Board governance: Best practices

Case Studies | June, 2013

As a retained search consultant, I have had a unique opportunity to work with hundreds of Boards of Directors over the last 27 years, as hiring a new CEO is one of the most important Board responsibilities. I have observed that while some Boards are well organized and very dynamic, others seem to exist in name only. Several Board members recently gathered as a panel to share some of their insights for successful Board governance. The panel, sponsored by the International Downtown Association, addressed best practices in Board leadership, and I had the honor of moderating the conversation. Their leadership insights apply universally to Boards of Directors.

The panel was comprised of distinguished corporate, business and community leaders. Each panelist had extensive experience serving both as a Board member as well as a “leader of leaders” - the Chairman of the Board. The panelists represented organizations involved in downtown/urban economic development. Each panelist also had prior experience serving on a wide range of corporate and nonprofit Boards.

While there are many best practices involving Board governance, each panelist was asked to comment on what they believed to be the three most important Board leadership constructs. Their comments provide sound advice and wisdom for Board leaders everywhere.

Mo Razik is the past Vice Chairman of the Downtown Winnipeg BIZ in Manitoba, Canada; the President and Founding Director of The Forks Market Merchants Organization; the Chairman and Founding Director of the Independent Specialty Wine Stores of Manitoba; and a member of the Board of Directors of the Canadian Culinary Federation. Mo is the proprietor of Fenton’s Wine Merchants, Fenton’s Cheese Shop Ltd, Fenton’s Gourmet Foods Ltd, and Cognac, Cigars & Liqueurs by Fenton’s. Mo is also the founder and manager of The International Wine Festival of Manitoba, which is now in its twentieth year.

Mo believes that Board governance begins with a strong, independent nominating committee: “The King Makers cannot report to the King.” He also believes that Board policies must be well defined. As an example, the Board’s absenteeism policy must be very clear and prescribe an absolute threshold such as 70% attendance at functions in order to be eligible to participate on the executive committee and attend national and international functions representing the organization. In the case of downtown Board composition, the Board should include a broad base of community leaders. For those community leaders who cannot meet the prerequisites to participate as paying/voting members of the organization their involvement can be encouraged in a special category such as “Friends of the Board.”

Michael Schiftan is the principal of DevCon Resources, a multi-functional real estate firm that specializes in real estate consulting, development coordination/project management, owner/tenant representation, and asset management. Michael has been active in providing real estate expertise to developers, corporate, and institutional clients as well as private individuals. Michael currently serves on the Board of Directors/Trustees for Downtown Greensboro, Inc. in Greensboro, North Carolina. His Board service also includes East Market Street Development Corporation, Construction Professional Network of North Carolina, CPN Institute, and Temple Emanuel. He is the past chair of Downtown Greensboro, Inc.; East Market Street Development Corporation, Guilford County Board of Adjustments, and Greensboro Agency Transportation Express.

Michael is a proponent of frequent Board meetings and prescribes that downtown Boards meet at least once per month. This prevents the Executive Committee from becoming too powerful, which is often the case when meetings are scheduled only bi-monthly or quarterly. Chairs should serve terms of two years in order to provide more time for the Chair to learn the job and implement programs and initiatives. Board composition should incorporate and represent the diverse districts and stakeholder groups that comprise the downtown community.

Thaddeus Smith is a high profile mover and shaker in Hollywood. He has served as a catalyst for the revitalization of the eastern gateway to the Hollywood Entertainment District. Thaddeus is the owner and operator of the famous Music Box Theatre. He is an accomplished entrepreneur, musician, producer, and artist. Thad’s lifelong philosophy is Gandhi’s adage that “you must become the change you wish to see.” He is completing his second year as the President of the Board for the Hollywood Property Owners Alliance, which manages the Hollywood Entertainment District Business Improvement District (BID). He is the President of the Hollywood Entertainment District and the Vice President of the Hollywood Police Activities League (PAL). Thad also sits on the Keep LA Beautiful Board, Hollywood Security Committee, and is on the Hollywood Chamber of Commerce Board of Directors.

Thaddeus concurs that the term of the chair should be two years in order to provide continuity of leadership and programming. Active Board involvement is also critical to the success of an organization, and Thad promotes that by conducting “themed meetings” with a caterer and bar to keep members interested and committed. The goal is to build friendships so Board members enjoy each other’s company and work and have fun together. Thad also believes in designing Board meetings and activities that take Board members into the community to experience first-hand its diversity and richness. Thad brought a pitcher of Mimosas to the panel discussion to enhance the ambience and make the point that work can also be fun! Point made!

Paul Morris is the President of the Downtown Memphis Commission (formerly the Center City Commission) in Memphis, Tennessee. Paul has had the unique experience of serving as a Board member of the Center City Commission and as the Board Chairman of that organization prior to becoming the organization’s Chief Executive Officer. Paul is a native Memphian and has practiced law since graduating from law school. Most recently he was a director and shareholder with the venerable Memphis law firm of Martin, Tate, Morrow & Marston where he counseled business clients and litigated in a variety of commercial areas focusing on intellectual property law.

Paul believes that leadership roles and the relationship between Boards, volunteers, and staff members must be clearly defined and accepted by all participants. Everyone must clearly understand their responsibilities and the boundaries between their respective roles. Authority parameters and responsibilities should be negotiated for best results. Boards should focus on future strategic issues while the staff focuses on the execution of day-to-day operational issues.

Joseph “Bo” Dempster is the managing partner of Poyner Spruill, Attorneys at Law in Raleigh, North Carolina. Bo has over 20 years of business and professional experience working with a variety of clients crossing both geographic and industry lines. He has represented a number of business and institutional clients with respect to planning and execution of acquisition and growth strategies. Bo is the chair of the Downtown Raleigh Alliance.

Preparing Board leaders is critical to both the Board’s effectiveness and the organization’s ultimate success. The current Chair, past Chair, and incoming Chair should all be involved in strategic planning and decision making activities such as preparing for annual CEO evaluations; defining the division of labor relative to responsibilities/accountabilities between Board and staff; providing support to staff; fund raising; and strategic planning – defining organizational growth plans for the future along with Board and CEO accountabilities. Community visibility – the Board is a critical “leadership link” to the community and must be visible and involved in public relations.

David C. Lockwood, III is the Senior Vice President of Colliers International in Columbia, South Carolina. David’s expertise includes brokerage management with a concentration on leasing of office and retail properties, market analysis, lease negotiations, corporate services and consultative brokerage. He is serving his second term as the chair of the Columbia City Center Partnership.

Maintaining organizational clout is extremely important. A Board should be comprised of C-level corporate and civic leaders to ensure the organization maintains a significant leadership position with regard to “decision-maker” access, community influence and credibility. Board chairs should serve years to ensure continuity. David recommends a three year organizational Strategic Plan supported by one year Action Plans developed by committees to fix responsibility and accountability. Community partnerships are critically important and downtown organizations should establish solid working relationships with other community organizations in order to foster collaboration. The Columbia Center city Partnership led a BID renewal effort that extended the life of the BID for ten years to enhance long-term planning and program of work accomplishment. The extended BID authorization was supported by over 80% of the stakeholders – a testament to community confidence in the organization’s ability to positively impact, and champion downtown growth.

Good Boards can become great Boards by adhering to these best practices. Training and mentoring strong, independent Board leaders combined with establishing clear expectations with regard to involvement and commitment levels, defined Board roles, and two year leadership terms for chairs all build a strong foundation for success. Themed meetings help build friendships among Board members while focusing on critical stakeholder needs. And don’t forget to have fun! As David Lockwood stated, and I have observed through the years, the Boards and organizations that are most successful are generally those who maintain C-level decision makers as Board leaders, and whose Boards represent the range and diversity of the stakeholder groups that the organization serves.