Tony Heard on what makes boards better.
Tony Heard has seen a lot of organizations from a lot of different angles. A successful private and commercial banking career led him to be regional chairman of U.S. Bank. In the middle of the last decade, Heard transitioned into management consulting — first with NMG Advisers, then with InfoWorks, where he has focused on business processes and technology tools. On the community service side of things, he has been a longtime member of the boards of Saint Thomas Health and the United Way of Metropolitan Nashville and also has helped guide WPLN and The Housing Fund, among others.
Heard recently sat down to answer a few questions from Editor Geert De Lombaerde about effective board service and broader governance practices.
What is your advice to someone stepping into board service for the first time? And is it different in a for-profit business versus a nonprofit?
Here are three steps, regardless of whether it’s a for-profit or nonprofit business:
- Understand the fiduciary duties of the board and learn how the board is prioritizing its work on key responsibilities such as setting and monitoring long-term strategy, evaluating senior management performance and monitoring organizational achievements.
- Get to know the other boards members’ skills and experience to identify some new ways you can help the organization. How can you serve as a subject matter expert?
- Take time to research and learn about operations, the industry, competitors, the CEO, the staff. Don’t wait to gradually gather that information through board meetings.
Think of the most effective boards you’ve been a part of. What sets them apart?
- Strong leadership from a board chair and committee chairs, who are more engaged than the other board members and personally understand the strengths and challenges of the organization.
- The relationship between the board and the CEO must be strong. Does the CEO understand how to utilize the board to augment his or her skills to grow the business and minimize risks?
- The board needs to focus on innovation and strategy and not just oversight of financial results and operational performance.
How important is it to have strong industry knowledge, say of health care or banking, of entities where you’re a director? Or is there greater value in bringing a true outside perspective?
Any company or organization will benefit from a board with members who have experience in multiple industries and who ask why something is being done differently than what they have seen work successfully.
Diverse industry experience is also a key to moving innovation horizontally. Uber and Lyft did not invent new technology for their operational platforms but built alongside mobile phones’ GPS technology and utilized that for new purposes. As noted earlier, it is imperative that board members learn about the company’s industry — read online industry news and publications and study how competitors are performing.
What are other skills and experience for a successful board?
Every board needs members who cover a matrix of functional skills — finance, technology, marketing, business development, etc. — as well as members who understand what will drive customers to utilize the products or services offered by the business today and in the future.
Nonprofit boards may need help gaining access to customers, donors and partners. Consequently, they need a set of members who cover a mix of four leadership traits:
- Ideas (creativity and vision)
- Power (influence and affluence)
- Energy (enthusiasm and availability)
- Authority (wisdom and ability)
On the for-profit side, should boards look different depending on companies’ size or structure?
The criteria for effective governance can vary somewhat based on the ownership structure of the organization. Among for-profit companies, CEO-owned, family-owned, privately owned with shareholders and publicly traded may have different governance criteria. However, best practices for any entity include:
- Establish leadership independent of management with outside directors in key board roles.
- Ensure optimal board composition with diversity in experience, gender, age and ethnicity.
- Create board and committee charters with detailed responsibilities and set term limits.
- Structure board meetings to maximize results by providing financial and operational information ahead of meetings.
- Encourage board members to visit one-on-one and communicate with one another outside of board meetings.
- Proactively evaluate board effectiveness and make changes when required.
Every company and organization will benefit from having an engaged and dedicated board of directors. It’s worth the time and effort to assemble a group of leaders who will support and challenge a business to set goals and achieve them.