agile boards of directors
TRANSCRIPT
Agile Boards ofDirectors
11.3.2015
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Agenda
1. Board Work and Legislation2. Budgets and Reporting3. 12 Agile Principles for Boards4. Chairman’s Checklist5. Discussion
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1.Board Work and
Legislation
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Organization of LLC
Shareholders Meeting
Supervisory Board
Board of Directors
Managing Director
Nomination
Reporting
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Stamp Board
Reporting
Sluggish Board
ParticipatingBoard
Dictating Board
Powers of the Board
Po
we
rso
f th
eC
EO
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”The CEO leads theCompany, the Chairmanleads the Board work.”
Board DutiesCompanies Act
• General powers
• Controlling the Managing Director
• Supervision of bookkeeping and assets
Practice
• Focus on division of responsibilities between the Board and CEO
• Special emphasis on CEOs with entrepreneurial background
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Decision-makingCompanies Act
• Min. 1 member + deputy
• Quorum, when more than 1/2 of the members present
• Decisions made with a single majority of votes
• All the members to be reserved the opportunity to attend
• Member disqualified, if conflicts of interest
Practice
• Typically 3, 5 or 7 members
• Focus on the agenda of Board meetings
• Sufficient but not excessive documentation delivered well in advance
• Prerequisite for an effective meeting: all the members have read all the documentation
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MeetingsCompanies Act
• Meetings to be convened when necessary
• Chairman convenes the meeting
• Only the members and CEO present
Practice
• Typically, Boards convene monthly
• Half-day meetings
• Electronic Board rooms for documents and discussion
• Also the CFO and other necessary persons present
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MinutesCompanies Act
• Minutes to be kept, signed by the Chairman and at least 1 member
• Right to record a dissenting opinion
• Minutes to be numbered and stored in a reliable manner
• Minutes provide evidence on the resolutions made
Practice
• Recommended that an outside professional keeps the minutes
• Signing of the minutes at the next meeting
• In many Boards, all the members sign the minutes
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DelegationCompanies Act
• Board has the right to resolve on issues belonging to the general powers of the CEO
• Board has the right to escalate issues belonging to its powers to the Shareholders Meeting.
Practice
• It can be good negotiation tactics to escalate issues from the CEO to the Board.
• The Board may limit its liabilities by escalating issues to the Shareholders Meeting.
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2.Budgets and
Reporting
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Min. 80 % of Board Meetings for strategy and significant business issuesMax. 20 % of time for reporting
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”Budgeting Process isthe most ineffective practice in management. It sucks the energy, time, fun and big dreams out of an organization…In fact when companies win, in most cases it is despite their budgets, not because of them.”
BudgetingProblems with traditional budgeting:
1. It takes a long time, costs too much, and consumes too many corporate resources.
2. It’s fixed and inflexible, and can quickly become irrelevant.
3. Most companies tie executive and employee compensation directly to performance against the budget.
The remedy: rolling forecasts
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Beyond Budgeting
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1. Bind people to a common cause; not a central plan
2. Govern through shared values and sound judgement; not detailed rules and regulations
3. Make information open and transparent; don’t restrict and control it
4. Organize around a seamless network of accountable teams; not centralized functions
5. Trust teams to regulate their performance; don’t micro-manage them
6. Base accountability on holistic criteria and peer reviews; not on hierarchical relationships
7. Set ambitious medium-term goals, not short-term fixed targets
8. Base rewards on relative performance; not on meeting fixed targets
9. Make planning a continuous and inclusive process; not a top-down annual event
10. Coordinate interactions dynamically; not through annual budgets
11. Make resources available just-in-time; not just-in-case
12. Base controls on fast, frequent feedback; not budget variances
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3.12 Agile Principles for
Boards
12 Agile PrinciplesSW Development
1. Our highest priority is to satisfy the customer through early and continuous delivery of valuable software.
2. Welcome changing requirements, even late in development. Agile processes harness change for the customer's competitive advantage.
3. Deliver working software frequently, from a couple of weeks to a couple of months, with a preference to the shorter timescale.
Board Work
1. Board’s highest priority is to satisfy the company’s customers through valuable strategy work and nomination of an excellent CEO.
2. Welcome changing requirements in strategy work. Agile strategy process harnesses change for the company’s competitive advantage.
3. In the strategy work, focus also on issues that can be executed at shorter timescale.
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…12 Agile PrinciplesSW Development
4. Business people and developers must work together daily throughout the project.
5. Build projects around motivated individuals. Give them the environment and support they need, and trust them to get the job done.
6. The most efficient and effective method of conveying information to and within a development team is face-to-face conversation.
Board Work
4. Board members and operative management must work closely and continuously together.
5. Hire a motivated CEO and pay attention to the management team. Give them the environment and support they need, and trust them to get the job done.
6. The most efficient and effective method of conveying information in Board work is face-to-face conversation.
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…12 Agile PrinciplesSW Development
7. Working software is the primary measure of progress.
8. Agile processes promote sustainable development. The sponsors, developers, and users should be able to maintain a constant pace indefinitely.
9. Continuous attention to technical excellence and good design enhances agility.
Board Work
7. Shareholder value is the primary measure of progress.
8. Agile Board work promotes sustainable development. The Board members and management should be able to maintain constant pace indefinitely.
9. Continuous attention to business performance and rolling forecasts.
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…12 Agile PrinciplesSW Development
10. Simplicity – the art of maximizing the amount of work not done – is essential.
11. The best architectures, requirements, and designs emerge from self-organizing teams.
12. At regular intervals, the team reflects on how to become more effective, then tunes and adjusts its behavior accordingly.
Board Work
10. Simplicity – the art of maximizing the amount of work not done –is essential.
11. The best strategies, practices and resolutions emerge from self-organizing teams.
12. At regular intervals, the Board reflects on how to become more effective, then tunes and adjusts its behaviour accordingly.
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4.Chairman’s Checklist
Chairman’s Checklist1. Be ambitious in building a winning team. Pay
attention to diversity and personal chemistry.
2. Ensure that the Board composition is flexible and annually renewed.
3. Actively lead the Board. And let the CEO lead the company.
4. Carefully plan the agenda and targets for each meeting.
5. Remember: 80 % of time for significant issues, 20 % for reporting. At a good meeting, the time never runs out.
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Chairman’s Checklist6. Co-operate not only with the CEO but also with the
management group.
7. Don’t waste your organization’s time for traditional budgeting and reporting. Beyond budgeting!
8. Conduct a self-assessment at least annually.
9. From a good meeting, the CEO walks out more energized than (s)he was when walking in.
10. Simple is beautiful.
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