Board Performance & Metrics

5 Cognitive Biases That Quietly Influence Boardroom Decisions

As human beings, we naturally want to think of ourselves as valuable and special, making us more adaptable while at the same time creating cognitive biases in our brains. Cognitive biases are repeated errors in thinking, often coming from stereotypes or preconceived notions. These biases are hard to detect and can lead to bad choices and illogical decisions. The first steps to overcoming or disrupting cognitive biases are to recognise that they exist and to replace faulty thinking with better information.

Hire, Review and Fire: The CEO Lifecycle

Better Boards hosted a webinar on the topic “Hire, Review & Fire: The CEO Lifecycle” in September 2023. I was lucky enough to facilitate a panel discussion with Craig Badings, Anthony Mutton, Tom Brett and Peter Crow, and gained so much from the session that I thought I’d share my reflections. Hire I’ve been lucky enough, as a member of a board to be involved in several CEO appointment processes. It always feels like spring when a decision is made – a sense of renewal and vibrancy, a sense of next adventures and new opportunities.

The Uncomplicated Guide to Getting Board Reporting Right

Many non-profit executives and directors may dread writing board reports, but it doesn’t have to be complicated. Arnold Wong, a Fellow and National Treasurer of the Australian Computer Society understands the foundations behind effective board reporting. He discussed the basic skills required through a helpful lens in a recent webinar with Better Boards. We’ve compiled some key points here in this brief article to help you approach your board reporting with confidence.

Key Stages of Building a Financial Model for NFP Organisations

Financial modelling is one of the most important tools a non-profit organisation can have under its belt to improve its Financial Management. It can help in the planning of short and long-term strategies, to identify areas for improvement, and even to adjust the entire business model. The board should be part of building a financial model, but it must cooperate with other key decision-makers in the organisation to ensure everyone’s needs are being met.

The Elephant in the (Board)Room

In almost every survey of boards, directors reveal that they are unhappy with the performance of one or more of their boardroom colleagues. They usually then continue to reveal that their board has done nothing to remedy the poor performance. For example, the 2018 PwC Annual Corporate Directors Survey showed that 45% of directors believed that one or more of their board colleagues should have been replaced. The McKinsey Global Governance Survey2 showed that 67% of directors served on a board where one or more directors should have been removed.

Documenting Customer-Centricity

It would be hard to find a business that did not place customer-centricity as a priority and not-for-profits have in recent times started to catch on. However, customers for many not-for-profit organisations will differ from that of a for-profit organisation. For not-for-profits, the “customer” could range from the beneficiaries of the organisation, to their supporters, stakeholders, members or clients. Customer-Centric Constitution Customer-centricity will often require a cultural shift, and fundamental to any sort of cultural shift in this sector is an organisation’s documentation.

The Touchy Subject of CEO Dismissal

Firing the CEO can be one of the most difficult decisions a board can make – it will also be among the most critical. However, many boards, including those of non-profit organisations, will resist bringing up the need to fire their CEOs, while other boards will be far too quick to fire their chief executives. There are many reasons a board may be slow to act when it comes to CEO dismissal:

Learning for Purpose

The ability of Australian Not-for- Profit (NFP) organisations to respond to change and growing demand – to have social impact – substantially depends on the knowledge, skills, and abilities of their people. This is not merely a trivial argument. Instead, multiple empirical research studies show that NFPs that systematically develop their employees and volunteers do better. For instance, a national study analysing field data from 697 Australian NFPs shows that organisational human resource development practices and policies positively affect organisational competence and capability.

Difficult Conversations About Director Performance

Every board must discuss difficult issues from time to time – and the right approach can have a positive impact on the outcome. James Birch AM, chairman of the Australian Red Cross Blood Service, has found that poor, or less than optimal, performance from the chief executive officer (CEO) tends to top the list of sensitive issues. This is followed by poor performance from a director or the board as a whole.

The Importance of Being Heard

Listening to consumers, their families and carers, is critical to succeeding in an increasingly competitive climate. For example, the commencement of the National Disability Insurance Scheme (NDIS) and emergence of disruptive technologies, introduces informed choice. As purchasing power shifts to individual consumers, they will become more critical in their choice of service. To meet their due diligence responsibilities, directors must have an effective oversight of the processes in place for engaging with consumers and effectively monitoring and managing the quality and safety of services.