October 10, 2019
Posted in: WATSON Views
DEMYSTIFYING DEBRIEFS — Part 1
It’s that time of year again – the annual CEO performance review – and the board is stepping up! They engineered a robust CEO evaluation tool with great metrics, KPIs, and consideration of the characteristics and attributes that drive effective CEO performance. They engaged in a thoughtful feedback gathering process and prepared a comprehensive report. They got it right up until the very last moment, when the 15-minute “debrief call” left the CEO wanting so much more…
One of the most critical parts of the CEO evaluation process is the conversation with the CEO. Done well, it helps the CEO focus on the most important feedback, clearly articulates the board’s key messages, and sets up a meaningful conversation between the board and CEO on priorities for the year ahead. Done poorly, it can leave a CEO confused, unsure, or demotivated, regardless of the feedback itself.
Many chairs find themselves leading this critical conversation with no experience or training in facilitating feedback conversations and unsure of where to start. We’re here to help. In WATSON’s three-part Demystifying Debriefs series we share tips and guidance to help set up a meaningful dialogue between the board and CEO and get the most from your CEO evaluation process.
First, the basics – who, what, where, when, why, how. We answer your burning questions on how to structure the conversation.
Common Questions and Answers
- Who should be in the meeting? We find it is best to have two people who have been involved in the CEO evaluation process. One should ideally be the chair and the other should be someone with high emotional intelligence who has experience delivering feedback – it might be the vice chair, human resources committee chair, or another director who helped lead the CEO evaluation process.
- When should we meet? The meeting should take place as soon as possible after the board meets to debrief the CEO evaluation report (with enough time to make any changes to the report). A week or so after is about right.
- Where should the meeting take place? The meeting should be somewhere the CEO is comfortable and where you can have a private, confidential conversation. While some CEOs might like to meet at their office, others would prefer to be away from their team to have the conversation.
- How long should the meeting be? A lot of time and thought has been put into the process leading up to this point – don’t rush the most critical conversation. Schedule 60 to 90 minutes depending on the nature of the feedback and the relationship and take the time to explore the feedback and the CEO’s reactions.
- When should the CEO receive the CEO evaluation report? This will depend on the nature of the feedback. The CEO needs time to reflect on the feedback but not too much that they stew on the feedback without context or conversation. Always let the CEO know when to expect the report and send a day or so before if the feedback is positive, the night before or morning of the conversation if there is tricky feedback in the report.
- How can I prepare for the conversation? Review the feedback and jot down your reactions. Craft an agenda with speaking notes to ensure you cover the board’s key messages. Anticipate the CEO’s reactions and think about how you will respond. Take the time to prepare with your counterpart to ensure you are both comfortable – if you aren’t comfortable, chances are the CEO won’t be either.
- What can I do in the meeting to make it successful? Think about things like body language and tone – how will you project your overall message and tone (e.g., confidence, support, concern, etc.) with your words and actions. Listen actively to the CEO and consider their feedback. Put yourself in the CEO’s shoes and respond with empathy and care. Engage the CEO so that it is a shared conversation, not one-way.
- What if it doesn’t go well? These conversations can be challenging and uncomfortable. They aren’t always going to go as well as you’d like. It if doesn’t go well, reflect on why it wasn’t successful and what you could have done differently. Reach out to the CEO if damage control is needed and regroup at a later date. Draw on your counterpart to debrief and strategize a go forward plan.
Build on the momentum of a well-designed CEO evaluation process with a powerful debrief conversation. Stay tuned for Part 2 of the Demystifying Debriefs series.
October 4, 2019
Posted in: WATSON Views
Good governance is always important. But add family relationships to the dynamic around the table and you might just see the need for good governance amplify. There are certain elements of a family business that inherently support good governance – foundations of trust, strong relationships, and a shared commitment to the business. At the same time, there are other elements that can lend themselves to inefficiency, power dynamics, and at their worst, total dysfunction.
How can family businesses play to the strengths of their unique family structure while avoiding the challenges that come with mixing business and family?
1. The Great Generational Divide
One thing that makes family businesses unique is the generational diversity of boards and management teams. A multi-generational leadership team can be a strategic advantage, bringing together different experiences and representing a broad cross-section of stakeholders. At the same time, societal evolution can result in shifting values and focus over generations – a tension between purpose and profit, varied commitments to sustainability and social responsibility, and a rapidly changing technological landscape. The way businesses operate is constantly shifting and different generations bring different lenses as they navigate and respond to change.
Different family generations also have different needs and motivations based on where they’re at in life. Childless family members may want to cash out early, while those looking to pass on the business to future generations may make decisions with a longer-term view. Tension between short and long-term interests can have significant consequences on an organization’s strategy and risk profile.
An advisory board with outside expertise can help family businesses craft strategy and consider risk from a more objective position, bridging different family interests, and keeping a steady focus on the best interests of the organization. A talented multi-generational board and management team, complemented by advisory board members with relevant outside experience, can leverage the strengths of diverse perspectives and experiences while diffusing different interests of family members.
2. Process Over People
Family businesses often see unrivaled levels of emotional connection by directors and management. A family name on the building and stories of multi-generational leadership drive a deep personal connection to the business that public and private companies can’t replicate. This passion and commitment are what helps family businesses thrive and maintain a competitive advantage over generations.
Passion can be a powerful motivator, but it can also be detrimental to effective decision making in the boardroom. The tension between facts and feelings is a reality in any boardroom. When directors are passionate about the business, their emotional blinders go up, making it difficult to see the data, logic, and analysis behind different perspectives. This can cause friction in relationships, slow decision making, and potentially result in bad decisions that hurt the business.
A sound governance framework puts processes and structures in place that can alleviate emotional elements of decision making. Clear roles and responsibilities, meeting protocols to guide decision making, and effective board leadership can help set up decision making processes that are focused squarely on the best interests of the business. Well-designed meeting materials can structure and inform objective decision making, diffusing emotional reactions before they occur. As well, an advisory board with external directors can shift the dynamic in the room, bringing outside experience and a focus on process, information, and logic over emotions.
3. Governance Gaps
Family business boards are unlike public and private company boards. When you look around the table, you may not see the standard lawyer, accountant, and CEO, each with industry and governance experience. Instead, you see an extended family with varying levels of skills and experience. Some family business boards are composed of skilled family members with diverse experience, inside and outside the company. Others consist largely of family members who have only ever worked for the family business, if at all. Some family members bring outside governance experience, while others have only seen the inside of the family boardroom. As a result, certain governance and oversight practices can be missing or underdeveloped in family businesses.
As family businesses become more complex and operate within a changing landscape, governance and oversight systems often lag behind. Family business leaders tailor governance and oversight to their current needs without full information. They are anchored to what they’ve seen done in the past, often unaware of the pace of change in areas such as risk management and internal controls in the broader market.
Bringing in outside directors and advisors with the right experience can help complement the skill-sets around the table and bring modern governance and oversight practices to family businesses. Skilled outside directors can bring knowledge of current governance practices, along with specific skills and experiences relevant to the business. The right outside directors and advisors understand the family, the business, and the broader industry. They bring forward new practices and structures that make sense for the business.
Family businesses are a cornerstone of our communities and contribute to a stronger Canadian economy and society. If governed well, family businesses can draw on their unique strengths while also leveraging leading governance practices, putting them in a unique strategic position.
May 9, 2019
Posted in: WATSON Views
It seems like everyone is talking about transforming their organization, aspiring to be more agile, sustainable, resilient, collaborative, customer-centric, open, platform-based, long-term sustainable…. Do any of these sound familiar? These all describe what organizations need to do, and to be, to survive in a VUCA (volatile, uncertain, complex, and ambiguous) world.
The reality is that it’s hard to get from “here” to “there”, especially if “here” is pretty comfortable. We know it’s hard to make changes to cultures, business models, etc. without the proverbial burning platform. It’s also hard to manage expectations of shareholders and stakeholders when they may have to forgo short-term results for longer-term impacts that are not guaranteed.
The board needs to give the CEO and the organization space, time, and support to make a transition that typically won’t show results in the same year. It goes beyond patience, to active belief and confidence that the strategy is the right one and the future state can be achieved. And yet – how does a board do that while providing oversight and ensuring accountability?
Take for example Microsoft, in 2014 when Satya Nadella, as a first-time CEO, presented a compelling case for completely transforming the business model, priorities, structure, and culture of the company. If you were on the board:
- How would you approach your work as a director?
- How would you deal with the fact that there would be layoffs and potential short-term disruption to results?
- What about the staff who liked the old way (after all, they had enjoyed enormous financial benefit)?
- How would you ensure that the transformation was on track and was actually going to yield the expected results?
- How do you find the balance between patience, engagement, and oversight?
When I see Microsoft’s success in its transformation, and its subsequent strong stock performance, I think the board must have played its role very well. Few organizations have successfully achieved such a notable transformation, especially without the urgency of a crisis. This board had the courage to back the plan not only at its inception but through challenge and pressure. To keep that courage, they must have asked for and received the insight they needed to be confident that the direction was correct and the transformation was progressing.
Our advice to boards who are living through this kind of change is to:
- Anticipate and talk about what the pressures will be and come back to the discussion at regular intervals to remind everyone that this is normal and expected; reground yourselves in your roles and where you need to focus.
- Identify what the early indicators of success (or failure!) will be. How you will know the change is on track even if it doesn’t yet show up in the results? It takes time for this kind of change to flow to the bottom line or to outcomes, but you can monitor a dashboard of indicators and listen for the right stories.
- Align on the board’s role both through the change and at the end of it. Make sure that how you measure performance, determine pay and incentives, and select and manage top leaders fits the future and not the past.
- Make sure everyone is singing from the same song book – craft rational and clear messages for the change that can be repeated to those who will question you on the basis of results – and shift the conversation to the long term.
When the organization is in significant change, it needs a board that engages differently. This is a powerful opportunity for a board to make its impact and add value to the organization.
April 1, 2019
Posted in: WATSON Views
Part 3 of WATSON’s 3-part Year of the Peer series
There is an old saying that feedback is a gift. Yet, for many directors, it is a gift we would prefer not to receive. It is also a gift many of us are unprepared to give. Boardrooms historically do not have a culture rich in evaluation and self-reflection. So, it should come as no surprise when directors are asked to share feedback on each other’s contributions to the board and a collective shudder ripples around the room.
Before asking directors to weigh in on peer performance, boards should ensure directors are comfortable with the evaluation process. It begins with understanding your board’s purpose in pursuing an evaluation, building a state of readiness and customizing the process. Without an upfront investment to ready (and steady) directors, there is a risk of the process causing more harm than good, particularly when it comes to relationships and board dynamics. Read up on how to ready the board and customize your evaluation.
Hey WATSON, I think there is a bigger problem in the boardroom that the survey doesn’t really address. What should I do?
If your feedback is about big issues that you feel are not properly addressed through a survey, speak with your Chair about other ways to address and resolve the issue. The director evaluation process is not your only avenue to deliver feedback to colleagues and is not an ideal avenue for more serious issues. If you feel the issue is with the Chair, talk to the Vice Chair or Governance Committee Chair about how best to proceed.
Have a governance question?
How to give the Gift of Feedback
To ensure your feedback is valuable and valued, employ these tried and true techniques:
Focus on Facts – High-quality feedback is low in judgment. Instead of stating your opinion about the person, identify the facts and your observations.
Example: “Mary is unengaged” vs. “Mary spends a lot of meeting time on her phone. During our last meeting, she asked several questions that were already addressed in the risk register update presentation.”
Be Specific – The more specific you can make the feedback, the more the receiver will be able to recollect situations or examples you may be describing and think about how to address them differently next time.
Example: “Bob talks too much” vs. “Bob can dominate a conversation at times. Last month during the conversation about our new office space, he didn’t let other directors ask their questions and I know this caused frustration.”
Emphasize Strengths – Highlight contributions so that directors understand where they are particularly effective and what they should keep doing.
Example: “Jane comes to the meeting with a list of thought-provoking questions that engages the entire board at the right strategic level.”
Take Personality Out – When raising shortcomings, try to provide specific examples and keep comments constructive. Try not to label behaviour with absolutes. Avoid personality-related comments that usually only serve to create bad feelings.
Example: “Tony is like a lemming. He never takes a stand. He votes with the majority every time. Might as well not show up” vs. “At the last meeting, Tony did not raise any questions to management nor did he provide any insight during the discussion on fundraising options. When it came to a vote on direction, he voted with the majority. This is a fairly common approach for him.”
How to Graciously Receive the Gift of Feedback
You’ve just been handed a thick report on your performance in the boardroom. Try these top tips to help you work through your director evaluation feedback:
Wear Three Hats. Read your report three times with three different lenses:
- What – what is the feedback?
- So what – what are your reactions to the feedback?
- Now, what – what are you going to do with the feedback?
Pause and Coach Yourself. Consider the following guiding questions in preparation for your one-on-one debrief with the Chair:
- What do you think about the areas of greatest contribution identified by your peers?
- Where do you see opportunities for you to improve your contribution?
- Are you surprised by any of the feedback?
- What specific development actions will you take as a result of the feedback?
Don’t Ignore the Good. It is basic human nature to brush the good aside and focus on the ‘what did they say about me’ negatives. Or even worse, ‘who said what’. We can’t stress this firmly enough – don’t skip over the positive feedback.
Consider the Context. The feedback included in your director evaluation is based on observed behaviour in the boardroom as a director, at a given point in time. Behaviour can change over time as you grow in your role and dedicate time to expanding your knowledge and skills.
Remember, the purpose of the process is to help you improve in your role as a director with the overall goal of continual board-wide improvement. The gift of feedback may not always be easy to give or receive, but if you let it, it can be a valuable gift that keeps on giving. Better directors, better board, better organization.
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