Larry Siff joins hosts Joe Ayoub and Raza Shaikh to explore what makes a board of directors effective and productive, what qualities makes a strong and valuable board member and how can a board add value to and help drive a business to achieve its goals.
Links:
Neptune Advisors: https://neptuneadvisors.com/
C-Level Community: https://clevelcommunity.com/
Highlights Include:
• Larry first board was a non-profit board at an early age and has been driven to give back to the community throughout his career. Importance of understanding the mission from the perspective of those that the organization serves. “You brought the outside world back to me”
• C-Level Community – they have consistently hosted some of the most interesting breakfast gathering in the business world.
• What sets the stage for effective Board – an actionable, viable business plan, and a board built on the skills/expertise that will drive the business plan to the future.
• Discussion about building a business/strategic plan with actionable steps – and the role of board in creating the plan.
• A business plan should define priorities and how to achieve them. It must be an active, workable, livable plan – everyone needs to understand their role in servicing the plan. And everyone has to be vested in making the plan succeed and accountable for their role in doing so.
• Attributes of a strong Board member. Experience helps – one way to gain board experience is in the non-profit world.
• A board member must understand that is a fiduciary obligation to deliver enhanced strategic value add that accelerates a company’s growth. You’ve got to be able to mentor the CEO and the senior management and build a culture of both innovation and accountability.
• How to create strong board culture – trust and transparency are paramount. Communication every month from CEO – and email or a call, but the board cannot go three months without knowing what’s happening in the business
• Learning by board members should always be done before the board meeting, not during the meeting. You should never see a board member reviewing information during the meeting for the first time or hear a question that is clearly addressed in the materials.
• PowerPoints should be sent in advance – focus on key issues – no “dog and pony shows” at a bkard meeting.
• Boards should focus on long term strategy 3, 5 and 10 years from now. For the board to add value for the company they need to focus on the success of the company. How do we make this company successful? How can we as board members really focus on the future? Not on yesterday, not on today. But on the future and making sure that’s where the board is spending time.
• The board cannot be afraid to challenge. There has to be constructive dissent. That said, when a decision is made, even if you don’t agree with it as a particular board member, the decision has been made.
• Board members, have got to think and act like an owner, whether they actually own stock or not.
• Challenge of off-boarding – easy to ask someone on a board, very hard to ask them off! A lot of CEOs or Board chairs don’t want uncomfortable conversations and hesitate to have one they think will be uncomfortable.
• But the conversation starts with the expectations set when someone joins the board. You’ve defined the expectations up front, and by doing that, when you have a board member who’s not performing, you can to sit down with the board member and have a conversation.
• Value of executive sessions with and without the presence of the CEO.
Larry Siff Bio:
Lawrence Siff is the CEO of Neptune Advisors, a consulting firm focused on strategically positioning middle market companies for accelerated growth. Mr. Siff is also the CEO of C Level Community, a membership based platform connecting middle market leaders. C Level Community provides educational resources both online and in person through the Thought Leadership Series featuring world renown CEOs. Mr. Siff has advised hundreds of CEOs and Boards on maximizing corporate value. He is the Founder of the Annual Pathway to Platinum Conference designed for CEOs to share best practices in management and oversight. Mr. Siff, a National Association of Corporate Directors (NACD) Board Leadership Fellow, currently serves on the Board of Directors of Jones & Vining and Mason Companies, Inc. and is an Industry Advisor for Silverwood Partners, a boutique investment bank. Mr. Siff serves as an independent board member and is the Chair of Strategic Planning, Investment, Compensation and Benefit Committees. He is a Trustee of the Museum of Science, Chairman of the Asia-America Chamber of Commerce, a Director of the New England Business Association, and a Director of the Two Ten International Foundation (Executive Committee). Mr. Siff is the past Chairman of the Brimmer and May School, Trustee of the Winsor School Corporation, member of the MA Senate Business Advisory Council and a past Director of the Association for Corporate Growth (ACG).
Prior to Neptune Advisors, Mr. Siff was Principal and Managing Director of Gordon Brothers Group, a $50 billion investment and transaction advisory firm. At Gordon Brothers Group, Mr. Siff founded the consumer products and branding businesses, which grew to become two of the firm’s largest divisions. As its Director of Strategic Acquisitions, he led acquisitions ranging from $5 million to $1.2 billion. Mr. Siff served on the Executive Committee and was an advisor to GBMP, an equity and debt fund. Over his 35‐ year career as a growth‐oriented corporate executive, Mr. Siff led manufacturing, technology, consumer, wholesale and retail businesses. He was the President and CEO of Babystripes, Inc., an online retailer of luxury baby gifts, and the President and CEO of Cherry Tree Products, Inc., a manufacturer, wholesaler and retailer of high‐end children’s clothing. Mr. Siff was the President and CEO of Ambassador Shoe, B‐W Footwear Inc. and B/W/A International, where he established operations at 38 factories in 9 countries and successfully sold the company to strategic acquirers. Mr. Siff began his career at Procter and Gamble where he created the Wholesale Club Division which today accounts for over $3 billion in sales.
Mr. Siff is a recognized expert in corporate governance. Most recently, he has been a speaker at the National Directors Institute (Chicago), The Society of Corporate Secretaries and Governance Professionals (NYC), the Chief Executives Officer’s Club (Boston), and the Asia America Chamber of Commerce (Boston). Mr. Siff has been a speaker for Morgan Stanley Smith Barney (NYC), Armanino McKenna Technology Forum (San Francisco) and a lecturer at Brandeis University International Business School, Babson Olin Graduate School of Business and Harvard Business School. He has been an Instructor for Pinnacle Solutions Exit Planning Advisor Certification and a contributor to Forbes. He graduated magna cum laude from Brown University and the Executive Program at Dartmouth’s Amos Tuck Business School.
Transcript of the Episode:
Joe: [00:00:00] Hello and welcome to onboards a deep look at driving business success. Hi, my name is Joe Ayoub and I’m here with my co-host Raza Shaik.
Hey Raza.
Raza: [00:00:14] Hi Joe. Happy to be here with you co-hosting.
Joe: [00:00:18] Good to be with you. Onboards is about boards of directors and advisors and all aspects of board governance twice a month, in 30 minutes.
This is the place to learn about one of the most critically important aspects of any company or organization. Its board of directors or advisors. Joanne, I speak with a wide range of guests and talk about what makes great boards great. What makes a board successful or unsuccessful, how to be a good board member, and how to make your board one of your most valuable assets for your company.
Our guest today comes with a deep and extensive board experience, both as a board member and as an advisor to hundreds of companies.
Raza: [00:01:03] He’s the CEO of Neptune advisors, which helps middle market companies position themselves for strategic growth, and he is also the CEO of C-Level community, a membership based platform that connects middle-market leaders.
Joe: [00:01:19] We’re very excited to have Larry Siff as our guest today. Welcome, Larry. It is great to have you with us as our guest on Onboards.
Larry: [00:01:28] Thank you. It’s a pleasure to be here today.
Joe: [00:01:31] Tell us a little bit about the type of companies that Neptune Advisors works with and what you do to help them.
Larry: [00:01:38] We advise a number of middle market companies, ranging from manufacturers, distributors, wholesalers, retailers, low, medium, and high technology companies.
So we’re very much industry agnostic. The key is that there are middle-market and focus on taking their company to the next level of profitable growth. How long has Neptune has been around? So Neptune and visors, we’re in our ninth year now, so this next year will be our 10th year, which we’re excited about.
And then in addition to C-Level Community, we started three years ago.
Joe: [00:02:13] Actually, Larry, that’s what I wanted to ask. Tell us about C-Level community. What led you to start C-Level community?
Larry: [00:02:20] What led me to start C-Level Community was the focus on middle market and what we saw and heard out there from a number of C level executives being COO, CFO, CEOs, there was a gap in the marketplace in terms of getting expertise and knowledge for them at their level for middle market.
So we first started that online, which we’ve continued online. We have experts every week. Members can ask questions anonymously to the expert. We have surveys every week and we have blogs specific to the middle market every week. And then right after we started this three years ago we decided, as per our members, to do an offline version. So in person, we bring in the top CEOs from around the country. They are interviewed by a Harvard Business School professor one-on-one 45 minutes. Then we open up to the business audience for 45 minutes, and we’ve had great CEOs. We’ve had Arnie Sorenson, the CEO of Marriott Bracken, Darrell, the CEO of LogiTech, just a name couple of CEO’s.
Upcoming CEO’s that we have is Diane Sullivan, who’s the president, CEO of Polaris, used to be called Brown Shoe. They own a number of brand names like Sam Edelman, Allen Edmonds, as well as having retail, which is Famous Footwear. In March, we have the president, CEO of Sam Adams, Boston Beer coming Dave Burwick. In April, we have Shari Redstone, who is the chair of Viacom, CBS.
Joe: [00:03:52] I’ve been to several of your breakfasts. The last one was fantastic.
Larry: [00:03:56] Aaron Ain was just terrific. Aaron is the chairman, president and CEO of Kronos. He also just recently wrote a book called Work Inspired and he was inspiring, I got to tell you.
Joe: [00:04:07] There are times we all go to breakfast or other programs and they’re just boring.
This one – every minute that he was talking, people were really focused on what he was saying. He was terrific, he was great.
Larry: [00:04:19] He sure was, I noticed the number of people taking notes in the room, which is what you always wanted to be doing, you know.
Joe: [00:04:25] So Larry, I know you served on more boards, nonprofit and for-profit, than just about anyone I know. When did you first serve on a board of directors and what was it
Larry: [00:04:37] That was 1986, iit was Boston Aid to the Blind, and I was asked to be on the board by one of the other board members. I had actually done some work with the organization before being on the board.
Joe: [00:04:51] You must have been pretty young at that time – I’ve known you for a while.
Larry: [00:04:55] Yes.
Joe: [00:04:55] What led you to join a nonprofit board so early in your career?
[00:05:00] Larry: [00:04:59] Well, I always believed, and I learned this very much from my parents, about giving back to the community, that that’s what really matters. So I was always interested in being involved. I first got involved Boston Aid to the Blind with one of their clients.
This woman who was blind, who literally hadn’t been out of her home for a long time, and I ended up taking her out and bring her to different places, showing her around, and I remember this was probably about six or eight months into it. She looked at me one day and said, you brought the outside world back to me.
Joe: [00:05:32] Wow!
Larry: [00:05:32] And that was unbelievably impactful. And a couple of months later, one of the board members said, would you ever consider being on the board? And I’m like, that’d be great. That’s fantastic.
Joe: [00:05:44] Well, you know, one of the ways I know you, Larry, is that we both served on a nonprofit board together, and you are a terrific board member then, it was great serving with you.
Larry: Thanks Joe.
Joe: What, what lessons did you learn from that first board experience?
Larry: [00:05:59] What I learned is first to listen and observe. You’re new, you want to watch, you want to learn, you want to look at who participates, who doesn’t, and then you want to take notes with questions and to follow up with people who have been serving on the board.
So that was one of the things. Second thing I would say is impact. Whenever I join, whether it’s a nonprofit board or for-profit board, I always look at what can I do to improve the organization and to know what are the critical factors for success. And the third thing is, as I mentioned, I had worked with a blind person through the agency, so I knew what it was like for them to service their own clients firsthand.
So now I was sitting on the board, which is a different point of view.
Joe: [00:06:48] I think having the perspective of working with the client in a mission-based organization is invaluable.
Larry: [00:06:56] I agree,
Joe: [00:06:57] Really makes a lot of sense. So since that first experience, approximately how many businesses have you worked with, either as a board member or a consultant advisor?
Larry: [00:07:08] Well, over 350 businesses, over half of whom were family businesses just since Neptune Advisors was formed. Before that I was CEO of seven middle market companies, and I’ve averaged six boards for over 30 years now.
Joe: [00:07:25] Wow. Very busy. Well, thanks for making the time to be with us today.
Larry: [00:07:29] Of course, always for you!
Joe: [00:07:32] What have you observed that helps set the stage for an effective board.
Larry: [00:07:37] It starts with an actionable business plan. You have to first define way you want the company or the board to be in the future. And I define the future as five to 10 years. So you start with that, and then from that you develop the skill sets that you need for the board.
And then you choose the [00:08:00] potential board members based upon the skill sets. And the reason I say this is a lot of boards don’t do it this way. They’ll do it, I know somebody, or I know somebody would be good for the board, but I really think it starts with the future. And that’s what drives it. And once you define where you want to take it, you can define the people who can help you get there.
Joe: [00:08:22] I’m curious, the companies with whom you work, for the most part, when you arrive on the scene, do you normally find an actionable, viable business plan or do you really start working with the plan?
Larry: [00:08:37] Well, there are some companies who don’t have business plans at all. A number of companies who have business plans that have very short term focus.
We know our plan over the next year as opposed to 3 or 5 or 10 years. And then the third element, I would say is business plans that just need to be improved. Often they haven’t picked the few that they want to focus on, what they want to win at and need to prioritize within it. Some will have these huge laundry lists of all these initiatives, but no real strategy, no real strategic plan.
Joe: [00:09:13] Do you help them develop a business plan if that’s one of the things they need to do?
Larry: [00:09:18] Yes, absolutely.
Joe: [00:09:19] And how does that work? And part of what I’m curious about is what’s your involvement and to what extent, if any, is the board involved?
Larry: [00:09:28] Good question. So I think it starts again with what do you have?
What are you starting with? Is there any business plan or ever been business plans in the past? So get as much homework done. The second thing I think it starts with is you’ve got to do one on one interviews with the CEO. with the senior management and with the board members, so you’ve got to get all the background information and then you need to have an offsite.
You typically do it with the senior management, the CEO, and all the management and that’s when you go through and identify. You start with, okay, where’s the company been the past? Where are we today, the present and where do we want the future to be? And you, you end up just doing a lot of charting on walls basically, and then trying to pick from there again, the focus, you know, where are we going to, where our priorities, what are we going to win at.
How are we going to do it? And then from that one to two days, however long it takes, you then walk away with, okay, now we’ve got not only a business plan for the future, but we have the actionable steps we can take. So you go through the who, the what, the when, the whole quarterback, the whole timeline.
Joe: [00:10:42] So one thing I’ve seen, and this is both for profit and non-for-profit, are business plans or strategic plans that a lot of work goes into it, and then they go on a shelf, which is, you know, an utter waste of everyone’s time.
So I’m curious, what do you do to make sure that what you end up with is an actionable plan that people are really going to look at and that’s going to really drive the business success.
Larry: [00:11:08] One of the requirements is after you’ve done the offsite with the senior management team, and then next, you’re now presenting and discussing it with the board, which is session two you also have to, and this is the key, to have a followup session. The followup session from that or from those two sessions has to happen within a 30 day period.
It can’t be three months from now. If you do it three months from now, or if you’re just going to revisit it a year from now, it’s never going to work because what will happen is you do it three months from now, two months or two weeks, that’s when people will start to say, Oh, I have to do some things again, but 30 days is enough time, and in that 30 days you identify, these are all the priorities we talked about.
This is who’s going to do it. This is the timeline. Then 30 days from now when you have that session, you find out what has been completed, what is WIP, what’s a work in process? So that’s where you really define further and what do we need to get done. But otherwise it becomes what you talk about, which is Joe, they just take it and file it away and then a year from now they look at it again and nothing gets done.
Joe: [00:12:19] Yeah. Well, how frustrating is that? Just a last question on this, how often do you normally, and I know this is probably going to change from company to company, but how often would you go back and look at the plan to do a real update?
Larry: [00:12:33] The business plan itself has to be a workable, livable plan. So you’ve gotta be looking at it and you look at it and then you take it and you to translate it everywhere.
So the people know, they know they have the accountability, they have the quarterback, and then it gets posted and it’s posted. So every, all the senior manager can look at all times where we are as a plan. So by the time you get . To a year later, everyone’s been working on this plan. They’d make the [00:13:00] revisions.
This is an active livable plan, and then you’re going back and saying, okay, this is everything we talked about in the past year that we’re going to do. These are all the initiatives. Here’s the update on this. This is what we did. What you can do is then start rating it sorta like what Warren buffet even did.
You know, the 1 to 10 things. How do we do, or A, B, C, D, E, F, whatever you want. What do we do in each of these areas? What could we have done better? And these, I call these the postmortems, are crucial because it will teach you what you can work on for the future to make it even a more viable business plan.
Joe: [00:13:35] Do you have the board at some point vote on accepting the plan, is that part of the process or not?
Larry: [00:13:41] You can or not. I’ve seen it done many different ways. Some have it where the board is presented the plan, but discusses it extensively, questions and everything, and they accept it. Some have formal votes. We’ll take a formal vote. You could do it either way.
Joe: [00:13:56] So the important part is to make sure the board understands it has had an opportunity to ask questions, gives their input. Whether they voted, or not, maybe not so critical.
Larry: [00:14:06] Correct. That’s the way I see it, but everyone has to be vested in it. Everyone has to be accountable. Everyone has to be aligned. You don’t want it with a boat where you’ve got eight people on the boat, three are going one direction, five are going the other. That doesn’t work.
Joe: [00:14:21] Yeah. No, that makes a lot of sense.
Raza: [00:14:24] Larry. Switching gears a little bit, what characteristics do you think are most important to be a strong board member? I’m not referring to specific skills or expertise, but rather attributes that cut across all industries and sectors.
Larry: [00:14:38] To be a strong boy member, first of all, you’ve got to have that first board experience cause you want to have some experience bringing people onto boards who’ve had zero board experience.
And that experience could be in the nonprofit world. It could be in the for profit, but you’ve got to have that first experience. Second, you’ve got to understand this is a role of governance. This is a role of compliance, but this is even more important than governance and compliance. It’s really going from being a fiduciary, a fiduciary obligation to delivering enhanced strategic value add that accelerates company’s growth.
So I have referred board members as growth creators. You’ve got to understand the different risks, but you’ve got to deliberately debate issues and feel free to do that, to be completely transparent, to be able to ask well-informed. Questions. I prefer open questions, then closed questions.
In terms of that, you’ve got to be able to mentor the CEO and the senior management and build a culture of both innovation and accountability.
Raza: [00:15:49] And being on a board I would say is an infrequent collaboration opportunity. You meet once a quarter with your colleagues and other board members. You’re not actually working day to day. How does one build that strength not only in the board, but as you as an individual board member, where despite that infrequent collaboration, you’re able to build a working relationship and work towards the goals that a board should be strong at.
Larry: [00:16:20] First I back up and define boards because there are at one end completely passive boards where some CEOs just want them to rubber stamp or meet several times a year.
And then you have on the other end, extremely active boards. In order to be close to the other, an extremely active board, you’ve got to have committees, so it’s not just the four times a year, quarterly that it meets. It’s all the committees and the work that gets done. I also believe the CEO has to inform the board monthly.
Minimum monthly, now whether they want to just send out an email or you have an hour long call, but the board cannot go three months without knowing what’s happening in the business and then find it out right before the board meeting. I don’t think that’s good communication-wise and I don’t think that’s good for board members to be active board members and find out three months ago or two months ago, something happened.
Joe: [00:17:21] No. I want to go back to one thing you said, which is the first thing is you have to have board experience, right? So that’s a little bit of a chicken and egg. So obviously you could find someone who has great skills, has the right expertise, whom you think would be great for board culture, but has never sat on a board so there must be instances in which you select someone for a board who’s never been on a board. How do you do that?
Larry: [00:17:45] Right. So then I would make sure that that person, that board member had the requisite training. So that would involve for all board members in general. You have to have, start with list of expectations, what’s expected from me as a board member.
Second, they should spend time at the company or at the nonprofit, probably a full day. They are. Where they go through and just have a lot of find a lot of the history where the company aware the nonprofits gone in the past, where it is today, where it’s going in the future, what it’s made of, what are the committees, what are the roles, what are the responsibilities, the basics. And then I would also encourage that they get training outside, whether it’s National Association of Corporate Directors, or one of the other organizations out there that focuses on this.
I think this is key. But you’re right, because they need the training to be able to walk in.
Joe: [00:18:44] I’m very much in agreement about, well, a number of things you’re saying, but creating the correct expectation for a board member and making sure the board member understands what is going to be expected of him or her, I think is absolutely critical and I think it often doesn’t happen.
Larry: [00:19:06] Right.
Joe: [00:19:06] What are the expectations that you communicate to a board member when you’re involved in that process?
Larry: [00:19:13] It varies very much by the board and if you’re talking nonprofit versus profit, but. Expectations can be everything from this is the time commitment we’re talking about, so they know that upfront we’re going to have quarterly meetings, so that’s four times a year.
How long did they last? Do they last two hours to four hours? Are they full day? We’re going to have committee meetings. We expect you to serve on at least one or two committees, whatever it is. Governance committee, compensation committee, audit committee, wherever their specialty lies for them to be serving on this committee that meets X number of times.
So all those expectations, it could also be you want any company documents they have. These are the rules. These are regulations just so they understand things in a compliance, audits that occur, how often they occur. So it’s a lot of the information, knowing it up front. And then in terms of your role on the board, explaining that how board meetings are run and what role we want you to do. Because if you’re trying to get them to be growth creators, you want them to be, feel free to ask any question they want in a board meeting.
Joe: [00:20:22] Do you spend much time really making sure they understand that they need to do their homework in advance of a board meeting, that the meeting is not going to be a lot of presentations where they’re going to learn, do the learning, most of it should be done prior to the meeting itself.
Larry: [00:20:43] I’m a huge fan of being informed before you walk in the boardroom. So that requires a couple things from the CEO and management team. All board materials must be sent out at least five days in advance. They shouldn’t arrive to the board member one day in advance. Second, you have all the committee meetings you’ve been part of, so hopefully you’ve gained a lot of knowledge being an active member of those committees, but you should never ever have a board member who sits in on a board meeting and starts to go through all the presentations for the first time, and that should never happen. Now in terms of what you’re talking about, the PowerPoint presentations, get them in advance, have the board read them, and then you can focus on key issues or questions, period.
Not the dog and pony shows, do not waste or spend time. And we’ve done actually a lot of analysis of this because what it comes down to is a number of boards and board meetings are not very strategic at all. So if you say over half the meeting should be spent or allocated on strategy and long-term strategy, real issues, that’s not what occurs in a lot of board meetings, in fact, a very small percentage.
Joe: [00:21:59] Amen! Especially on the issue of sitting in a room and having a fellow board member appearing to look at the materials for the first time. How aggravating is that and how really counterproductive is that? That’s really not acceptable.
Larry: [00:22:14] Well, I’ve also seen where a board member asks a question that was answered if you read the deck, and that is inexcusable.
Raza: [00:22:24] Speaking of that, this can go pretty far, Larry. So talk about what do you do as a board member or even chair of the board or a board advisor when you realize that there is a board member that is disruptive, counterproductive, or you’ve made the wrong choice.
Larry: [00:22:42] It starts with the expectations. You’ve defined the expectations up front, and by doing that, when you have a board member who’s not performing, you can be able to sit down with the board member, and that should typically be two people.
Often it’s the chairperson or chairman of the board and then the head of the governance committee. Often you’ve gone through and done a 360 feedback and you’re able to sit down and then the question is can the person change or not? So I’ve been part of a number of these meetings and some of the people are very receptive and say, I didn’t realize I was doing that.
And others do not change what they’re doing, and if they don’t change what they’re doing, then you’ve got to see – are they the right person for the board going forward? You can also look at. Well, how long, when does a term end? Because that does make a difference because if you’re talking about the terms going to end in a month or two, you may just want to keep them on the board and then just don’t re-elect them.
Now in those meetings, I find the best way to approach it is to ask them the questions first. Don’t just go into judgment day here, but rather say to them, how do you view your performance on the board? Or [00:24:00] do you have time to be an effective board member and hear how they respond? Because often they’ll say something else could be going on with them.
Personal-wise, health-wise, they lost interest, they realized they’re not participating the way they should be. Or their attention been diverted, or other things.
Joe: [00:24:17] Yeah, so important to listen to them. As you said, board members need to listen and I think that makes sense. I will say this though, and we’ve talked about this before, that in my experience, that even when you do it the right way, you make the observation that someone is not appropriate for the board, whether they disrupt or are not doing their homework or for whatever other reason, and it’s clear that they need to come off the board.
My experience is that many owners, CEOs, whoever it is that’s running it, are very reluctant. They don’t want that kind of confrontation is, even though it doesn’t have to be confrontational, it feels that way to many people.
How do you help people get over the concern, Oh, if I ask Larry off my board, he’s going to be so hurt or he’s going to be upset, or whatever it may be, because a lot of it becomes a personal issue even though that person may not be a good board member.
A lot of owners, senior management don’t want to offend them..
Larry: [00:25:23] Right. But often those are the same CEOs who don’t like to have uncomfortable conversations with their direct reports or employees who aren’t performing either. But it is important in addressing these uncomfortable conversations that whoever you’re addressing, you want that board member still leaving with a good impression of the board and the company going forward because you got to view them no different from employees as they’re still ambassadors for you.
Joe: [00:25:52] Yes, of course, but there are definitely instances that I’ve observed, and I’m sure you have too, where no matter what you do when someone is being off-boarded, they don’t like it. You have to be ready for that.
Larry: [00:26:07] Right. And so to me it’s how it’s being done.
Joe: [00:26:11] I say this all the time, it’s really easy to ask someone on the board. It is very difficult to ask them off, so be very careful with that invitation.
Larry: [00:26:21] I agree with that.
Raza: [00:26:23] Taking this to now to the board level, Larry, what are two or three most important attributes for an effective board? What allows them to add value for the company that they serve?
Larry: [00:26:35] For the board to add value for the company they need to focus on the success of the company. Where a, how do we make this company successful? How can we as board members really focus on the future? Not on yesterday, not on today. But on the future and making sure that’s where the board is spending time. What often happens is the senior management, and I’ve been CEO of a number of companies, you get so caught up in day to day, it’s hard for you to step back and start to look from a 20 or 50,000 foot view.
That’s what the board needs to do.
The other thing that board needs to do is make sure that we’re working on the critical few things that are going to make a difference for that business to push it forward. The board cannot be afraid to challenge. There has to be constructive dissent. That said, when a decision is made, even if you don’t agree with it as a particular board member, the decision has been made.
Joe: [00:27:35] So to pick up on constructive dissent. Absolutely agree. I mean, I will often say, if you’re not going to speak, then you shouldn’t really be on the board. But what are the things that go into creating the kind of board culture where board members feel comfortable speaking even when they know maybe senior management or other board members or the chair doesn’t agree with the position?
Larry: [00:27:58] Trust. Transparency, being able to be open, knowing that you’re going to have discussion about it and really be able to openly debate the issues and everyone, when I say transparency, I mean transparency.
Joe: [00:28:14] On the topic of transparency, what do you think about the practice of having executive sessions of the board where the CEO steps out and the board meets alone?
I know for years that’s been something that people have talked about as good governance. I have heard lately maybe some pushback on that because why should the CEO not hear this? Isn’t it better if he/she can be in the room? Doesn’t it create more trust. What do you think about that?
Larry: [00:28:43] Well, I’m a governing fellow National Association of Corporate Directors, and they say it is best practice and it, and I do believe it is best practice, but at the same time, I think that the feedback has to go directly to the CEO after this session.
So if you’re going to have an executive session, then you need to provide the feedback directly to the CEO. This is what the board is saying. This is some feedback that you need to work on. We need to work on as a board going forward. I also think it works the other way around. The CEO needs to judge the board, and we have done a number of surveys and been involved with them where we asked CEOs – how effective is the board for you?
So it’s really gotta be a two way relationship, but I don’t view because somebody is out of the room versus in the room as they’re being excluded. I view it as, as a board may not want to be one person saying one thing to the CEO. They feel more comfortable saying to the chair and then the chair delivers it as the board saying if they agree, if they debate
Joe: [00:29:47] When the chair delivers the message of whatever it was that was said in executive session, is he or she alone, should he do with another board member? What’s the best way to do that?
Larry: [00:29:58] Well, good question. It depends on what’s being delivered and how sensitive it is. A number of boards that we advise the chair will bring in the CEO and just say, there are the three or four things that we discuss we want to share with you, but if it’s something very sensitive, that’s a whole different thing, then I do believe it’s better one-on-one or maybe two of the board members sitting in with the CEO.
Raza: [00:30:23] Larry, one other thing we wanted to ask you. A lot of people do want to serve on boards and think that it’s something that they want to be involved with more. What would be your advice to people who want to serve on boards?
Larry: [00:30:37] I would say the first thing you need to do is put together a bio that’s geared to being on a board, because a number of people have bios that are not geared to being on a board.
So focus on a bio that’s gonna appeal to boards. So that bio would include any of your board experience, any of your committee experience too, if you’ve chaired any committees, but specific to it. I see people just send their general bio and it doesn’t even present in any way their experience in it.
And second, target or think about where would you add value, what type of boards or what type of industries or companies or nonprofits you would want to add value to versus others. You know, whether you’ve got industry knowledge, if that’s what they’re looking for, whether you’ve got acquisition experience, maybe they’re looking for a lawyer, maybe you’re looking for someone whose got international experience.
You’ve got to make sure that whatever qualities you are bringing to the party, that this is what they’d be looking for. And again, I see those missing pieces where it just doesn’t match.
Joe: [00:31:46] Larry, is there anything else you’d want to talk about in terms of what you think is important about boards?
Larry: [00:31:54] Yes. I, I think that areas where they can improve is focusing on the long-term versus the short term.
I find that a lot of boards, their focus is very much on short term or short term initiatives that are happening in the next year as opposed to the long-term, what’s going to happen in 3, 5, 10 years, and if we’re doing the right things for that. I think that as board members, you’ve got to think and act like an owner, whether you actually own stock or not. I think that’s very important. I do believe as a board member, you’re accountable. No different than employees are accountable a company, and I do believe in today’s day and age that you’ve got to figure out, do we have the right diversity on boards, and that means diversity, meaning women, that means minorities, that means diversity of opinions. Those are better performing boards than the ones that are not diverse.
The other thing I would say is you’ve got to make sure that you have a strong commitment to your employees, to your community, to the vendors, to all the stakeholders. Because a lot of people on boards today are constantly talking about the shareholders, which is important, but they also have to consider all the stakeholders and are they doing the right things?
Are they doing the right things for the community? Are they are doing the right things for sustainability, for all the bigger issues out there.
And that I would also say 360 reviews are critical that every board should be doing them. A number of boards do not do them and nor do they do them well. But that’s part of being able to do the feedback.
Joe: [00:33:33] Larry, it’s been great speaking with you. Thanks for joining us today.
Larry: [00:33:37] Thank you for having me.
Joe: [00:33:38] And thank you all for listening to Onboards with our guest Larry Siff.
Take care of Raza,
Raza: [00:33:44] You too. Joe.