5 Steps to Board Meeting Enlightenment in PE-Backed Companies — Part Ⅱ

Board effectiveness

3 min read

Step 2: Break Your Monthly Board Meeting Habit

Portfolio company board meetings consume time and energy, but for many board members and management teams they don’t add value. In this series, we share ways of breaking this unproductive cycle. In the first article, we recommended rewriting the agenda to make better use of the board’s time. In this article, we’ll look at the board’s annual calendar.

What are you doing wrong?

Board meetings and operational meetings are not the same thing but are often conflated. This is because the board’s purpose isn’t always clear — does it exist to monitor performance and confirm the state of play, or is it a forum for value creation?

Research by Board Intelligence confirmed that portfolio company boards are, in theory at least, an important value creation lever. They set and monitor strategy, drive pace and focus, and help management to spot opportunities and risks, and act on them. Board meetings are an opportunity for everyone to step back from the day-to-day and think to the future.

90% of investment professionals and portfolio company board members believe that returns would be materially lower without board meetings.

Source: Board Intelligence 2019 research.


But theory doesn’t always translate into action. Too often, board meetings are about dissecting detailed operational and financial information — confirming the state of play and holding management’s feet to the fire. The monthly cadence, designed to time the board meeting around closing last month’s numbers, only exacerbates this. And while it is important to ensure that the numbers add up, this won’t create value — and crowding out forward-looking discussion and rushing strategic decisions can destroy it.

“The board should help to lift management above the day-to-day, to think about their priorities and reset them if necessary. Without that, management can lose sight of the end game.”

~ Paul Franks, Managing Partner, Beech Tree Private Equity

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So what’s the solution?

Firstly, the PE house must make sure that all board members, observers and contributors are aware of the board’s role and purpose — and what distinguishes a board meeting from an operational one. Conduct a quick survey of your board and management team now and you’ll see just how successfully you’ve done this. It is a crucial part of the board onboarding process but often overlooked.

Then, break your monthly board meeting habit and rebuild your board’s annual calendar around two things:

  1. Financial and operational performance reviews — a 60–90 minute call or meeting led by the CFO every 4–6 weeks.

    Don’t turn the pages and dive into line-by-line detail. Share insightful information in advance, and focus on discussing exceptions, asking questions and making important tactical decisions.

  2. Quarterly board meetings.

    By covering the performance detail separately, the board can lift itself out of the day-to-day and focus its full attention on the topics and decisions that will add most value. By meeting in full only once a quarter, the board is forced to think carefully about what those topics and decisions should be, and management have the time to prepare insightful information to set the board up for productive discussion.

Board meetings are expensive — board reporting costs the average medium-sized company £900k per year — so you should optimise that spend in the same way you would any other. This means more than keeping a close eye on performance; it means using the collective experience and knowledge of the board to turn the value creation plan into reality. If the board isn’t doing that, it’s not worth the investment.

The next article in this series will look at the CEO’s report.


The 5 Steps to Board Meeting Enlightenment in PE-Backed Companies

In case you missed any of the steps in the series, you can find them here:

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