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Book Review: What Makes Great Boards Great

Great Companies Deserve Great Boards ImageTitle: Great Companies Deserve Great Boards: A CEO’s Guide to the Boardroom
Author: Beverly Behan
Publisher: Palgrave Macmillan
Publication Date: 2011
ISBN: 9780230113657
Formats: Hardback; Kindle
Score: 4/5 stars

So how do you know if you have a high-performing board? Could the CEO or management team tell you how the board is adding value? If not, no, you do not have a high-performing board. Could a board member tell you candidly how the board adds value and give some specific examples? If not, the answer is again no. Finally, would the directors be able to offer any meaningful suggestions on how the board could further improve its performance. If not, the board is not focused on continuous improvement, which is a characteristic of high-performing boards. Are your board meetings characterised by openness and vibrancy? Answering no to any of these questions means you may gain some benefit from reading Great Companies Deserve Great Boards.

In the past decade, author and boardroom consultant Beverly Behan has worked with over 100 boards in the US and Canada including Fortune 500 companies, and in Great Companies Deserve Great Boards, she offers her advice to CEOs on how they can get the most out their boards. The book aims to help a CEO establish a constructive relationship with their board, to address some of the dysfunction that may be present within the board, and to show the CEO how to make their board a significant asset to the organisation.

To begin, Behan notes the decline of the ‘imperial’ CEOs who once dominated the boardroom and describes the culture of the boardroom today, in light of decreasing tenure of CEOs globally. Boards are all too willing to sack the CEO and Behan says that she has seen more CEOs fired for ‘trust issues’ than ‘performance issues’ (p. 1). But, while boards may have become more independent from the CEO, this does not mean they have become high performance boards. Indeed, Behan’s first boardroom experiences left her shocked when she saw ‘talented, accomplished people sitting around mahogany board tables contributing very little’ (p. xi) – a situation that remains as true today as it did when she first began working with boards.

Behan makes good use of real-life examples from her consulting experience to illustrate her points and to persuade her readers that it is possible to turn a lacklustre board into a high-performing one. For example, she describes a board she worked with where frustration with the board papers was raised by every director, but none of them had brought the matter up with the CEO – something we at Effective Governance see all too often. In many cases, this is due to poor boardroom dynamics and goes back to the issue of ‘trust’. The board members have to feel they can bring matters up with the CEO and vice versa.

The book touches upon many of the areas that boardroom advisors confront on a regular basis such as poorly designed agendas with board meetings devoted to management presentations and compliance issues instead of spending time in discussions about strategy. Indeed, Behan decries the fact that few boards work to create a boardroom that is ‘a vibrant, energized place to exchange ideas and make decisions’ (p. 99).

Behan is a strong proponent of board evaluations, which when done properly, she considers to be the most powerful tool available for taking a board from good to great. However, she points out that many board evaluations are not done in a meaningful way and are simply a waste of time. She has an excellent ‘primer’ on individual director evaluations with the pros and cons of different models (pp. 91-92).

The chapters on new CEOs and CEO succession have many valuable insights as does the chapter on board composition, which tells CEOs to stop whining about not having the right directors and do something about it – including finding out just what skills they do have at their disposal and whether they are underutilising the board.

While the book generally offers sound advice, it is by no means flawless. The author’s view on the CEO and strategy, for example, is at odds with what is considered good practice in Australia. Similarly, there are many more CEOs on boards and chairing boards in the US than in Australia, so readers should factor this into what they read.

Nonetheless, the book is timely since much of the normative corporate governance literature to date has been from the perspective of boards, chairs and individual directors. If you remember that Great Companies Deserve Great Boards is written for CEOs of North American for-profit companies, the content is still very useful for Australian CEOs, directors and anyone who interacts with a board such as company secretaries and advisors whether in the for-profit or not-for profit sector.