Essentials for Effective Board Meetings

[00:00:00] Intro: Welcome to Minutes by boardcycle, where in each episode we pack the insights from one of Australia's boardroom leaders into just a few minutes.

[00:00:09] Intro: Today, join host Richard Conway as he interviews Catherine Brenner, Chair of Australian Payments Plus, and Director of Scentre Group, Emmi, and the George Institute of Global Health, about how to run productive board meetings.

[00:00:27] Richard Conway: Hello and welcome to Minutes by boardcycle. I'm your host, Richard Conway. And today my guest on the podcast is Catherine Brenner, who I'm talking about how to run a board meeting. Catherine's had an extensive career as a non-executive director and is currently the chair of Australian Payments Plus and a director of Scentre Group, Emmi, and the George Institute of Global Health.

[00:00:48] Richard Conway: Welcome, Catherine.

[00:00:49] Catherine Brenner: Hi, Richard. Lovely to have a chance for a conversation.

[00:00:52] Richard Conway: Great. So, Catherine, jumping straight in, I think, although sometimes it might not feel this way to the board or the company secretary, the fact is that boards don't meet all that often. And when they do meet, it's not really for all that long in the grand scheme of things.

[00:01:08] Richard Conway: So it's really important at the time that the directors do spend together is used to its maximum possible effect. Could you give us an idea what you think are the essential things that have to be done before, during, and after a meeting to achieve that?

[00:01:22] Catherine Brenner: It's a great question, because as you say, there's a finite amount of time with such important decisions to be made.

[00:01:29] Catherine Brenner: And boards are a social dynamic where you want to not only have a great environment, but use every minute wisely. So as you say, there's a lot that happens in advance. So one of the tools that I find really helpful, whether as a chair or a board member, is an annual planner or annual calendar for what the board's going to do throughout the year.

[00:01:52] Catherine Brenner: And that will have things like when the accounts get approved, or when we're going to review the risk appetite statement [00:02:00] review executive remuneration, et cetera. And it also enables them to other things to be scheduled in. So that's a sort of very basic hygiene factor, which is really helpful because there might be something I've been thinking about and thinking, Oh, I'll have a look and go, okay, that's in two meetings time.

[00:02:15] Catherine Brenner: I know we'll get to discuss it then and I can leave it until then. The agenda for a board meeting, usually I see as chair of a committee or chair of a board, the agenda is often before the two meetings in advance, and straight after a committee or a board meeting have a draft skeleton agenda for the next board meeting.

[00:02:36] Catherine Brenner: So there's a lot of thought and planning that goes into it because of course, management need the time to think about the papers and to draft the papers, and then for that to go through the whole process, but also for us to think about who do we need to talk to those papers or whether they're things we just should note.

[00:02:54] Catherine Brenner: So there's a lot of discussion and iteration that happens that the company secretary facilitates and [00:03:00] the chair and the CEO or the, if it, particularly if it's a committee, the responsible executive will have a discussion on. Other things that are important, and one of my very wise, excellent, former chairs used to have what he called the rule of three.

[00:03:15] Catherine Brenner: And that was for important decisions that unless it was a crisis, or an emergency, that a board shouldn't be being asked to make a decision unless it had come before them at least three times.

[00:03:30] Catherine Brenner: And so the first discussion would be, there may not even be a paper, sometimes there'd be a paper, and the concept, some education would happen, and the parameters of what management are thinking and why they're thinking it, so that the board could get up to speed. The temperature could be taken, management could understand where there were gaps in understanding, or where there are things that they might need to spend more time on.

[00:03:55] Catherine Brenner: And then the second time, I mean, there may be a number of these second time [00:04:00] meetings, but that's when the meat of the material comes. Often a strong man, what the parameters might be, and they'll often be some clear questions that are being asked to the board to help management refine what they'll bring for final approval. So that when it does come at a subsequent board meeting, there's only certain things that need to be decided, and everyone's been well and truly warmed up, and the resolution often for that one, has a much shorter discussion because it's already been canvassed.

[00:04:30] Catherine Brenner: That's just some of the things. We can talk a bit more about the day before the board meeting and after the board meeting, if that's helpful.

[00:04:37] Richard Conway: Yeah, before we jump into that, Catherine, can I ask a little bit more about that rule of three scenarios? So, I just wanted to clarify when you think that rule of three should be followed because, I guess I'm imagining for very regular planned things, you probably don't need to follow that kind of scenario. And it's important for people to use the time [00:05:00] well, and therefore not do three steps if it's not necessary.

[00:05:03] Richard Conway: So what are the scenarios where you think that that is essential to do?

[00:05:07] Catherine Brenner: So that's a really good point. So say that there's an acquisition or a new product line or division, a disposal, big capital expenditure, even approving a risk appetite statement that there will need to be a number of iterations.

[00:05:23] Catherine Brenner: So it's horses for courses, but boards, I find work much better if everyone around the table at least has a base level of common understanding. And that can sometimes be done outside the board meeting. At one of my boards, we have these education sessions out, you know, which might go for an hour. They're usually on teams.

[00:05:44] Catherine Brenner: And it's really for the board members to come up to speed, understand the issues, some of the variables, the history, which then enables us to go into the discussion at the board and make a decision if need be. So it can work that way as well.

[00:05:58] Richard Conway: Yeah, absolutely. [00:06:00] And so Catherine, to go back to what you said before, could we now talk about just before the board meeting and during the board meeting particularly.

[00:06:09] Richard Conway: In your experience as a chair, what are the things that are essential to do it at that kind of critical point to make sure that the meeting runs well?

[00:06:18] Catherine Brenner: Sure. And also, as a Director, I think that as a Chair and as a Director, identifying what the questions are that you have, where are perhaps you have quite a different point of view to what's put forward in the papers, or you feel there's something missing. Giving a call to the chair beforehand so that you can discuss it with them. They can understand what would help you. It gives management an opportunity to prepare.

[00:06:42] Catherine Brenner: And sometimes, it also enables the chair to say, Oh, but remember, we discussed it then, or perhaps if you look at this. So that sort of conversation is incredibly important for directors and as a chair, it's very helpful.

[00:06:54] Catherine Brenner: Right up until sometimes the morning off, but definitely the afternoon before [00:07:00] as a Chair, having a discussion with the CEO or the executive responsible as to what sort of questions have come up, questions that I have on the papers and where I think there might be things that particular Directors might be interested in, where it might be helpful to have another piece of information.

[00:07:17] Catherine Brenner: That sort of planning and pre thought makes a big difference to having a quality discussion and a very effective discussion. Even the sequencing of how the agenda works is something that when you see the papers and you've got a sense of what the issues may be, I won't hesitate if I think it will mean we have a much more effective board meeting to change the order.

[00:07:39] Catherine Brenner: Obviously you take into account, you know, you don't want executives coming in and out of the room all the time, but sometimes the sequencing will work better. If it's going to be a topic where, I feel that there could be some discomfort or a very robust discussion, I like to reset the room and everyone's mindset.

[00:07:57] Catherine Brenner: So either having, matters for [00:08:00] noting after that or even having a short break. Because I know as an executive coming into a boardroom, and just sensing in the air that there's been a bit of tension beforehand, doesn't bode well for your own presentation. And I don't think that's fair on executives or enables boards to make the right decision.

[00:08:18] Catherine Brenner: So, just thinking through those human factors and almost choreographing the agenda, I think, is a really important thing for a chair to do to ensure that it's a really effective, productive meeting.

[00:08:30] Richard Conway: Absolutely. And Catherine, I wanted to now talk about things that you feel might derail a meeting. And I think you've alluded to those a little bit in the sense of things you do to prepare to avoid those things.

[00:08:43] Richard Conway: But what in your experience are key things that do happen to derail a meeting? And what can you do as a chair or ask that your company secretary do to proactively avoid those things? And, and I guess also if it happens to you on the spot, do you have [00:09:00] any advice on how to deal with those on the spot?

[00:09:03] Catherine Brenner: Yes, the sort of derailers really have tended to be in two categories. And one is where management has put something on the table that the chair wasn't expecting, that the board wasn't expecting, and sometimes the CEO wasn't expecting. That is a surprise or a shock. That can be quite a derailer because it is a surprise that there hasn't been a warm up.

[00:09:26] Catherine Brenner: There's a concern about what else we don't know. That sort of thing can be a derailer. The other broad category is where a topic comes to the board, and there's no straw man or framing questions. And so there's this enormous landscape where different directors start at different spots. So they're not quite sure what the purpose of the paper was, or even what the purpose of the agenda item is.

[00:09:50] Catherine Brenner: And so you end up with a very fragmented discussion that tends to go down rabbit holes and not usually where it needs to be. So they're the two broad areas. How do [00:10:00] you avoid them, and then how do you deal with them if they come up?

[00:10:04] Catherine Brenner: So how they're avoided is by having really good board papers. I'm a big fan of board papers as it was set out in one of your earlier podcasts, being very clear on the purpose of the paper.

[00:10:15] Catherine Brenner: I find if it's a board paper that's for discussion, having some framing questions so that the directors can think about them beforehand, minimises the risk of thought bubbles and facilitates a much richer discussion. So board papers are a key one.

[00:10:31] Catherine Brenner: And the other one is ensuring that important material information comes up beforehand. Even if it's the CEO mentioning without a paper at the beginning of the board meeting, that these are some of the things that have changed and that they'd like to discuss during the course of the meeting.

[00:10:47] Richard Conway: I guess to follow up on that, Catherine, is it really ever acceptable for management to put something to the board that hasn't been flagged in advance?

[00:10:56] Catherine Brenner: Look, it always depends on the circumstances. If [00:11:00] it's a crisis or something emerges, the way in which it's brought to the board and the commentary that's given to the CEO. If it's a surprise to the chair, that's not a good sign either. And I think that undermines the confidence in the room as well.

[00:11:15] Catherine Brenner: So if it can at all be avoided, I think that that's an important thing. If it does come up, what I tend to do is to pause and look at the CEO and ask them to define what the question is or the issue is. If we're getting lots of information real time as the chair stepping back and trying to synthesise it and asking and playing back to management, what is the question that you're wanting us to answer? Or what is the issue at hand? Because otherwise, you can end up with sometimes everyone in the room having a slightly different view of what the problem is or what the proposed solution is.

[00:11:51] Richard Conway: Absolutely. And Catherine, I then wanted to go towards the end of a meeting or after a meeting, what you can do at that point in time to make sure [00:12:00] it's effective. And one thing in particular that's very common is for the board to have a closed session where they discuss that issue. And I, I wanted to ask you, how important you think it is to do that process and how effective you think that is in continuously improving your board meetings. And whether it needs to be done every meeting or it's something that you just do periodically.

[00:12:24] Catherine Brenner: A really great suggestion and that's something that I find is really effective. And having it on the agenda for every board meeting is important because if you don't need it, you just don't use it, or it's a very short session. But I do like the closed sessions to have two parts to them. The first part being where the CEO is in the room.

[00:12:44] Catherine Brenner: And also the company secretary needs to be in the room for both. So that you can have a record of what was discussed if needed. The CEO being in the room means that we can give feedback as a board on how we felt executives presented on the [00:13:00] papers, what we thought we would have liked less of or more of.

[00:13:03] Catherine Brenner: And there might be just other issues because we won't probably get together as a group for at least a month, if not longer. It also is quite helpful to reset so that everyone leaves on a good note and the CEO walking away having clarified what it is that we want management to do more work on, what the decisions were, if that wasn't clear in the meeting, hopefully it was clear.

[00:13:26] Catherine Brenner: Having then a session after the CEO leaves of just the non-executives, I think is really important to have on the agenda. You don't always have something to discuss, but having it as a standing item means it's less alarming and concerning for the CEO when you ask them without notice to leave.

[00:13:43] Catherine Brenner: And as a chair, I always go and check in with the CEO after that just to sort of either give them a heads up or just check they're okay. Because they're humans and it is worrying to know that everyone's talking about you without you there.

[00:13:56] Richard Conway: Absolutely. So finally, Catherine, I think one of [00:14:00] the strong themes from what you've said here is talking about the importance of both good planning and clarity prior to board meetings to make them effective.

[00:14:10] Richard Conway: Both the chair and the company secretary play very critical roles on that. And I wanted to ask you, what you see is the keys to making sure that those two roles work effectively to run these meetings well.

[00:14:25] Catherine Brenner: Look, I think, good process leads to good outcomes. That way, you have the right information, the right questions, and the appropriate time allocated to things with the right people in the room.

[00:14:36] Catherine Brenner: And having a good constant dialogue with the company secretary is really important. Chairs regularly catch up with the CEOs, you know, they have a cadence of talking every week or more or less. And just being able to sort of mention to the company secretary, look, would it be good to put this on the agenda or can we have more time for that?

[00:14:54] Catherine Brenner: The company secretaries are also really good for feeding back information to the chair as well as to issues [00:15:00] that they see are emerging. So having a relationship of trust is particularly important because the company secretary will be privy to pretty much everything that the board discusses, even when the CEO is not in the room.