Boards can have Directors with stellar credentials. The directors maybe be diverse in background (or not) and have fabulous skills and experience. In theory and on paper, the Board is first rate. But in practice, its it failing. Directors are not coming prepared to meetings; they are not reading materials in advance; they are not calling before the meeting to ask the CEO, CFO or GC questions on major issues. They are not keeping up to date on Company press releases or products or new business lines. And by “they” I do not necessarily mean the whole Board. It only takes one or two Directors to start the Board down the slippery slope to institutionalized laziness. And laziness can be contagious. Even with the brightest, most experienced professionals. Directors temper their own behavior (consciously, or more often unconsciously) off the behavior of others in the groups they frequent. So, if one or two Directors come to meetings noticeably unprepared, not only does it make the Board meeting less productive that one time, but it leaves an impression on the other Directors. A well run Board or proactive Chairman will take those Directors aside immediately and inform them that being unprepared is unacceptable. Almost better not to attend than to come unprepared to a meeting. One Director’s behavior can affect the entire Boards’ behavior and culture, not just at that particular meeting, but at subsequent meetings as well. Laziness, like a weed, must be quickly quashed, lest it spread among the other members of the Board and ruin the harvest.
Some laziness is not blatant or obvious, but to us who have sat in hundreds of Board meetings, we see the signs. When directors bury their noses in the Board binder of materials when they arrive, it means they did not read the materials beforehand. As a Board secretary, I always knew those Directors would be useless at the meeting. In fact, whatever that director said would probably be a waste of time – a non-sequitur, meant to highlight his or her intelligence or skill, but contributing nothing to the matter at hand. The unprepared Directors often were those who spoke a lot at the meetings; more interested in getting their voice heard or asserting their own points of view than taking time to understand the details of the matter. Staff or executives who spent days preparing the meeting materials, would then need to reiterate all the information to those Directors who did not prepare. In many instances, the staff is not given the opportunity to educate those lazy directors – and poor, uniformed decisions were made. Failure or less than optimal outcomes are the result.
Directors – be prepared! Not only will you fail the Company and its shareholders by indulging in laziness, but you risk personal liability. You are a fiduciary! You have a Duty of Care! A critical part of that is being informed and prepared. Do it or resign.
Chairman – Observe. Who asks questions or makes statements just to talk? Who asks questions that show they did not read the material? Take those Directors aside immediately after the meeting (if circumstances call for it, take a break during the meeting) and discuss the behavior.
Behavior can show the true nature of a person. If this Director comes to another meeting unprepared, take the director aside and ask for his/her resignation on the spot, even if it disrupts a meeting. You have to take a stand. The Chairman sets the tone for the Board and the Board sets the tone for the whole company. Laziness is more insidious than you can believe. Once the Board gets a reputation as lazy, the executives may start down the same path, then employees, etc…