Characteristics of Effective Boards, Directors and Management


Below are two great articles about board effectiveness and interaction - both pieces are by Pascal Levensohn.

The summarized rules below ring true far beyond board behavior: leadership, management, and organizations. Great, intuitive and thoughtful guidelines:

Common characteristics of effective private company boards / directors:

- Establish a clear and mutual understanding of expectations and the CEO - Conduct a formal annual performance evaluation of the CEO - Have directors who work as a team and who make important contributions outside the boardroom - Encourage open / honest communications - Resolve differences of opinion constructively and quickly - Have directors who are accountable to each other - Promote continuing director education about current best practices - Know and understand their responsibilities as directors - Are informed when they arrive at the board meeting, know the industry and know the company's context in the industry - Do not attack the CEO or other board members - Participate in free and easy communication outside of the boardroom - If appropriate, provide a different perspective as an individual member of the group

Common Characteristics of ineffective private company boards / directors:

- Fail to communicate - both in and out of the boardroom - Suffer from denial - fail to act and make decisions - Fail to reconcile diverging viewpoints - Avoid addressing existing conflicts - Regularly hold excessively long board meetings (more than three hours without a strategic planning or other extraordinary agenda) - Feel compelled to say something and to be heard, even if their comments are not relevant or effective - Become disengaged because they no longer feel that their opinion matters - this could be over a strategic disagreement - Fail to resolve disagreements quickly and constructively - Do not attend board meetings regularly - Deliver inconsistent messages between the actual meeting and their post-meeting behavior - passive aggressive behavior - Succumb to lead investors who discourage constructive discussion from the rest of the board