Is Your Board A Broken Board?

broken board

Because boards are ever-changing entities, they often go through phases of effectiveness. Some phases might include sharp financial growth and strong teamwork between directors and management.

Other phases might include the exact opposite.

And still others could be a combination of the two—both positives and negatives. Once in a while, though, you may find yourself on a board that is essentially broken. What do we mean by broken?

Put simply, we mean that because of one or more internal issues, the board is unable to operate with its highest goal (shareholder benefit) in mind.

Here are some signs that you might be serving on a dysfunctional board. Don’t worry, though; all hope is not lost! In fact, here we’ve got some tips for how you can help bring your board back to life.

Lean on parliamentary procedure

Are you having trouble getting through a basic meeting because of clashing agendas or antagonistic discussions? In this instance, it’s important for boards to turn to their parliamentary procedures; in the U.S. these procedures will typically follow Robert’s Rules of Order. The board chair will have to take an extremely active role in overseeing this process.

They will need to conduct themselves with as much neutrality as is possible in order to establish an environment where discussion and voting can occur within the appropriate constraints.
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Building the Most Effective Healthcare Board

Building the Most Effective Healthcare Board

Healthcare is one of the fastest moving industries in the world. Hospitals and health providers are investing in new technology, new processes, and new personnel constantly while working to ensure that they can provide top-notch care at a reasonable price—that’s no easy task!

Healthcare boards—or traditional community-based boards—are finding that between changes in compliance legislation and the pace of innovation, staying ahead of the curve takes some serious effort.

So how can your healthcare board be a leader in the field and not just playing catch up? Here are a few of our suggestions:

Embrace diversity

We speak to this topic often on our blog, but it rings particularly true for the healthcare industry. Healthcare boards should strive to include a representative sample of the groups they’ll be serving. A mixture of ethnicities, genders, religious affiliations, and even age can help healthcare boards ensure that they’re not overlooking the needs of any potential patients.

A diverse board also means a diversity of ideas, which ultimately leads to better decision-making.
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Finding the Balance Between Board and Management

balance between board and management

Boards of directors and management executives are integral to the success of any major company and finding the right balance in board management is key. Although they’re constantly communicating, they serve in very different roles.

The board, which is meant to contain an appropriate mix of “outside” and “inside” directors, acts as the guiding force for the company while the CEO and other c-suite leaders carry out their plans for the future.

That’s not to say that forward progress and change can’t come directly from the CEO, though.

Duties of the Board

At the end of the day, the board has the final say when it comes to making major decisions for the organization it serves. The entity is expected to uphold its fiduciary duties to the shareholders above all else. In addition, the board hires/fires CEOs, votes on important policies, safeguards resources, and more. For a more in depth explainer of these responsibilities, visit our Board Membership 101 blog series.
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4 Questions About Board Conflicts of Interest

What are conflicts of interest?

For directors, board conflicts of interest are “situations in which a person is in a position to derive personal benefit from actions or decisions made in their official capacity.”
board conflicts interest

Example: Let’s say that a director serves on a board for a rental car company, and he also works as an auto insurance salesman for his primary job.

If the board he served on voted to buy insurance from his company, this would present a conflict of interest because the board member would stand to gain personally from that transaction.

For an incident to qualify as a conflict of interest, it must involve the clash between a director’s official duties and their own self-interest.

Legally speaking, this sort of situation would obviously muddle a director’s ability to make the correct and impartial choice for the shareholders’ benefit.

What dangers do board conflicts of interest present?

Conflicts of interest that have not been addressed can result in legal action taken against both an individual board member as well as the organization they serve. These intermediate sanctions can have an extremely negative affect on the finances of an individual or an organization.
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Business Lessons from Sports Teams

Putting together an effective board isn’t all that different from developing a standout sports team. OK, so you won’t necessarily be looking for someone who’s built for speed or for an athlete who’s able to push an F-150 using only their own strength. But you will need to create an environment that encourages group success.
good board team
We’ve looked at some business lessons from sports teams that you can apply to your boardroom dynamics.

Find specialists, but focus on determination

Countless business journals (and our own blog!) have called for adding specialists to the boardroom; tech experts and professionals with entrepreneurial backgrounds have been particularly sought after in recent years. These “playmakers” bring big benefits to any boardroom.

The tech experts, for instance, help provide a healthy defense against cyber threats as well as an innovative, offense-focused mindset.

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Directorpoint Establishes Australian Headquarters

Here at Directorpoint, we’re thrilled to announce that we have recently opened an official headquarters and data center in Australia. As our number of Aussie clients has grown, we have actively pursued ways to improve their product experience. The establishment of the data center, in particular, will allow Australian clients to experience significantly faster download and upload speeds while using our software.
Directorpoint Establishes Australian Headquarters

As an organization out of Birmingham, Alabama, we’re very proud to be positively affecting decision-making processes in boardrooms across the globe. Our team sees this expansion as the next step further in expanding our international reach.

John Peinhardt, our Founder and President, shares, “We are very excited about our prospects globally and are thrilled that Australia is home to the first of many international Directorpoint offices. We believe the new data center will help us provide an enhanced experience for our clients who are currently operating in Australia.”
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Board Membership 101: Risk Management

Decades ago, the notion of “risk management” boiled down to the simple act of buying insurance. These days, however, board members are expected to be much more involved in overseeing and evaluating their company’s level of risk.
Board Membership 101: Risk Management

According to PwC, risk management includes “the identification, assessment, and prioritization of risks and the application of resources to minimize, control, and mitigate the impact of unfortunate events on a business.

It is the job of a board to oversee that their management teams have adequate risk management policies and procedures in place.”

Overseeing risk isn’t a job that falls solely on outside directors, though. According to the Harvard Law School Forum, internal executives are expected to handle the day-to-day risks of their business operations, but directors should, “through their risk oversight role, satisfy themselves that the risk management policies and procedures designed and implemented by the company’s senior executives and risk managers are consistent with the company’s strategy and risk appetite.”

In other words, it’s the job of the board to ensure that the CEO and senior executives are completely engaged in systematic risk management behaviors.
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Board Membership 101: Financial Oversight

Chances are good that if you ask a stranger on the street what a board member’s most important job is, they’re likely to mention finances. Boards have long been seen as the “make it or break it” play callers for corporations that either boom or bust.
Board Membership 101: Financial Oversight

Financial oversight, while closely related to fiduciary duties in general, calls for a board member’s attention to detail and ability to understand the current position of the company’s financial assets. Although every decision a board member makes may not be a financial one, all of their decisions will affect the financial future of the organization they serve.

Providing a company with great financial oversight takes serious effort on the part of board members. Here are some ways that they can excel:

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Board Membership 101: Board Member Policy

board member policy

Policy-making may not be the most fun side of board membership, but it is an absolutely vital corporate director duty. Company policies affect every aspect of governance and decision-making—from CEO selection to board management guidance and beyond.

In a time when expectations for board members are soaring, policy-making has also become a significant way to reduce risk.

According to Mitch Dorger, experienced CEO and governance consultant, boards should be creating a strong policy focus. He writes, “Clear, concise and current policies improve the overall management of the organization…By having these documented, …[the board] speaks with one voice—avoiding a problem that many organizations have with multiple sources of policy guidance.” Unfortunately, many boards struggle to maintain a policy focus.

Dorger continues, “When I was still a chief executive officer, I led an effort to get my board to establish and document the policies that were needed to govern the organization…When I talked to the board about creating a policy focus, there was some confusion about what policies are and what they are not.”
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Corporate Titans Call for Better Governance in WSJ Ad

Corporate Governance

If you’re perusing the latest issue of The Wall Street Journal, take a moment to flip to the back of section A. You won’t be able to miss the full-page spread that was secured by 13 of the country’s most influential business leaders.

The ad, which is signed by people like Warren Buffet of Berkshire Hathaway and Mary Barra from General Motors, has one major purpose: to offer up commonsense governance principles “in the hope that they will promote further conversation on corporate governance.”

The article, which is also presented in full at www.governanceprinciples.org, begins by outlining how the future of the economy relies heavily on companies “being managed effectively for long-term prosperity.” It points out that millions of Americans’ retirement savings, college savings, plans to buy a home, and more are directly affected by decisions made by board members at major corporations.

The authors continue by insisting that although they don’t agree on every single aspect of corporate governance, they can offer up six major principles on which they can agree. The principles are summarized in the main article but can be viewed in depth here.

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