2013

Issue 14

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BoardWorks International
Issue 14, 2013

Getting the Chief Executive's Report Right

It is common for board members and executives alike to express dissatisfaction with board meetings. Among other things, they say that each meeting seems to pass without their board really connecting with the substance of its job.

The boards with this problem are often those that drive their meetings off a report from their chief executive. All chief executives should be expected to report to their boards but it is a question of how it is done. Here are some of the common issues when the chief executive's report dominates or distracts from the board's meeting.

  • Directors are encouraged to think that main purpose of a board meeting is to be briefed by the chief executive about 'what is going on' in the organisation. A governing board has a definite oversight role - mainly to ensure the organisation is achieving what it should. However, this should not detract the board from exercising its other important 'sights': insight and foresight. 
  • The content of the report is often dominated by operational and administrative trivia. This encourages directors to become de facto managers scrutinising and second-guessing. Roles and responsibilities easily become confused. The time of the meeting is frittered away on matters marginally, if all, relevant to the board's unique responsibilities. The chief executive's report 'sets the agenda' but not in a deliberate and effective way.
  • When the chief executive's report is taken early in the meeting, as many boards do, this typical operational focus means the board is quickly mired in a level of detail it will find difficult to escape from. Its attention will likely be 'inwards and downwards' rather than 'outwards and upwards'. The board will struggle to see the 'big picture'.
  • If the board has given little explicit thought to what it needs from the report the chief executive has to guess what the board might be interested in. Inevitably this guess work is 'hit and miss'. The discussion that follows - depending on what attracts directors' attention on the day - is likely to be reactive and rambling. Discussion is unlikely, except by chance, to get to grips with any really important issues.
  • The haphazard nature of the conversation sparked by the chief executive's report often means that the outcome of the board's consideration of it is vague and ill-defined.
  • Too often the content of a chief executive's report is more about what has happened than about what might happen. Contrary to the board's responsibility to 'direct' the organisation it ends up 'steering by looking in the rear vision mirror'.
  • By being invited, in effect, to consider how the chief executive has been spending his/her time, directors are encouraged to become critics. If even one director is 'liverish' about how the chief executive has gone about some aspect of operational delivery other directors easily find themselves drawn onto a 'band wagon' of criticism and complaint.  Most chief executives under attack respond as others would: they become defensive or they come out fighting.  Great harm can be done to the mutual confidence and trust between board and management.  Board meetings can become a battle ground.

These common shortcomings suggest that chief executives' reports often lack clarity of purpose and detract from, rather than support, the board's ability to do its job. However, these are not insurmountable problems. The value of the chief executive's report to the board can be increased in a number of ways. Note that, in some cases, these suggestions are alternatives rather than consistent parts of a total package.

  • By having a fundamental rethink of the purpose of a chief executive's report. The chief executive's report might, for example, be no more than a succinct 'headlines' report about the state of the business and its operating environment. This would create a helpful and stimulating context for other items on the agenda. Such a report might also highlight the issues the chief executive needs the board to be aware or to provide input to. More detailed information about how the organisation is tracking could go into a separate 'purpose-built' organisational performance report.
  • By ensuring the content of the chief executive's report speaks to governance-level concerns. Relevance of any reporting to the board's role is vital. By definition this is a report that should inform the board's meeting. This means its content should be 'criterion-referenced'. In other words, it should relate to important matters that the board has identified in advance (e.g. through its planning and policy making processes). This is quite different from the type of chief executive report that is little more than a narrative history of the activities s/he has been involved with for the past few weeks or a piecemeal collection of line managers' reports.
  • By ensuring that the 'chief executive's report' is primarily thought of as 'for information'. In other words it is just part of the scene setting for the meeting. Any matters that justify a substantive board discussion and decision, or that relate to important board monitoring responsibilities, should not be 'buried' in the chief executive's report. They should be the subject of separate agenda items supported by purpose-specific reports and, as appropriate, recommendations.
  • By positioning the chief executive's report towards the end of the sequence of agenda items. Because the report is written and pre-circulated any matters it covers that are relevant to agenda items considered earlier in the meeting will automatically be informed by the report. Also, if other earlier items need longer than expected this report can be 'taken as read'.
  • By ensuring the chief executive's report is well written and self-explanatory. Many of the chief executive reports we see appear to have been thrown together at the last moment (quite possibly not even by the chief executive). From a governance perspective they raise more questions than they answer.
  • By encouraging directors to raise particular issues with the chief executive's report ahead of the meeting. By putting both chief executive and chair on notice neither will have reason to feel they have been 'ambushed' in the meeting. The chair can determine whether the issue is something that justifies board attention and how best to handle it. The chief executive can be advised and given the chance to respond appropriately. Teamwork and trust around the board table, and between board and management, is enhanced. Incidentally, this is a good use of 'board-only' time.
  • By ensuring that there is no 'regurgitation' of the chief executive's report. There should be no need for a lengthy presentation or, even worse, an almost verbatim 'reading' of the report. It should always be assumed that all directors have read all reports prior to arrival at the board meeting. Not only is presenting the report in detail a waste of time it is also an insult to those who have prepared properly and digested the material in advance.

This analysis has shown how chief executive reports can easily become problematical. If nothing else, boards and management, together, should regularly discuss what is expected from these reports.  Both should be aware that there is a high risk of time being taken up by matters not central to the board's role. In whatever form it takes, the chief executive's report must provide focus and stimulation for the type of value-adding discussion that is worthy of both board and chief executive.

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