The Best Boards Maximize Time on One Type of Information
- Posted by Paul Zilz
- On February 25, 2021
- Board Agendas, Board Meetings, Governance Improvement
How many times have you sat in a board meeting wondering why you were discussing what you were discussing and feeling frustrated that the “real” issues weren’t being discussed? Often that frustration can be traced to one key issue: The board doesn’t understand how to properly distinguish between the three types of information it handles: decision information, monitoring information, and incidental information.
The degree to which a board recognizes and handles appropriately the category into which a piece of information falls will impact how effectively and efficiently the board governs. Stated differently, without a proper understanding of the three types of information, a board cannot hope to govern properly and will waste time focusing on the wrong things. This is tragic. Why? Because the board has a life-impacting purpose! And squandering precious time focusing on the wrong issues detracts from that life-changing purpose.
The board’s purpose is to ensure, on behalf of those for whom it governs, that the board-stated intended outcomes for the targeted recipients of those outcomes are worth the resources deployed, and are achieved within the boundaries of ethics and prudence established by the board. The most systematic method of governing in such a strategic, accountable, and future-focused manner is called Policy Governance®.
Accordingly, most of a board’s meeting time should be focused on decision information. Decision information is timely, pro-active, future-focused, and serves as the background information for policy decisions. When the board is properly evaluating decision information, it is envisioning where the organization is going while recognizing the hazards up ahead. Decision information could include:
- Input from connecting with your owners regarding what the outcomes should be and what recipients should be targeted to receive those outcomes
- Trends identified in the CEO’s environmental scan report that address an emerging need in the community or an additional potential group of recipients to receive the benefits provided by the organization
- Education on emerging risks, such as cyber, legal, or pandemic risks that could impact the board’s policies which limit the CEO’s means
- Background information on potential board members being considered for a slate of candidates and how those potential board members might fit into the current mix of governing skill sets of existing board members
- Background information on the expertise and experience of consultants the board may be considering to improve the board’s governance performance
Monitoring information is backwards-focused and its purpose is always to assess past performance. When a board handles monitoring information, it is like looking into the rearview mirror while going down the road; it’s a good safety practice to glance in the rearview mirror, but it’s deadly to stare. Alternatively, it is like glancing down at the vehicle’s dashboard to see if there are any warning lights lit up. Monitoring information should be concise and specific to the policy monitored, providing a reasonable interpretation of the policy by the CEO along with evidence demonstrating compliance with that reasonable interpretation.
Incidental information pertains to either information the board has specifically requested it be informed about in an Executive Limitations policy or other incidental information about internal operations the CEO chooses to provide. Incidental information is NOT for board decision-making or for monitoring.
Unfortunately, many boards spend significantly more time dealing with incidental information than either monitoring information or decision information.
Such board behavior generally leads to a pre-occupation with the past and present to the detriment of the future! It also clearly wastes precious board meeting time. And that is often why you become very frustrated in board meetings!
To prevent this frustration, try a simple plan to help you govern with an eye to the future rather than (micro)managing with an eye to the past and present:
- Evaluate the board’s agenda and the information the board receives in its pre-meeting packet in terms of decision, monitoring, and incidental information.
- Allocate at least 2/3 of the meeting to discussing decision information, with the remaining time split 90% to monitoring and 10% (if any) to incidental information.
- Make sure the board always addresses the decision information first. This will help ensure decision information does not get pushed off the agenda because too much time was spent on monitoring (the past) and discussing incidental (nice-to-know) information, neither of which moves the organization forward strategically.
Expect more for those you serve! Contact us to learn how we can help you improve your governance effectiveness and performance. Then add “Discussion to engage the services of The Governance Coach” as a decision item on your board agenda. It will be one of the best board decisions you make this year!