FICKS your Board

An excellent article in last month's Harvard Business Review, 'Leading from the Boardroom,' highlights a paradox that many Boards face.

Directors know - or ought to know - that the real task of a Board is 'to build tomorrow's company out of today's'. The authors of the article, Jay Lorsch and Robert Clark, note that as the pressure on compliance grows, a Board's natural response is to spend more time on avoiding mistakes and minimising risks, rather than focusing on long-range planning. As a result, they expose their companies to potentially even bigger risks.

Think of the Board of a manufacturer of music CDs: what's the value of making sure we comply with every regulation and check every figure against last month's results, if we miss the fact that Steve Jobs of Apple has reinvented our industry - and that nobody wants to buy CDs when they can download their Amy Winehouse favourites onto their iPod? Oops, suddenly we don't have a business. That's the type of issue that Boards ought to be thinking about!

In my advisory work, I've developed a way for Boards to segment their work: I call it 'FICKS', obviously a catchy name (well, I think so) but also a helpful acronym for the five key functions of a Board:

• F - Future Focus - making sure we have the right Chief Executive (for the next few years as opposed to the last few), and working with management on strategy development and execution (let's spend about 30% of our time here - even though it's scary because it involves making decisions about an uncertain future);

• I - Issues Identification - understanding our environment, spotting the trends, communicating with our stakeholders so they understand what we're doing (another 30%);

• C - Compliance - it's still important to make sure we keep to the law, regulations and best practices, and monitor the risks the business faces, but not at the expense of looking ahead (perhaps 15% of our time);

• K - KPI ('Key Performance Indicator') Monitoring - sorry to tell you this, but you don't usually need to spend half of every Board meeting asking the same questions about the numbers and budgets that you asked last month (15% again);

• S - Succession and Skills - making sure we've got the right people at the Board table and in top management to deal with what we'll be facing over the next few years (the remaining 10%).

We can break this into three broader categories - the first two (F & I) are about creating value (cumulatively 60%), the next two (C & K) involve preserving value (30%), and the last (S) deals with the ability to keep adding value in the future.

In summary, the latter categories (C, K & S) are a means to the end - the end being to look ahead and build the organisation of tomorrow. That's where, as directors, we build the legacy that makes our job worthwhile.

Of course it's never this simple or so clearly segmented in real life - any decent strategy proposal will have elements of all five! And the proportions will vary from meeting to meeting. But I've found that 'FICKS' is a useful reality check on how a Board really spends its time, and whether it is dealing with the right things - as opposed to dealing well (perhaps) but with the wrong things.

You may get a surprise when you think about how your Board spends its time. But I'm sure the exercise will be worth it.

(Oh, and if you do find this is of any use to you, some attribution of my trademark, 'FICKS', would be appreciated, thank you!)