure, a new opportunity emerges or an important assumption no longer looks reliable, the board can contribute before management has a fully developed recommendation. Directors may help test assumptions, identify blind spots, assess trade-offs, clarify risk appetite and bring external perspective.

The objective is not to transfer management decisions to the board, undermine confidence that management can handle the situation or to lock in a board-preferred path before the analysis is complete. The goal is to involve the board when director judgment could materially improve management’s thinking.

To be clear, early board involvement should not blur accountability. Management should remain responsible for conducting the analysis, developing the options and making a recommendation. The board’s early role is to challenge assumptions, clarify relevant guardrails and identify issues management should consider. The board should not select the preferred solution before the work is complete.

Here are three ways to involve the board when director judgment could materially improve management’s thinking.

1. Look for moments when management’s existing perspective may not be enough

Management is closest to the business. That is usually an advantage, but it can also make it harder to step back from established assumptions, operating pressures or past practices.

Pause and consider greater board involvement when:

For example, if a major partner withdraws or a strategic initiative underperforms, the board can help management assess whether to continue, adjust, pause or change direction.  The board’s involvement might also help reduce sunk cost bias or uncover executive pressures that are unknowingly influencing a course of action.

2. Match the board’s involvement to the value

A broad request for “board input” can lead to unfocused discussion. Be clear about the contribution management is seeking. For example:

When choosing between competing investments, ask: “What trade-offs should we weigh more carefully?”

When considering a faster or more ambitious course of action, ask: “Is this level of risk, cost and uncertainty within the board’s comfort zone and our organization’s risk tolerance?”

When the external environment is changing, ask: “What are you seeing in other organizations or sectors that should inform our thinking?”

A precise question helps directors contribute at the right level and reduces the risk that the discussion drifts into operations or locks into a solution.

Increase Candor in the Boardroom - Use these practical meeting processes to generate better quality insights and limit groupthink, without increasing conflict.

8 Questions to Evaluate Your Board - After your board meeting, ask these eight questions to score how it went.

Strategic Planning Guide - A five-stage roadmap to sharpen your next planning cycle and ensure that board discussions lead to real decisions and results.

Should the Board Approve This? - A six step filter to guide organizations struggling to distinguish between board-level and management-level decisions.

Giving Back by Supporting Non-Profits: Is your organization improving the world on a tight budget? Each year Puimac Consulting Ltd. provides a number of presentations pro bono. Non-profits with limited budgets can inquire for more information and on availability.

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Referrals are always appreciated!