Patricia O’Connell interviews Beverly Behan about boards. They discuss Beverly’s books, her work with boards and directors, and her advice for newly recruited directors who want to become stars in the boardroom. Beverly’s experience with boards and directors has given her the knowledge of what makes a board run and what makes a star director, and she shares bits of that knowledge in this interview.
Listen in to learn more about reaching your potential as a boardroom star.
[:26] Patricia O’Connell introduces Beverly Behan, a governance expert and author of several best-selling books on the subject, including Great Companies Deserve Great Boards and Becoming a Boardroom Star.
[:46] Patricia welcomes Beverly to This is Capitalism: CEO Stories.
[1:03] Boards have evolved since the fall of Enron around 20 years ago. Before the Enron scandal, being on a board was considered an honor. Boards, whether in private or public companies, were more decorative than functional. Beverly was shocked at the country club nature of boards when she got interested in boards as a young attorney.
[2:17] Directors have never worked harder than they are working today. Being on a board is not only a privilege but also an important job to protect the company, its employees, and its investors and to leverage their expertise to guide the company through tough times.
[3:07] The board sets the tone and culture of the company. They choose the CEO. They approve the strategic direction of the company.
[3:41] A board member brings value by fulfilling two roles: a watchdog, raising tough and important questions, and a sounding board, bringing expertise to guide management through the challenges the company faces. That second role is where Beverly would like to see boards add more value even than they do today.
[5:24] Board composition is the single most important factor in board effectiveness. You want people with experience relevant to the issues they will confront on the agenda. A company needs one or two board members with industry expertise at the table but not all board members should be from the same industry.
[6:29] Bev offers suggestions for the types of experience that would be important to have on a board, depending on the size and type of company. Someone with a lot of industry experience has the credibility to challenge management. You want people who have run comparable-sized organizations. Expertise in finance and tech is important.
[8:40] On top of the various areas of expertise, consider diversity.
[9:28] In the past 12 to 18 months, there had been unprecedented recruitment of diverse board candidates, many of whom had no board experience. Bev started getting calls from women who were being recruited to a board for the first time. They all wanted to be great directors and wanted help to know what to do and what pitfalls to watch for.
[10:26] Bev drew on her thousands of interviews of directors and boards around the world to come up with things that make a difference for the new directors who were calling her for help. What do boards hold in high regard, and what detracts from a director’s credibility? This is how Bev came up with Becoming a Boardroom Star.
[11:07] What does it take to become a boardroom star? Bev shares a few ideas. The first thing is to learn as much as you can about the business. Go beyond the “Executives on Parade” meeting with each of the C-Suite members. After the director orientation, do site visits. Be diligent in your preparation; your work ethic shows.
[14:02] Injecting new people into a board with new and better behaviors can change the norms of the board in a good way.
[14:42] New directors often struggle with learning the line between governance and management. Directors don’t run the company, they oversee the people who run the company. A board may have a “Board Buddy” program where a new director is paired up with an incumbent director to review board materials together before the meeting.
[17:31] Bev lays out a case where the best choice for a director is to resign from the board! If a board votes differently than a director advocated, the director can either support the board’s decision or resign from the board. It is no use trying to revisit the decision and becoming a problem director.
[19:46 How long will it take for “new blood” to have an influence on the board? Bev shares her thoughts. It depends on the director. The better the director prepares for the role, the sooner the influence of that director will be felt. Credibility is key.
[21:59] Bev discusses how virtual board meetings have worked. She brings up the value of board evaluations, a tool to take a board from good to great and keep great boards vibrant. How is a board evaluation done by video conferencing? As boards return to meeting in person, what will change? What about board committees?
[25:36] Patricia thanks Bev for sharing her great insights with This is Capitalism: CEO Stories.
Mentioned in This Episode:
Beverly Behan
Great Companies Deserve Great Boards: A CEO's Guide to the Boardroom, by Beverly Behan
