Your board’s information curve
Wednesday, November 01, 2017
Your board members have a fiduciary duty to members in three areas: the duties of care, loyalty and obedience. A functional board recognizes the importance of all of these in making decisions. Being an informed board member is tantamount to advancing the mission of the organization they serve.
The duty of care, as defined by Bridgespan, states:
"The duty of care describes the level of competence that is expected of a board member and is commonly expressed as the duty of 'care that an ordinarily prudent person would exercise in a like position and under similar circumstances.' This means that a board member owes the duty to exercise reasonable care when he or she makes a decision as a steward of the organization."
Making decisions on a board requires the duty of care to be exercised and the "care that an ordinarily prudent person would exercise in a like position and under similar circumstances." Therefore, board members need to be as informed as possible to make good management decisions. The only problem is, there is an information curve that most boards have.
As you can see in the chart below, this information curve is based on how prepared board members are prior to meetings to make important decisions. In the information curve, we could have a combination of board members who are less informed all the way up to most informed.
It is important to understand where your board falls in this curve. If most of the board is in the middle or lower end of the curve, the potential of making flawed decisions is high.
There are three steps that we recommend to insure your board is higher on the information curve.
Step 1: Board orientation
Orientation is one of the first steps in providing proper training and knowledge on how to be a good member of the board focused on the key duties of care, loyalty and obedience. In terms of information, the board needs to understand that the business of the organization cannot move forward if the board doesn't prepare adequately prior to a meeting.
Imagine building a house with no plans and preparation and expecting it to be structurally sound for 100-plus years. From the architects to the engineers to the builders, everyone on the team is ensuring the success of that home's structure.
The board is the "house" that we are continuously building to be structurally sound and server its members for 100-plus years.
Step 2: Preparation
Another key element of having the most informed board is something simple: providing information in the right way. But we sometimes fail to do so in a timely manner or it is not clear.
The timing of information, its clarity and the key decisions that need to be made (outlined in advance) are critical to help prepare your board to make intelligent decisions. But don't overload them. Read this article on information digestion to determine how much information is enough and how much will choke your board.
Also, always send information at least one week prior to a board meeting if possible in a digestible format. Two weeks is ideal.
Step 3: Follow-up and performance measure
Being informed doesn't begin and end with the information provided and key decisions being made at just that board meeting. There needs to be follow-up around how those decisions have been implemented and how successful they are.
Setting performance measurements is the key to performance excellence. At subsequent board meetings, review the impact of the decisions made and potentially reverse some decisions if they are not working.
As we noted before, "information is knowledge" and using that knowledge is the power to make huge differences for the industries and professions your organization serves. Read this article on performance excellence to dive deeper into how to set KPIs in your organization.
William Pollard, a physicist from the 1800s once said, "Information is a source of learning. But unless it is organized, processed and available to the right people in a format for decision making, it is a burden, not a benefit."
Information is knowledge and ultimately power in making decisions within your organization. Don't make it a burden but a benefit by ensuring it is a management tool and not a chokehold on progress.
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