Strategy & Operations » Leadership & Management » Herding cats

LAST WEEK was the occasion of an important board meeting where, together with the CEO, I presented our annual budget for approval. Despite a thorough and effective process led by the executive team, and briefings for all board members in advance, I was astonished by the insane circus of events that took place at this meeting.

We were faced with an almost impossible challenge, to balance our ambitious investment and growth objectives against a backdrop of market conditions that called for austerity. We had decided not to undertake a full strategic review in advance, but to maintain the strategy agreed last year, with pragmatic adjustments. I am certain many organisations are doing the same thing at this very moment.

The meeting started well enough: the sun was shining, hardly anyone had forgotten to bring their board papers this time, and everyone was wearing clean shirts. Eventually we bought in some of our executive colleagues and introduced the budget topic.

The chairman (94) started it, then the non-executives (NEDs) piled in with political infighting and a rambling of uncoordinated yatter, constantly interrupting each other, leaving no sentence finished. They pretended to be discussing the serious matter of our budget, but my view was very different.

They bleated on about bankers’ bonuses, the refusal by certain dissident bankers to take their bonuses, the Greek crisis, Fabio Redknapp (honestly) and Alf Ramsey, a suggested strategy meeting in the convenient location of Bermuda, pet hates, personal agendas, and George Osborne’s next budget. This went on until the bio break. Then we returned to discuss our own budget, this time against the clock as, more importantly, lunchtime approached.

The board was in no mood for a budget presentation. So they picked and poked, criticised and accidentally formed themselves into a dysfunctional awkward squad. Not all of them of course: certain NEDs sat silently staring at their shoes. This turmoil appeared to be a collection of midlife crises, anger and disappointments taking the form of shambolic feuding thinly disguised as a board meeting.

It was as if they were all seeing this budget for the first time, and this is the point. I had, in fact, spoken to each one of them in advance of the board meeting as I always do in the spirit of our no-surprises environment, believing preparation is everything. Each of them was congratulatory and supportive at that stage and they all had their say.

This bizarre experience raises a number of serious issues in my mind. What is the effect of the board being negative and disrespectful to the CEO and CFO in front of other executives? Does it demean our authority? Does it impact the promotion ambitions of the executives? Does it diminish or enhance the reputation of the board’s effectiveness? What point is there in briefing the NEDs between board meetings if they then behave irrationally? Is it just an amusing game to them? Why am I here?

Of course many NEDs are first class – and some are famous for being so – but some are less equal than others. Done properly, they perform a valuable role and it is a difficult role to do well. It is not simply a matter of being negative, challenging everything and delivering nothing. However, after years of corporate Britain focusing successfully on improved governance, I am surprised that ineffective NEDs still exist.

We will have to present this budget again with revisions and I am hopeful that logic will prevail next time. I know our budget is the right one and I note the chairman and the NEDs did tell me so, individually, before the chaos of the last board meeting. Sometimes wrong but never in doubt, I remain resolute and undeterred. ?