What type of boards are there

Boards must recognize which directors need help, which should not be nominated for another term, and which should be cut loose. The peer review at one multinational financial services company illustrates how such assessments work.

All board members, including the member being evaluated, fill out the form. Peer feedback has influenced decisions about recruitment, retirement, committee leadership and selection, and education initiatives for directors.

Use of peer-review tools is becoming more common among boards interested in formally assessing their individual directors. His peers generally gave him more credit for his knowledge than the director gave himself. Meanwhile, the director clearly considered listening and engaging to be among his strong suits. Agenda management is a mundane-sounding subject if ever there was one. Agendas, however, dictate what the board discusses and at what length. To control the agenda is to control the work of the board.

Historically, management has been in control. The result has been decades of choreographed ceremonies substituting for meetings where real work gets done. CEOs, if so inclined, can overload the agenda with so many show-and-tell segments that they crowd out serious questions, troublesome concerns, or authentic debate. But with the call to accountability, corporate boards can no longer doze behind the wheel while management steers. To the extent that CEOs participate in the board-building process and CEOs must participate in the board-building process they acquiesce to some level of power sharing—a high level in the engaged, intervening, and operating models.

The presiding director can collaborate with the CEO to devise an agenda agreeable to both. Alternatively, at the end of each board meeting, participants can collectively set the agenda for the next one. Directors and managers can review the agendas and minutes of meetings past to ascertain how much time they devote to each area. The board at Target, a corporate governance leader, has gone further, transforming agenda management into something of an art.

At the start of each year, the board sets three top priorities—for example, strategic direction, capital allocation, and succession planning. It then places each topic at the top of the agenda for at least one upcoming meeting. Directors never stint on questions and debate, requiring management to submit major items for board approval at least one meeting prior to the scheduled vote so they have the chance to discuss them. But they are chary of their time and insist that presentations be short and to the point.

Even without managerial diversions, board meetings are simply too packed with must-accomplish items to allow an in-depth examination of any one. That is frustrating for directors who want to dig deeper into the meatiest subjects, most notably succession planning and strategy.

Annual off-site meetings or retreats, one-on-one conclaves involving CEOs and directors, and sit-downs between groups of directors and employees who have common interests all make the intervals between meetings fruitful. In response to the heightened focus on accounting and financial reporting, for example, many audit committees now meet—in person or via teleconferencing—more often than the board as a whole. Certainly, committees give directors the chance to concentrate on specific issues, developing deeper expertise in the process.

The other, ironically, is to provide too much. Too many board directors are overwhelmed by fat stacks of often insignificant numbers but lack the right information presented in the right way to produce informed action.

Certainly, boards face a huge information challenge. Directors are outsiders with limited time to learn about the company. If knowledge is power, then the balance lies with managers, who live and breathe operations.

The rest rely on what management chooses to share with them. In some cases, a little class time helps correct the imbalance. One company we worked with, for example, decided that its board lacked the background to intelligently review its strategy, business model, and performance. Directors, including some who had been on the board for years, came away with a much better understanding of important issues.

In that case, the board diagnosed its own problem. Other boards, however, suffer from a more general discomfort: the feeling that something is missing or preventing them from doing their jobs. Often, that something is a particular kind of information.

The board of Axcan Pharma, for example, conducted a self-assessment that exposed concern about the conflation of chairman and CEO roles. Further conversations narrowed the focus: Directors, it turned out, worried less about the conflation of roles than about a lack of information regarding acquisitions the CEO was pursuing. The solution was to change the information flow to the board rather than separate the two roles. Their chief complaint? Such knowledge malnutrition is common. Boards often subsist on just two sources of information.

The first is retrospective data on corporate performance and operations—in other words, trailing indicators. Not long ago, we worked with a board that was under sharp criticism for taking too long to remove a CEO following major performance shortfalls and spectacular valuation declines.

How were we to know what was going on below? In fact, once we saw the problems, we acted with blinding speed, although in many ways it was too late. The best boards design processes to deliver formal information that combines both leading and lagging performance indicators, which will vary by industry and company. What do they do? Speak up and demand change? They meet two to four times a year. The President manages the organization. In this case, the board member would speak directly with the chairman or president…no one else.

The board has the power to rethink or over throw any management decision. They would need to meet monthly or more as needed. State and federal laws require corporations, including nonprofits, to have a board of directors to provide oversight and make sure decisions are made soundly and ethically.

A few states allow the corporation to have as few as just one board member, but most states require more. For example, it's common to have at least a board chairperson, a treasurer and a secretary to take minutes at the required annual board meeting and any other meetings throughout the year.

If you're involved in forming a new board of directors, be sure to find out the specific federal and state laws that apply to you.

Ask any board member or CEO of an organization about the different types of boards or even the type of his own board, and you'll get a huge variety of answers. That's partly because the same types of boards go by different names. It's also because CEOs and board members don't know what kind of board they have. They only know how their board operates and how their board members are selected. Many organizations use combinations of board types anyway, so they can't put a name on it.

There are certain types or models of boards that you'll hear mentioned again and again, however. Advisory boards typically don't have authority to make decisions for the organization.

Instead, they provide advice to the actual board of the organization or to someone in the organization when asked. Advisory board members have expertise in particular areas. For example, a CEO might ask the advisory board for help with public relations if one or more of its board members has that experience. Or, the board of directors of an organization can ask an advisory board for advice in a certain area or about a certain issue with which they don't have experience.

Collective, consensus or cooperative board members have a shared focus and vote collectively as a group. Each board member has an equal voice and vote. All board members are expected to contribute equally. Investors want it big and fast. Private Board directors have more latitude with regards to their involvement with the CEO and the management team while working to grow the business.

Private Boards are great launch pads for corporate board service. Public Boards are by far the most regulated boards. Serving on these boards is time intensive. While attractive compensation is an upside to Public Board service, a director must commit to allocate time to prepare for meetings, to be part of committees that meet between regularly scheduled board meetings and to attending all meetings.

You must be prepared to address crises that require board diligence as they surface. Public Boards are a great place to make a significant impact with an organization and its leaders.

Johanne Bouchard, a serial entrepreneur and former high-tech marketing executive, is a governance and leadership advisor to boards, CEOs, executives and entrepreneurs, as well as an expert in board composition and dynamics. She is an advocate for STEM, increased diversity in the boardroom and patients' rights. More Posts.

I have a question regarding your post about the four types of boards. I would like to get an advisory board set up.