Q: "I've recently taken over as CEO at our company, with a mandate for some restructuring and new initiatives. The board, however, could slow down change in itself. Most outside directors have been on board for years, and I frankly think a few members contribute little. Also, there are 13 directors, which seems too large nowadays for the size of our business and our industry. What are some effective (but humane) ways to weed out non-productive directors?"
A: Your particular situation, with the board changes as part of a general company shape-up, allows you to bring some overall good governance exercises into play. Robert Lear and Boris Yavitz, co-founders of Lear Yavitz Associates governance consultants, have between them decades of experience on boards, and shared with me their real-world advice on boardroom housecleaning.
Easing out ho-hum directors is relatively bloodless if you back it up with a solid evaluation program to first separate the sheep from the goats. "If you have a regular CEO evaluation, then it makes sense to also do the board," says Lear. "Then you suggest looking at the individual directors. If 12 out of 13 directors give negative ratings to Old Joe, then Joe is likely to decide he shouldn't be there." Lear suggests a nominating or specific governance committee for such evaluation, and also notes the value of having an outside facilitator guide the process. "That way, you can blame it all on the consultant." Yavitz suggests that this consultant should interface with the chair of the committee to process "director feedback on individual board members, but without the [ raters'] names attached." The committee chair then meets with the chair of the board and with individual directors who were voted weakest links.
Directors still may be reluctant to point the finger at individuals, so another evaluation tool that Yavitz recommends is to have them "write down the 4 most effective and 4 least effective members of the board, and briefly state why." Common beefs include lack of meeting preparation, or a tendency to push a single issue. This technique spreads the blame, and when directors are privately told that they received the most negative votes ("taken out for a cup of coffee" by the committee chair or lead director), they often do the right thing on their own. Weak members decide not to stand for re-election, so "you give them a big party and a plaque, and everyone goes away happy," says Lear.
With ongoing use of such evaluation, you should be able to both slim down the size of your board and strengthen its value within a couple of years.