“The Bear” on Business

Yesterday’s post needs to be read for context.  If you haven’t read it, please do so first.  The post ended with two questions; this post provides my perspective on them.

What if you don’t appreciate the feedback?  In yesterday’s post, I emphasized that a key part of the CEO’s response is communicating that the feedback is appreciated.  But what if the feedback isn’t appreciated?  If this is the case, the CEO has a much bigger problem on his or her hands.  To be blunt, the problem is probably the CEO–the CEO has not learned to value feedback.  Less likely but possible is that the CEO has a legimate issue with the board–he or she doesn’t trust the motivation or competency of the board.  The board/CEO has ceased to be effective in this case and this broader problem needs attention.  I won’t address what to do in any of these situations.  I just hope to never find myself in them.

What if you don’t agree with the feedback?  This is less of an issue.  Reasonable people will disagree.  The important part is to genuinely reflect on the feedback.  What might the board see differently and why?  What added information might help close the gap?  Might the board be right–if so, how do you learn more about the issue at hand?  My recommendation–start with the assumption the board is right.  Use this to guide your thinking.  If they are not right, this will unveil itself over time.  Instead of defending your position, take a step back.  What additional thought, perspective, or analysis might improve everyone’s understanding of the situation?  Common ground will likely be found.

This completes the series on Closed Sessions of the Board.  I hope this provides perspective in two ways.  First, it sheds some light on what happens in the Ivory Tower.  Second, it shows that workers at all levels, including the corner office, are people; navigating through the personal relationships, group dynamics, and effective communications are the key to success. 

In early May, I began a series of posts on how I finish my board meetings.  My posts were triggered by a Brad Feld post.  Thanks Brad for sparking this series.  

The Clossed Session is the part of the board meeting where only the board and CEO remain in the room.  I structure my closed board sessions as a four step process:

1) CEO Report Card

2) Outside Directors Only

3) Readout to CEO

4) CEO Response

In part 3, the directors offer up feedback to the CEO.  The feedback includes accolades, concerns, and other suggestions.  Part 4 is the CEO response to this feedback. 

This can be awkward, as the CEO has very little time to react.  Typically, there are 4-7  directors and the group is eagerly anticipating the CEO’s reaction.   They hope to hear that the CEO hears and understands the feedback.  They hope the CEO accepts it as construtive; that is, they don’t want to see the CEO react defensively.  Importantly, they are not looking for the CEO to tell how he or she will address any concerns.  This can come later. 

With this in mind, the CEO should first make sure he or she does in fact understand the feedback.  Ask clarifying questions.  Probe.  Repeat back what he or she heard and ask if the message was fully understand.  This is proabably the most important aspect of the CEO’s response–make sure you understand.

Second, the CEO should provide assurance that the message has been received constructively.  This doesn’t mean that the CEO need to communicate he or she agrees with the message.  It is not constructive to fein that you agree if you don’t (or aren’t sure).  It is much more important that you reinforce that the feedback is appreciated. 

Generally speaking, the best next step is to stop here.  That is, don’t feel compelled to address the concerns in real time.  It is better to reflect on them off line and then respond later.  If you respond immediately, the response might be one of the following:  (a) defensive; (b) self-serving, or (c) not completely thought through. 

This brings up two questions:  (1) What if you don’t appreciate the feedback?; (2) What if you don’t agree?  I will address in a post tomorrow.

This is the fourth installment in the series Closed Sessions of the Board.  Please read the eariler ones for continuity.

We CEOs can be quite the sensitive bunch. Our egos–though large–are quite fragile. We are used to giving feedback, not getting feedback. With this in mind, the board is very deliberate on what messages will be delivered and by whom.

As alway, it makes sense to start out with the positives.   Hopefully it isn’t hard to focus on areas that the board is truly pleased with.  The board should be thoughtful and forthcoming in this feedback.  It will reinforce what pillars of strength the company and the CEO have to build on. 

Next, the board should cover areas of concern.  At times, it is very easy to come up with areas requiring a spotlight.  This is natural opportuity to communicate them to the CEO.  At other times, the board is very pleased with the company and the CEO; even so, it is extremely important the board identify areas of potential concern.  It is healthy for the group to practice on how it will deal with potential problems or areas of disagreement before they become severe.   A board/CEO only reaches the highly effective state when it demonstrates the ability to tackle these more difficult issues.

Part 3 ends when the Board finishes the feedback.  The next post in this series addresses the final part of the Closed Session–The CEO Response.  I will cover this tomorrow.

Last Monday, I described what happens in Part 1 of the Closed Session for the Board: the CEO Report Card. This first part provides the CEO an opportunity to opine on the management team and the board.   Part 1 ends with the CEO leaving the room.  The board gets to dialogue among themselves.

Part 2 starts out with a general discussion: what is on everyone’s mind? It is important to give each board member a chance to speak. Even those who might otherwise be more quiet should be encouraged to chime in. The range of dialogue certainly includes the board meeting itself, the company’s overall performance, and reaction to the CEO comments. One other area is also discussed—what might each investor group be thinking relative to their involvement with the company. The latter point is important as it is good for everyone to understand the agenda of each individual investor.

Next you zero in a more focused discussion on messaging to the CEO.  What message should be delivered to the CEO?  What positive feedback is appropriate?  What constructive feedback should be offered?  What other messages might the board want to deliver? 

The value of the Closed Session of the Board is rooted in its consistent use.  It is rare that a board does not have both positive and constructive feedback it should give.   It is common that the board has topics on its mind that it wants to share with the CEO.  Often, the messages are non-controversial and not particularly sensitive.  Nonetheless, the act of providing this feedback is extremely important.  When tougher issues emerge, there is a forum for the board to communicate. 

Part 2 ends with the CEO joining the outside directors.  I will cover this Part 3–Read-out to CEO–in a subsequent post.

In late April, Zayo had a board meeting in Boston. This was the first time I put into practice “Part 1: CEO Report Card” of the Closed Session of the Board.

As you’ll recall from my blog post “Closed Sessions of Board Meetings” in early May, the final item on the board meeting agenda includes only board members and the CEO.

My format for the Closed Session has four parts.  In part 1 I get to do the talking. I get to play Roger Ebert.  Part 1 is the CEOs opportunity to share thoughts with the board without the broader management team in the room.

I begin by commenting on the board meeting itself. Did I think the meeting went well? Are there areas that require a bit more color—such as agenda items that went adrift or problem areas that surfaced unexpectedly? Perhaps someone from the management made a comment that came off as inappropriate or misleading, but correcting this in front of the board did not seem wise.

Next I cover the company in general. How do I think the company is doing?  What do I feel good about?  What keeps me up at night?  

Then I shift to the management team.  Who is doing a great job? Who might be struggling a bit? Where might we have holes in the organization we need to fill? What do we see as our pillars of strength? What changes am I contemplating and why?

The final part is to provide feedback to the board. Do I think our board is operating effectively? Are there any issues I see regarding the board (or the investors they represent)? As I look forward in time, what changes might we contemplate?

Perhaps the most important aspect of a director’s role is to assess the CEO.  Hearing what is truly on the CEO’s mind is quite helpful in this assessment.  Do the directors believe the CEO has his or her arms around the company’s challenges? If so, they are much-relieved and can focus on monitoring how the CEO excutes. If, to the contrary, the board sees it differently, they at least have a clearer picture of what is going on inside the CEO’s head.

After I finish with my report, the Closed Session of the Board advances to Part 2.  I will outline Part 2 in a subsequent post.

Brad Feld wrote a great post on The Closed Session of the Board Meeting. I sit on five boards, two of them as outside directors, one as CEO, one as Executive Chairman, and one as an observer. I believe strongly in the closed door session for exactly the reason Brad described in his post. However, I use a different format, one which I think increases the value.

In Brad’s post, he described a specific board meeting in which the closed session made a big difference. He rightfully emphasized that by institutionalizing the closed session, it came in handy when needed. That is, they had long since put into practice that each board meeting would have a closed session whether needed or not. This way, once it was needed, no one had to take the step to request a closed session. The time was already blocked off on everyone’s schedule and having the session set off no red flags. I am sure it made for a more natual and less confrontational discussion of the situation.

Brad described his format as involving all board members, including the CEO and founders. His exception is management board members who are not founders.

I structure my closed board sessions as a four step process:

1. CEO Report Card
2. Directors Only
3. Read-out to CEO
4. CEO Response

I’ll discuss each of these in postings next week.