Author: Tony Rule, Partner, TAG Financial Services
Board meetings work – it is hard to argue with the facts. We regularly see businesses achieve a 25% increase in profitability when they introduce a quarterly board meeting process. And for many decades big business has understood the importance of a properly functioning board. But why do board meetings work?
The Coach
In some respects, engaging in a board meeting process is like having a coach.
Elite sportspeople, regardless of whether they are in a team-based sport or compete individually engage at least one coach. A coach should bring an outside perspective into the team or player’s performance to help them get the best possible result including:
- Setting goals with the player and maintaining a focus on those goals
- Understanding what motivates the player and what makes them tick.
- Building a plan to help improve on existing strengths and reduce identified weaknesses.
- Analysing the competition to determine the best strategy for success.
- Developing measures in the form of KPI’s to determine progress towards improvement and goals
I am sure that many of these coaching activities sound familiar to you – mainly because business is like sport with one major difference. That major difference is that most sportspeople spend 90% of their time preparing for the match and 10% of their time in elite competition – while business owners spend at least 90% of their time (if not 100%) competing in business and less than 10% of their time working on skills, setting strategy, reviewing performance or setting goals.
A quarterly board meeting gives the business owner a chance to stop the match (even if only for a few hours), think deeply about their business and then agree on a strategy, plans and actions with an advisor so that business performance can be optimized.
Back to Business
Often business owners are excellent technicians in their chosen field of expertise (eg. engineering, construction, law, manufacturing, etc) and they have progressed through their career to find themselves at the top of their particular organisation. They are now the managing director of a business where their technical skills may still be useful, but there are now more business issues that need to be controlled including strategy and implementation, goal setting and focus, monitoring business drivers and retention and motivation of key team members (to name but a few!).
A board meeting environment provides an opportunity for a business owner to discuss the issues they face (or think they face) with someone who has an outside perspective. The business owner will know a lot more about their chosen industry (and therefore will have the answers), but often it is the outside perspective that can ask the right questions for those answers to be unearthed. The board members also provide a sanity check to help the business owner ensure that his actions and initiatives are taking the business towards its goals.
What Goals?
One of the first things that need to happen with quarterly board meetings is to get very clear about what the goals of the business owner (and therefore the business) are. Too often business owners have forgotten why they are doing what they are doing and if they are not careful, they can find themselves “going through the motions” or like Bill Murray, stuck in “Groundhog Day”.
A clear focus on your goals will revive your motivation and give each day purpose. One of the key roles of a board meeting is to remind the business owner of what those goals are and to make sure that decisions, actions and initiatives are taking the business towards achieving those goals (rather than away from them).
Point of Accountability
Being a business owner can be a difficult and lonely job. Tough decisions need to be made and difficult conversations need to be had. There are very few people that a business owner can naturally confide in – if they are lucky it might be a spouse or a mentor, but in my experience, these trusted confidants are usually the exception rather than the rule.
The board meeting environment should support and empower the business owner to confirm why the tough decisions and difficult conversations need to be had (which invariably tie back to the goals of the owner and the business) and then provide a point of accountability around making sure that those things happen.
Board Meeting Process
A board meeting does not need to be a panel of 12 directors focused on your business. Many of our clients start the board meeting process with a one-on-one quarterly meeting with an advisor. We utilise the discipline of a board meeting process to ensure that all aspects of your business are being properly considered. We then ensure that appropriate reporting is provided to the meeting to monitor the right business drivers and an action plan is maintained to ensure that strategy is implemented to achieve the business goals.
Results
Owning a business is not always about making the biggest profit (this gets back to the goal definition). There are many monetary and non-monetary goals that we have helped business owners to achieve through the quarterly meeting process including:
- Helping a business owner achieve his goal to own a racehorse as a reward for ensuring that his business had hit its goals.
- Working through a difficult family business scenario to ensure the right family members were engaged in the future of the business.
- Building a business to the point where it could be purchased by an industry consolidator resulting in the usually elusive “payday” for the owner.
- Implementing a succession plan for the owner where he could sell to their trusted lieutenants whilst still retaining interest and ownership in the business.
- Designing and implementing work-life balance for the owner so she could spend more time following her passion to mentor other businesswomen.
- Motivating the business owner to the point where the business profitability doubled year on year to the point where he could make a substantial gift to his brother following years of loyal service.
If a business owner can start to implement a quarterly (or more regular) board meeting their business performance will improve and their motivation and passion for the business will continue or be re-ignited (whichever is required).
If you have any queries about how you and your business would benefit from a quarterly board meeting, please contact me.
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Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686).