Exec 4 - Running Effective Board Meetings SOP

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RUNNING EFFECTIVE BOARD MEETINGS SOP WHY HAVE BOARD MEETINGS? As discussed during RENEW’s Enhanced Exec’s Program Training Session #4: Strong Corporate Governance – The Board, the purpose of Board meetings is to hold the company’s management team (specifically, the CEO) accountable to executing its agreed upon plans, obtaining results, and ultimately delivering greater value to the shareholders of the company.

HOW TO HOST A GREAT BOARD MEETINGS The purpose of this document is to give SME executives a tool to prepare for, run and follow up from their Board meetings. The Board is one of the most valuable tools for an SME executive – yet we have consistently seen SME executives treat Board meetings as a “check-the-box” - not preparing well and not running the meetings well. Not only does this leave the Board lacking confidence in the company’s management team, but it also weakens the company’s governance and often is a factor that leads to underperformance, lower valuation, and business failure. This is because governance is about accountability. The Board is the strongest governing body in a company. The Board meeting is the main venue for the Board to learn, advise, and support.

Without a strong Board meeting, you have a weak Board and weak governance. Bottom line: take your Board meetings seriously.

Top performing SME executives know how to run excellent Board meetings. They know that the purpose of the Board is to hold them and their management team accountable to executing their plans and delivering results, thinking strategically about the future growth of the company, and acting as a coach and adviser to the company. The Board also has very clear responsibilities such as setting the management team’s compensation, approving the annual plan and budget, and many other fiduciary responsibilities. So, being able to manage and run effective Board meetings is something top performing executives consistently do.

HOW TO PREPARE FOR, RUN AND FOLLOW-UP AFTER BOARD MEETINGS 6 DAYS BEFORE THE QUARTERLY BOARD MEETING Hold a half-day meeting with the management team: 1. Hold a half-day quarterly management team meeting to review the progress of implementing the annual management plan. This is your quarterly SMART Objectives and Key Results (OKR) meeting (see the “Master Planning SOP” tool for more details).

2. Ask the management team to present and provide updates on their OKRs and accompanying projects – which have been outlined in your annual management plan and their unit/division/department KPIs. 3. Ask the management team to provide talking points for their projects and unit that you can use at the upcoming Board meeting. a. HINT: Do not accept any excuses, because your Board (if they are good) will not accept them from you

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4. Ask your management team to present their plans for the next quarter – keeping the AMP in mind.

5 DAYS BEFORE THE BOARD MEETING Hold a half-day meeting with your CFO and spend time preparing the meeting materials: 1. Spend no less than three hours with your CFO. Go through the budget and 13-week cashflow targets versus actuals variance analysis, and ensure the data is gender disaggregated when appropriate. Understand the root cause of why the company may not be on target (remember: the rule is to ask why up to seven times in a sequential row to get to the root cause – do not allow them to say they will get back to you).

2. Prepare a slide showing the company’s targets versus actuals analysis on sales, profit, cash flow, etc. (see the “Setting Up & Managing a Board SOP” tool for a sample template), and ensure the data is gender disaggregated when appropriate. Prepare your talking points about why there is performance variance.

3. Prepare a corrective action plan, with the CFO (and others, as appropriate) to ensure the company corrects any budget variance over the next quarter. Set revised targets to make up any difference in the budget: this will be the hardest discussions to navigate because you, as the CEO, will be pushing your team to likely do more. You may need to push sales, cut expenses, etc.

4. Your slides should be concise and to the point. The things you must cover are: a. An update on your annual management plans (AMP) initiatives and progress towards your OKRs. b. Budget performance targets versus actuals, an explanation of variance, and a corrective action plan. c. 13-week cashflow review and cash position. d. SWOT analysis. e. Discussion points you need the Board’s input and support around – ideas or decisions.

5. Draft the agenda for the meeting and send it to the Board Chair for approval.

3 DAYS BEFORE THE BOARD MEETING Proofread and send out materials: 1. Have your Board Secretary proofread the slides and agenda – make sure the formatting is good and there are no spelling errors – this reflects badly on you.

2. Instruct the Board Secretary to circulate the materials and agenda to the Board. a. HINT: See the “Setting Up & Managing a Board SOP” tool for a sample agenda and email communication templates 1 DAY BEFORE THE BOARD MEETING

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One hour of prep: 1. Spend an hour reviewing the slides again and making updates to your talking points and slides.

2. Be prepared to answer and ask questions.

THE DAY OF THE BOARD MEETING

Sidebar: How to write a resolution: 1.

Arrive early and setup: 1. Have your administrator or assistant set up the room three hours before the meeting (night before if the meeting starts at 9am).

2. Arrive an hour early, plug in your slides to the projector, make sure everything is working and set out coffee and refreshments.

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3. Print two copies of the Board minutes from the prior meeting for signatures.

4. When the Board arrives welcome them – these are your shareholders.

5. Open the meeting on time, no exceptions – this sets a standard discipline that others will learn quickly.

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a. Have the Board Chair open the meeting, read the agenda, purpose and outcomes (make the outcomes specific, if necessary). b. Board minutes should ideally be captured verbatim. The individual assigned to capturing notes (likely the Board Secretary) will not necessarily be able to capture the notes and summarize them at the same time. They must capture and then after the meeting, speak with the Board Chair to properly summarize.

6. Have the Board Secretary take attendance, review the meeting minutes from the prior Board meeting and have all Board members sign them.

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Format the resolution by putting the date and resolution number at the top. If it’s the boards first resolution, you can number it whatever you want. Consider using something like 0001 and then giving all future resolutions a consecutive number.

Form a title of the resolution that speaks to the issue that you want to document. For example, “Resolution to Approve Annual Budget”.

Use formal language in the body of the resolution, beginning each new paragraph with the word “whereas”. The first sentence should reference the board’s responsibility.

For example, “Whereas it is the responsibility of the Board to approve the budget”.

Continue writing out each important statement of the resolution, beginning each paragraph with whereas.

The last statement of the resolution should state the final resolution, which is the action that the Board took. For example, “Now, therefore be it resolved to approve the annual budget as set forth by the management team with adjustments to the management compensation”.

The bottom of the resolution should list the names of the Board members voting on the resolution and spaces adjacent to their names where they can indicate a “yes” or “no” vote.

The resolution is approved when the majority of the Board members vote “yes”.

There should also be a place for the Board president to sign and date the resolution.

7. Review the resolutions to ensure the management team is following the rules of the company.

8. Work through the agenda – the Board Chair should facilitate the meeting.

9. During the management update:

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a. Go through the key points – you should use slides to aid in your presentation. Do not read directly from the slides, but rather focus in on the key points. Check to see if the Board has any specific questions. b. Let the discussion focus on the most critical aspects; just going through the slides is boring. The Board should have come prepared. So, focus on the most critical topics.

10. When a decision is made that has a material impact on the business it should be a resolution: a. Resolution: A Board resolution, or corporate resolution, is a way of documenting a decision made by a corporation's Board of Directors or shareholders on behalf of the corporation. See sidebar above.

11. At the end of the meeting make sure you have covered all the agenda items. Have the Board Secretary review the resolutions and next steps. Make sure everyone agrees with how they are written.

12. Make sure the chair confirms the date of the next Board meeting.

13. The Board Chair adjourns the meeting.

AFTER THE BOARD MEETING

1. Clean up the environment. Make sure all tools used such as laptops, notepads/pens, projectors, refreshment cups have been put away. The meeting room should be tidy and ready for the next person to use.

2. Clean up the minutes. Proofread and make sure all sentences are clearly written in English, and that decisions (i.e., Board resolutions) are pulled into a clear table for Board members to review.

3. Distribute the minutes. Ensure that the minutes are produced and promptly distributed to all attendees, including guests. Meeting minutes should ideally be verbatim and include following information:  Date, time location of the Board meeting  Attendees  Key points raised and decisions made  Motions and voting results if votes taken  Who is responsible for what follow-up action and by what date?  Name of the minutes notetaker  Tools used 4. Archive meeting notes. All meeting documents including the agenda, minutes, PowerPoint presentations and supporting documents should be kept together and saved in the company’s file hierarchy. These records can be checked when questions arise about past decisions or actions. It is discouraging to committee or group members to rehash prior discussions or decisions because of poor record keeping.

5. Check on actions. Often people need a gentle nudge to remind them about completing action items. Leaders need to check to ensure that action is taking place as agreed. The

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check can be an e-mail or phone call to the point person, or a meeting devoted to checking on progress. Not checking may send a message that action is really expected.