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ACCOUNTANCY: With Matthew Bellingham, Bellingham Wallace

Five secrets to high performing boards

 Advisory board or board of directors? Matt Bellingham successfully acts for both, but believes what business owners should really be asking is, “what distinguishes a high performing board from one that simply lacks impact?”

I should start by saying that my views are fully loaded with an SME bias, more M than S if I am to be completely honest. Listed companies and large corporates are very different beasts and demand a completely different approach. 

Yes, there are intrinsic differences between advisory and formal boards, but they share three fundamental traits

Both should be responsible to an organisation’s stakeholders.

Both should be strategic in their focus and function as ‘shapers of the future’.

Both have a legal obligation to protect and act in the best interest of the organisation. Contrary to popular belief, advisory board members are likely to be ‘deemed directors’ and therefore not free from liability. 

What this should tell you is that delivering performance should be the primary accountability of any board. So what are the secrets to achieving new levels of board performance? Here are my top five:  

Intuition without insight is guessing. Unfortunately some boards are often weighed down by a large amount of unnecessary information that provides little insight and serves only to dilute a board’s strategic focus. This is something I see a lot of and it’s usually because a manager is either worried about leaving out relevant information, or because they have a need to reinforce their activity i.e. “the bigger my report, the busier I am”. Boards need to get into the habit of regularly reviewing the information they are presented with (especially if there is an independent to consider) and accept that they have a role to play in defining the best measures of performance. 

High performing boards have a restless curiosity. They ask the questions necessary to understand the full gambit of risks and opportunities and how proposed plans may affect the long term success of the business. Fueling this curiosity takes board members who can see the strategic intent behind the numbers, tables and graphs. In other words, insight without intuition is just yesterday's data. 

I recently came across the phrase ‘Digital Darwinism’. This is when technology (and society) evolve faster than our ability to adapt – and the pace of evolution is picking up. To put this in perspective; in 1992 global internet networks carried around 100 GB of information per day, ten years later and we churned through that same amount every second. Last year (2013) global internet networks carried 28,875 GB of data per second and in 2018 it’s predicted that 50,000 GB per second will be the norm*. IT should not be a separate agenda item, because depending on your business, it will fundamentally drive several core business functions e.g. sales, production, customer service and HR. Therefore, the responsibility of overseeing technology should not lie with your IT function alone. To be effective boards need to be more involved and adopt a strategic view of how technology trends are shaping their organisations’ future. Something I’ve have to do as a board member, and encourage as a chairman, is challenge our level of understanding in these areas. Not doing so would lead to less than meaningful discussions and, in my opinion, would be a breach of my duty as a director/chair. 

A board chairperson, or chair, as I like to call them sets the board’s direction and tone i.e. they are the drivers of board performance. It’s a challenging role which requires someone with the skill and experience to create a collaborative environment, maintain that collective focus, draw out opinions and shape the discussion of prickly issues. They should also know when and how to introduce core strategic issues (see below) – get this wrong and it can stifle progress, or worse still, cause irreparable damage to the business. In my experience a high performing board with a good chair should never have to resort to a vote. 

Boards should only focus on two fundamental issues:
a. What do we need to do to achieve our strategic plan?
b. What risks do we need to protect ourselves against?

A board can only ever tackle one, or maybe two significant tasks per meeting. The responsibility for determining what these tasks are and introducing them falls to the chair (see above). An issue I recently had to introduce was an owner’s commitment to their strategic plan which involved growing the business fivefold. Only once I knew they were committed, was it appropriate for me to challenge the company structure which, in its existing form, was holding the business back. The outputs of these realisations have been massive and will include a review of the skillsets necessary to operate a $10 million business. Simply turning up to the board meeting is not good enough; chairs of high performing boards spend extra time nutting all this out ahead of the board meeting. 

Boards, advisory and formal, are important leadership disciplines that are a defining characteristic of today’s market-leading organisations, big and small. If you want to get more out of your existing governance framework then contact Matt. You can also contact Matt if you would like one of Bellingham Wallace’s Directors to act for, or chair your board, whatever form it may take.  

Matt Bellingham, mattb@bellinghamwallace.co.nz 

*The Zettabyte Era: Trends and Analysis, Cisco, 2014 White Paper 

by Matthew Bellingham

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