I’m back at school again, this time on the student side, for the first time in 18 years. Day one of the AICD Company Directors Course has just ended, and I’m going to blog my thoughts and take aways each day, so this will be the first of 5 such posts…
The CDC course involves 10 modules, each takes half a day, so we covered the first 2 modules today – an introduction to the roles and responsibilities of directors and then group decision making.
It’s fast paced and you have to engage. There’s a lot of pre-reading (I reckon 20-25 hours should be set aside to read all the material and case studies beforehand), and I’m glad I did all the reading, as it gave me a head start and strong overall understanding before I walked in this morning. I could apply my reading to the cases immediately. You could tell some had done all their reading, and some had not. Like a sewer, what you get out of it depends on what you put in. My suggestion is to do the pre-reading work, over a few weeks beforehand and take notes as you read, which helps you stay awake while reading, remember it, and then you can re-read your notes just before the session, and it all comes flooding back.
My main take aways from today are:
- Directorships are not for the faint hearted – know what you’re getting yourself in for. Be clear on your responsibilities (to the shareholders) and what you are bringing to the table. Doing the wrong thing can land you in jail (think Adler and Williams from HIH).
- Actively participate, but don’t do so overly; add quality to the discussion, and consider how the best boards could be run, and best decisions be made.
- Some of the most important decisions a board make involve selecting the best CEO and formulating the best strategy, keeping the management and CEO to account
- Boards need to fly at 35,000 feet taking a view from above, and leave the CEO and management to work on ground level on the business; communication between them is critical – how much is enough/too much? how would you know?
- Sometimes boards need to fly down to ground level to help (e.g. in a crisis) and then they need to get out of the way again above the clouds when the crisis has been averted. (Think Kevin Rudd, who was seemingly good in the GFC but then could not let go once it was past.)
- You should not get too comfortable on the board; after a few years, a refresh is needed. You can only be truly independent if you are relatively new and have no ties to the organisation (not a major shareholder or supplier).
- Group decision making is complex, but should be better than individual decision-making if the board is diverse, has enough information, takes enough time and analyses all sides and thinks what’s in the best long term interests of the shareholders.
- There are various tools that can assist decision making (Bono’s 6 hats, decision trees, PEST analysis, etc).
- Sometimes short term priorities blur long term thinking.
- A good Chair, who can draw out and use the talents of every board member, is crucial – they are like a conductor of an orchestra, and are ultimately responsible.
- Groupthink, where everyone just agrees and goes along with a (usually dominant) CEO of Chair is very dangerous; a managed bubbling of various ideas is healthy.
- Always consider what other options are possible, why others have not done this, what other information may be required.
- Voting is not a good idea; a good Chair will move the Board to a consensus, where all views have been expressed, and everyone can agree on the course of action, how success will be measured. If someone wants their opposition noted, note it.
- Reflect on past decisions and what it means for future ones.
- Before taking a decision, agree on how the decision shall be made (process).
- Will your decisions look good in the cold light of day? the next month? in 10 years’ time?
There will be many more takeaways; but these are off the top of my head (my notes are left back at AICD in the city).
See you tomorrow 🙂