Best Practices in Communications between PE-Backed Executives and Board Members

On May 19th, 2023, The Operators and the LinkedIn Group, PE-Backed Executives, hosted a discussion of highly experienced Operators discussing their perceived best practices in Communications with the Board. Below are some of the takeaways from that discussion.

Before the first Board meeting, before the first Board deck, before even meeting personally with Board members, focus on gaining a tangible understanding of individual and shared expectations of the Board. A good place to start in terms of gaining perspective and context on Board expectations is the Thesis and the specific situation the Company faces. In other words, the Board of a turnaround company with a timeline of two years will be very different than the expectations of a Board serving a relatively simple growth story in a five-year timeline. Consider the Thesis, Goal, Strategies, and Timelines in gaining a better understanding of the Board’s communication expectations.

Working with a specific Board for the first time is challenging because it may not yet be clear what their priorities, interests and expectations are. You will need to discover, quickly, what they want to receive, when, and how often.

Ask about their expectations at the outset.

In other words, their preferences and expectations; points of contacts for various topics; their biases toward the timing of sharing problems vs. solutions (and complaining vs. solving; collaborations and available resources. Seek to understand Board Members’ individual motivations, areas of concern, and personal styles. By investing personal time to get to know Board Members, on their own turf, perhaps pursuing their own interests, you will buy yourself future acknowledgement and understanding if and when you need to ask for their support.

As you get to know board members individually, you will begin to gain an understanding of their preferences and unique perspectives. Who is most interested in numbers and who is most interested in personal relationships? Who wants specifics, and who is satisfied with the big picture? Learn each board members’ communication preference. How, when, with what level of detail do they prefer to communicate.

Chemistry with individual Board members comes easier with some than with others, but executives would be wise to take advantage of any opportunity, whether formally offered or subtly suggested, to get together in person outside of a group Board meeting.

Management should have separate and periodic meetings with key players, such as the chair or subject matter experts are on the board.

Relationships, personal connections, shared experiences and understandings serve Board members and executives well during emergencies, when time is of the essence. In addition, personal connections sometimes reveal knowledge, passions, hobbies, and past experience that may simply be background – but can benefit the organizations in certain unforeseen situations. Only if those experiences, knowledge, skills and interests have come to light – possibly through personal communications — will those skills and capabilities actually come to be called upon.

The Operators present for our discussion agreed that investing the time to meet a Board member individually outside of the Meeting structure is essentially an investment — in future understanding, acknowledgement or even mutual understanding. In other words, gaining rapport with Board members individually may enable you to leverage those connections in the future.

The Operators agreed that something will go amiss, a mistake will be made, a misjudgment inevitably will happen – and a Board that relates well to you personally will undoubtedly be more understanding and accommodating than Board Members who barely know you and have not invested time or energy in getting to know you.

Help ensure that the Board finds your meetings productive and meaningful. Ensure decisions and resolutions can be achieved. In order to do this, stick to the agendas and the tasks at hand, and keep the entire group on track.

This may require summarizing at a high-level and waiting to see if they ask for more. It may make sense to use dashboards or a one-page summary to highlight priorities, challenges, proposed strategies and financial health, for example.

Consider using online platforms or portals if the Board is not using them already. To increase the efficiency and timeliness of both operational and financial information flow. Doing so can help reduce the risk of errors, omissions and misrepresentations. In addition to helping with compliance issues, these platforms allow board members to easily look back at information and provide visibility for CEOs to always have a record of what was shared with the board. An online board portal makes it easy for board members to access, review, and exchange key business data wherever they may be. It can also serve as a portal for knowledge sharing of documents and information. This form of reporting provides board members with enhanced opportunities to formulate more pointed questions and offer their expertise more frequently.

That said, board members sometimes know a lot less than they appear to know. Think of them as either experts in specific functional or situational roles, or generalists who are a mile wide and an inch deep. They typically are not both. Therefore, you will need to summarize and present the details if and when asked for them. Be prepared to answer specific questions, but leave the details out until needed.

When the first Board Meeting is actually scheduled, bear the old saying in mind that “The board meeting should never be held at the board meeting.” In other words, socialize pertinent information in advance so that the Board meetings is a discussion and not a reveal. While it is advisable to share details and get into story telling mode or analysis mode only when asked to do so, it also holds true that Executives should avoid surprises, especially around bad news. In other words, air negatives early and often. Negative surprises are obviously to be avoided.

In general, CEOs should always strive to field questions from board members in an affirming way so that the board member feels that he or she has posed a valid question, while the CEO can demonstrate that he or she is informed on the topic.

You do not always have to take a board member’s suggestion, but you should always internalize the suggestion and determine the best course of action.

There are going to be situations, of course, in which an Executive disagrees with a Board Member’s perspective. When this happens, acknowledge their point of view and why it seems sensible or logical. Then explain why you have a different perspective. Respecting, valuing, appreciating Board input goes a long way toward creating an atmosphere of mutual respect and appreciation – and not hostility or competition.

Board members sometimes cling to the past, and may be averse to change. You may need to explain carefully why and how change is necessary. However, do not create unnecessary controversy or defensiveness. Avoid responding to questions or suggestions from board members in such a way that the board member looks foolish in front of his or her peers.

The Operators who were present for the discussion on May 19, 2023, shared common experiences that making assumptions on topics without thorough due diligence and without communicating openly with the board can lead to pushback if subsequent passage of time reveals poor judgment. In other words, assuming, estimating, guesstimating or shooting from the hip are rarely rewarded. Humbly, confidently acknowledging that you do not have in informed enough opinion on a topic at this time to make a decision, typically results in acknowledgement, understanding, appreciation – if not patience. Ensure you understand all perspectives, from all parties on the Board before making any assumptions or jumping to conclusions.

Conclusion

In conclusion, the role of the Executive facing an unfamiliar Board, or a Board without chemistry and shared experiences yet, is to be an Ambassador of goodwill and understanding, striving to develop common ground, small victories and rapport before all else. As time passes, and the Executive has more opportunities to develop personal connections, and relationships, Board and Executive expectations will expand commensurately.

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