We hosted our third annual Asia-Pacific Society Governance Workshop on 27-28 July 2019 at the Kowloon Shangri-La Hotel in Hong Kong with a total of 54 society leaders, society executives, and CFA Institute staff. We had the honour of inviting our renown Dr Judith MacCormick, fellow of the Australian Institute of Company Directors, as our facilitator for the workshop.
See below some highlights of the key learnings:
- Board members must always do a conscious effort to remain at the strategic level, and not to interfere with management. Judith’s key phrase for board members is to: “have your nose in, but your hands out of management”. Board members must be the river shore guiding the water flow, but not sailing the boat. I particularly love Judith’s idea that board members must have a “holiday mindset”, i.e.: issues that appeared pressing on our desk pre-holiday ended up being quite a benign matter post-holiday… this is exactly how board members should feel, i.e.: distant from the day-to-day operations so that they can think critically and emotionally-detached when they enter the boardroom.
- Likewise, it is important for executives to remember not to overwhelm board members with too much information that will refrain the board to reach the strategic level. Good management transforms information into insights and decision requests for the board and produces memos with a sharp focus, e.g.: for decision, for discussion, for information. For decision items should always be placed first into a board meeting to ensure the items will be addressed within time and when directors have the most energy.
- Executives should use the acronym “PACKO” when preparing board communications, e.g.: purpose, audience, context, key messages (maximum 3), and outcome. This will ensure a concise and impactful memo for board members to review. On the other hand, board members should use the “PESTLE” acronym, e.g.: political, economic, social, technology, legal, environment, aspects when reviewing proposal.
- There are two foundational behaviours board members must always have: a loud voice, and solid confidence. Everyone adds value when they speak up and the chair of the board is the custodian of the voice. Many people often say: “oh, it was a good board meeting, no questions were asked”. It should, in reality, be the contrary: “oh, what a good board meeting, the directors asked a lot of challenging questions. I thought I covered all aspects but it appears I have more to think about before proceeding”.
- Board members should always, before board meetings, go back to the review the organisational VMS, i.e.: vision, mission, and strategy. It should also review the organisational values. The VMS and the values will help ensure the board remains strategic and take decisions in line with these critical organisational components.
- The world we live in is now VUCA (volatile, uncertain, complex, and ambiguous). It is therefore of utmost importance for today’s board members to have solid critical-thinking and to let go of their ego when making decisions.
- Board members are individually responsible for the group’s decisions. This is one of the utmost importance for directors to remember because if they are to disagree with a board decision, they ought to voice it given they are legally responsible for the board’s decisions, regardless if they were in favour of the decision or not.
- In the past, many non-for-profit boards were looking at for-profit boards for best practices and inspiration. Nowadays, it is the opposite, for-profit boards are looking at NFP boards for inspiration. It is demonstrated that NFP boards are better engaged because they fulfil two foundational human necessities: passion and purpose.
- The ideal board size is seven members. It is demonstrated by research that for any one additional or one lesser board membership, the effectiveness of the board diminishes/increases by 10%. There are, of course, some exception to the golden-7 rule, but it is to be kept as a target.
- Diversity on the board is a key component of organisational performance. Gender and cognitive diversity are the two most important elements. Nominating Committees should also be on the lookout for gender and cognitive diversity. Board member personality and questioning styles can be classified into six categories: objectives (board members asking about the objective of the endeavours; why are we doing this?), options (what could we do; have we surfaced all options?), process (what decision-making process will be used; what are the steps), facts (what facts are we relying on; what evidence), stakeholders (How will stakeholders feel about our decision; who are we impacting), and risks (what are the risks, what could go wrong).
- Other learnings include:
- The importance of always setting the agenda and best practices for taking minutes (such as doing an evaluation after every board meeting);
- Having a board self-assessment;
- Ensuring a Nominating Committee is mandated and set up nominees’ matrix to attract the desired future board members (one great idea includes having an “observership” programme for future leaders to attend the board meeting – with NDA and confidentiality agreements in place);
- Having director’s role descriptions;
- Having a systematic and thorough induction for board members and a “buddy system” and asking new board members to act as “consultant” for the board so that they can have a more explicit permission to be critical and provide feedback on their observations given their “newer eyes”;
Lastly, Judith left participants with a thinking questions: “As board members joining your CFA Society, are you going to be future takers, or future makers”? This left us to think of our personal contributions to society versus personal benefits of board directorships.
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