How should CFOs contribute at their firm’s board meetings? Les Charm of Babson College says board meetings should focus on looking ahead, but too often they focus on what’s already past. What’s more, Les says that when it comes to middle-market firms, there’s no shame in recruiting family and friends to serve as board members. In fact, he would advise many CEOs to do just that. And as for championing good governance in the boardroom, Charm bristles at the very thought.
Friends & Family:
“For CEOs who are just starting a board, I believe that educated friends are really very good. Now, there are many authors who say, “Oh, not friends! They will be on the side of the CEO.” Wrong! If your board is about advice and not consent — then the CEO and their friends can listen and not feel threatened.”
The Financial Discussion:
“If you have 3 hours, the financials discussion should not be more than 30 minutes, and that 30 minutes should include the forward-looking dashboard. That’s my rule of thumb. I believe that most questions concerning financials should be dealt with by email prior to the meeting. When the person in charge of the numbers finds that they are getting asked the same questions two or three times, that is likely something that should be addressed at the meeting as part of those 30 minutes.”
On Good Governance:
“In middle market companies where the owner owns 100 percent of the company, it’s not about consent anyway, because if you continue to go against what the CEO says, he or she changes the board — and that’s why a lot of companies don’t even have boards. The word “governance” is horrific for lower-middle-market companies, whether they’re ventured backed or not.”