Does your board have "curb appeal"?

Chairmen always ask me for my recommendations for potential candidates for their board vacancies. Inevitably they’re after the best – a person with the skills that meet the organisation’s needs, who may already have board experience and has overall "fit" with the other directors.

But never has a chairman asked me "is the board is ready for a director of calibre to join us?".

To use American real-estate parlance, I’m never asked if I think the board has “curb appeal”? To continue the metaphor, and much like the first impression made at an open house, I’m never asked whether I think the board looks good on the inside, too.

There’s a popular saying in governance circles that the most difficult thing to do on a board is to “get rid of” a “bad” director – someone who is no longer making a contribution at board meetings, is being difficult, or who doesn’t always attend meetings, and when they do, it’s clear they haven’t prepared.

But no-one ever asks what it’s like for a newly-appointed director who suddenly realises the board they agreed to join doesn't resemble the board they're now a member of.

A professional director will always do proper due diligence before accepting a board seat. The investigation includes reviewing past board papers and agenda, meeting with the chairman and some, if not all, of the directors, as well as the CEO and maybe senior members of management. This process can take months, as the board and the candidate size one another up.

Once the appointment is formalised, the director will attend the first of many years of board meetings and sub-committee meetings, (in Australia it’s common for non-executive directors to serve three terms of three years).

But what if at that first meeting the new appointee wonders what kind of board they’ve joined? It’s a bit like the couple who transition from dating to living together. Each has to adjust to the unromantic conversations about housework and supermarket shopping that they didn’t bother with in the first flush of romance.

A new director and the board have likewise been on their best behaviour and while both parties can get a reasonable impression of what each person is like, it’s not until the first, second and third board meeting that the new director is exposed to the unique group dynamic and the communication styles of that particular board.

A new director has fresh eyes and ears and he or she sees and hears differently to people who have been on a board for longer time.  Obvious problems include whether the agenda is followed as expected, if the chairman runs the meeting well or badly, if some directors dominate the conversation, if the board papers are sent to directors in a timely manner.

Then there are the impressions that are difficult for the incumbents to acknowledge because they’ve been living with them for so long – those pesky personality traits and behaviours of the other directors that the board accommodates for no apparent reason other than tradition. Meanwhile the new director must deal with their frustration in silence, hoping things will change.

It’s often said, too, that the new director is the person who asks “why do we do it this way”? Most directors think this question is typical of the naïve newbie who will learn the board’s ways in due course.

Another way is to consider such a question as a moment of reflection – how do the board members relate to one another, and what, if anything, does the board “put up with” because it’s easier than addressing it in an otherwise busy calendar?

A typical example is the board papers. In my experience of running workshops for CEOs and their senior executive teams on how to communicate better with their boards - http://boardroomcg.com/page/consulting_services.html - the board pack is often a festering sore.

Boards “put up with” badly-composed, poorly-argued and over-written board papers that come with thick appendices; there might be requests for change made to the CEO but these are not always addressed in the way the board wants. The managers of the business don’t see such things as a priority (or as a KPI) in an otherwise busy schedule. Likewise the board hasn’t given a clear enough directive other than “make the papers shorter” or “the board pack is too big”.

But the new director is more likely to say something, and this is a perfect time for the board to revisit the content and style of the board papers and to ask, more broadly, what standard of communication it wants from management.

A new director is new for only a short time. It’s a wise chairman who takes advantage of this fresh perspective and asks for first impressions, without fear or favour. In fact, it would be better if the chairman alerted the new director before their first board meeting that in a few months’ time, he or she would appreciate their observations on the way the board operates.

The last thing a professional director needs is to feel they’ve made the wrong choice in joining the board; the last thing a board wants is to make the wrong choice in filling a vacancy.

Just as in the real estate game where rented designer furniture can turn an average house into a “lifestyle choice” so, too, do boards need to be sure their own house is in order before an advertising and sales period.

The Risk of Ivory Tower Thinking in GFC 2.0

When the barista announced my order was ready, I noticed that my takeaway flat white had come with a bonus – a bite-sized biscuit placed on the lid. The price of the coffee hadn’t changed but my view of the café had. A simple little treat had made me feel that my custom was appreciated.

The role of the board and the role of management are different but complementary. It is not the role of a board member to delve deeply into the daily detail of management. And it is certainly the not done thing to bring minutiae to the board table. A much-cited example of such behaviour is the director of a supermarket chain who complains in a board meeting that the oranges were poorly displayed at his local.

But it is the role of the director to understand how changes to the economy are impacting on daily life, consumer buying decisions, and what competitors are doing. It is the role of the director to understand how the company he or she represents interacts with its customers. And it is the role of the director to take a “deep dive” - to use the jargon - into the everyday life of the stakeholders of the company.

As the world faces more economic downturns, there is no better way to see the impact at a grassroots level than by taking a walk around your local shopping strip. I took such a tour on the weekend and learned – at least anecdotally – that retailers are much better prepared now than in 2008/2009 as we face the real possibility of a second GFC.

The popular hairdresser had placed a sandwich board on the street with the words – “Appointments available today”. Whether it was a slow day, whether certain days are slower than others, or whether it is just a way of driving people physically into the shop it didn’t matter. The sign showed a degree of inventiveness to gain custom.

In the café , I overheard a discussion about the shop next door which had closed. “She just wasn’t prepared to sign another three-year lease,” said the café’s proprietor. Replied her waitress: “Why would she when everyone sells on eBay these days?”.

Right in front of me was a lesson for commercial property owners and agents – is it better to offer shorter leases in the current climate than risk no income from an empty shop? And for retailers, is a bricks-and-mortar presence the right way to run a fashion boutique anymore?

After decades of new management practices urging boards, CEOs and business owners to shave costs by reducing service; to sell services that were once part of the price - the tide has turned. Boards and the executive teams they work with would do well to think about the simpler points-of-difference to ensure the success of their companies in these difficult times.

Take the “bikkie” or “cookie” test – what is your company doing to make your customers smile? As a company director why not be a customer – walk into your store, visit your company’s sites, pick up the phone and wait in a “queue” listening to bad music to have your question dealt with by a “customer service representative” from your company’s call centre.

The cost of making small changes to show appreciation to your customers is worthwhile expenditure even when times are tough. And the ROI is probably greater than you’d realise because showing genuine appreciation is sadly rare in today’s market.

A new café opened recently in a major shopping centre near my office. It features a simple sign – “Please be seated for table service”. It made me wonder, when had we blithely accepted that it was normal to “pay and order at the counter” when we visit a café? Yet the pleasure I felt was strangely palpable when I realised that I could sit down, relax, and have time to converse with the friendly and helpful waiter who served me.

Is this a sign that companies – no matter how small – are returning to old-fashioned service in order to combat the forces of global economic downturns, e-commerce and information-overload?

I won’t mention any of these examples at my next board meeting but I will be asking if the CEO could prepare a briefing about staff morale, productivity and turnover, whether customer complaints are decreasing and why sales are up – because I have a gut feel about changes to buying patterns and it’s my job as a director to ensure our organisation is prepared.