The New Director's chair
A Call to Board Directors: Bring Your “Whole Self,” and Be Courageous
October 29, 2018
For the next installment of our interview series called “The New Director’s Chair,” my colleague David Reimer, the CEO of The ExCo Group, and I (Adam Bryant)sat down with Shellye Archambeau, the former CEO of MetricStream who sits on the boards of Verizon and Nordstrom. She has many smart insights on boardroom dynamics, and don’t miss her sharp take on the biggest mistake first-time entrepreneurs often make. Stay tuned for more interviews with other leading directors.
Bryant: What have been some key lessons you’ve learned from your experience as a director?
Archambeau: Probably the biggest is that effective directors ask the right questions. There can be a tendency when you have an operational background as a CEO to dig in and solve problems. But that’s not really your job. Your job is to make sure that the company has the right strategies in place, the right talent and team to execute those strategies, and that they are managing the risks associated with those strategies.
Another is to make sure you really understand the context. Every company has its own environment, marketplace and set of competitors. So it’s important, in order to be able to add the right value, to spend the time to understand the context. It’s not a matter of just reading a board deck and showing up at a meeting.
Reimer: For somebody considering a board position, how should they evaluate whether a given company is the right fit for them?
Archambeau: Due diligence is really important. You have to make sure you’re comfortable with the company, the brand, and the values. Then there are questions about the board. Who’s on the board and what are the dynamics within the board? How many board meetings are normally scheduled, and how many did they actually have? Some companies schedule five board meetings a year, but when you look closer, they may have 15, with calls and special board meetings outside the regular ones. To me, that’s a sign that something may not be right.
“The board should be in constant evolution of skills, because companies don’t stand still.”
Don’t just talk to the CEO and one director. You want to make sure that you talk to a few of the directors, and get a sense for who they are, what they think about the board and how it operates.
When you talk to the CEO, ask them how they use the board. What are they looking for from you specifically to add to the board as a new director? How do agendas get set for the board meeting? You want to ask about the strategy of the company, but also the strategy for the board. Where are they trying to take the board? The board should be in constant evolution of skills, because companies don’t stand still. I’ll also ask how often there are big disagreements, and how those are handled.
Reimer: Once you’re on a board, how do you dig in to really understand the fabric of the company’s culture?
Archambeau: It’s not just about the numbers. How did we get there? The culture is in the how; it’s not in the performance or the results. So it’s important that you feel comfortable as a board member that you generally understand the how. When you’re on the compensation committee and you’re designing compensation, you always have to make sure there aren’t unintended consequences from the incentives.
Every company does culture and employee surveys, and you want to make sure that the surveys are really getting at questions like, “Does management walk the talk of the company? Do you feel comfortable raising issues?” And you want to track key cultural indicators, like attrition, and watch for disconnects. If there’s high turnover in one of the business units and people don’t transfer in and out, something’s going on there.
You also want to make sure that boards have opportunities to interact with senior management, such as three levels below the CEO. That gives you a chance to sense whether the leaders are walking the talk. Those discussions with people a few levels down should happen freely and accessibly, and not in some super-controlled environment.
Reimer: What is the CHRO’s role in the boardroom?
Archambeau: I expect the CHRO to have the pulse of the overall organization. I expect them to be courageous, to be doing and driving the right things so that the company has the best talent possible to execute on the strategy. I’m expecting that they’ve created an environment where, if things start to go off the rails or bad actors start to emerge, that it’s easily and quickly discovered. A company is nothing more than just a microcosm of the United States, so there are going to be bad actors. You don’t hold a company accountable for having bad actors. The issue is how quickly you find them, handle and address the problem.
Bryant: If you were giving a talk to first-time directors, what advice would you give them?
Archambeau: Make sure that you are adding value every time you open your mouth. No one is taking notes on how many minutes you speak, and there’s no award for taking up most of the air time. It’s much more about the value that you bring when you participate, so don’t feel the need to pile on. The time in the boardroom is precious.
“The board brought you on for a reason, and they brought you on as your whole self to add value.”
Ask for feedback from other board members. And learn the language. There are always so many acronyms. When I join a board, I’ll keep a list in the first meetings where I write down all the different acronyms I’m hearing. I don’t interrupt the flow of conversation, and when we take a break, I’ll lean over and ask another director, “What do these mean?”
This is a key point: The board brought you on for a reason, and they brought you on as your whole self to add value. Many times, especially for women or for minorities, they can be afraid to raise certain issues. But you’re on the board because you bring that lens, and it’s important to speak up. It doesn’t matter whether it’s a different ethnicity, gender or sexuality. Your job is to bring that lens. That’s part of adding value. So be courageous.
Reimer: You’ve been part of organizations that have either been disrupted or brought disruption to the market. How do you bring that experience to the board?
Archambeau: First of all, I do seek out those kinds of companies. They are the most interesting and the most challenging. What I bring to the table because of my experience is a little bit of paranoia about competitors, particularly when you have a high-margin business. The whole thing about a high-margin business is that it is fabulous and it is fleeting. That paranoia helps with asking questions and raising risks.
Bryant: In your work with entrepreneurs, what are the most common mistakes they make?
Archambeau: One is that they forget they’re responsible for running the company. They listen too hard to advice coming from their board or an advisor as a directive.
Two, they fall in love with their product, and they need to fall in love with the market. Because when you fall in love, it’s just like when you have a baby. Everyone who has had a baby thinks their baby is absolutely the most beautiful creature in the world. When you fall in love with your product, you have this perfect product and it’s great and people just need to better understand it.
You have to fall in love with the market instead. Because if you fall in love with the market, then you will understand that market better than anybody else and you will figure out exactly what it needs and you can morph the product.
Reimer: Do you have any baseline advice for CEOs in terms of managing a board effectively?
Archambeau: You, as the CEO, run the company. The board does not run the company. One dynamic thing I’ve seen is that when the board says, “Do this,” it’s easy to take that as, “Okay, I have to do this.” And the answer is no, you don’t. It is all input. They hired you to run the company. It’s your job to make the decisions. They can always change you out. But the board does not run the company.
Bryant: How much time should a first-time CEO spend with the board?
Archambeau: You’ve got to spend the time necessary to actually get to know each of the directors, their priorities, how they think, and how they’re showing up. With some people, you can do that quickly because they’re pretty open and it’s direct. With other people, it’s going to take a few dinners to do that. Some board members want much more contact and information than others. So there isn’t a one-size-fits-all approach to managing them.
Bryant: Now that you’ve got some distance from the CEO chapter of your life, what were the most important leadership lessons you learned?
Archambeau: The top three keys to success are the team you build, the team you build, and the team you build. And I mean build in an active sense, because as the company grows and develops and evolves, the same needs to be true for the team. That can be hard, because you work closely with these people, but you have to bring the team forward. It’s about always thinking about the team that you need three years from now.
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