How Boards Can Avoid “Surprises”

Surprising bad news is the bane of a director’s existence. Operating losses appear without warning. The medical staff votes “no confidence” in the CEO. Medicare investigates an unexpected death during surgery and finds rampant quality deficiencies. A competitor beats you by announcing plans to build in a hot growth suburb. A labor union announces a campaign to organize the nursing staff. When boards think things are going fine and hear such news, trust fades quickly in management, justified or not.

Leaders are usually great problem solvers, but a new book — Know What You Don’t Know: How Great Leaders Prevent Problems Before They Happen – argues that “leaders at all levels must hone skills as problem finders,” and by so doing, “they can preempt threats that could lead to disaster for their organizations.”

Organizational breakdowns and collapses, says author Michael Roberto, do not occur “in a flash; they evolve over time.” Great leaders, says Roberto need to learn seven sets of skills and capabilities that enable them to find problems and institute improvements before catastrophe occurs.

I recently interviewed Roberto, professor of management at Bryant University in Smithfield, Rhode Island, and formerly on the faculty member at Harvard Business School, to ask whether his advice for top management could be applied by governing boards. “Absolutely,” he said, but boards face some unique challenges.

The full interview will appear in the fall issue of Great Boards, but here are a few excerpts:

  • “Filtering of information is always happening in organizations as information moves up the hierarchy. Perhaps the biggest filter of all takes place between management and the board.”
  • Board meetings should be “about the dialogue not the documents. Board members are inundated with too many documents. My dean likes to call it ‘death by PowerPoint.’ The focus of the board meeting should be on creating a robust dialogue, not on plowing through a million documents.”
  • When recruiting new board members, ask “about how they run their management meetings. How do they interact with their own board, and what are those board meetings like? Get a real feel for the kind of a decision-making process this person tends to structure and lead. How connected are they to the front lines of what is happening in their organization?”

Until then, see these articles in past issues of Great Boards:


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