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Managing the gap between director expectations and management execution is often more art than science. Financial executives not only need to give the board the numbers, but also tell the story regarding what the numbers mean.
FEI Daily spoke with Stephen Brown, Senior Advisor, KPMG Board Leadership Center about how to perfect the boardroom presentation.
FEI Daily: What exactly does a boardroom advisor do?
Stephen Brown: In my current role as a board adviser I help boards and management think through a variety of critical corporate governance issues. Such issues can include board composition and diversity, how to engage with investors and advising the company about dealing with activist hedge funds, how to respond to crisis related shareholder issues, board evaluations, and best practices for various board committees.
FEI Daily: What are some of the common problems or disconnects between boards and management in boardroom presentations?
Brown: One is watching management reiterate what they've written in their presentation, reading word for word from the deck that they create for the board. That's an absolute no-no. Part of that is assuming that the board didn't read everything that management submitted. Many times it's part of the first sentence that management utters, ‘I'm assuming everyone's read all the materials’ which you should assume because that's their job and that pretty much is always the case.
I’ve seen management read word for word from their presentation. A lot of times a board member will stop them. By the way, that means you're off on the very wrong foot. I always tell executives, ‘You probably should come in with a brief summary that you're going to use to provide the high-level information that you need to provide.’
That leads me to the second thing, which is not providing insight and perspectives beyond the numbers, because board members can read numbers. They've read your presentation. They want to know exactly how you think about a particular trend. They also may want to throw you a curve ball: What happens if some of the assumptions that management has made in this model change? What do you think about that? Answers to those questions gives the board perspectives that they need to make their supervisory job easier. They get the most out of that presentation when they do that.
Sometimes management does not provide enough information. And sometimes they just provide too much. They give the board a 500 page deck and buried on page 433 is the real information that board needs. Board members don't like that. They don't want too little, they don't want too much. They want to know exactly what they should be focusing on.
Another pitfall is thinking that the board members are experts on the issues that are put before them. They're not. The board is made up of a number of people with different areas of expertise. The reason why they've called you in is because you have a particular expertise that they're responsible for, but they may not be experts. So you have to go into the presentation understanding that.
There is a level of pre-work that management should do in understanding each board member’s perspective and expertise. You get that by talking to people who have worked with those board members, whether it's the CEO, general counsel or the corporate secretary, who can give you pointers. What questions do they anticipate from each board member? What are some of the idiosyncrasies or proclivities that a particular board member has that will help you plan your presentation.
Additionally, it's absolutely crucial that management reads the room well. Many executives will miss the non-verbal cues. Whether it's a board member who's heard enough or a board member who thinks you're off base. These are, for the most part, collegial, consensus building environments. The board may let you get through your presentation, then, after you leave, they may be very critical of it. So, it's important to have those soft skills to read the room.
Lastly, is not selling what has already been sold. I've seen that happen where the board has already bought into a plan and management keeps going. That can only be bad because the board members could change their minds.
FEI Daily: What are some other examples of the risks of a bad presentation?
Brown: Bad presentations may be rectified. That’s a big maybe. But you certainly don't want to make the same mistakes twice. These presentations are high stakes and you want the board to come away with a great deal of confidence in you. Which is why this is so important to get the presentation right.
Another presentation pitfall is when there are questions put to you that you're just not prepared to answer. Or you answer in a way that the board leaves with deep questions about your answer.
When to speak and when not – that’s another boardroom diplomacy issue to think about. There are dynamics in the room that you may not be aware of, that are very important. It's also the issue of not wanting to show up your boss or your CEO.
FEI Daily: Why is it important to attend this session? What do you hope that the summit audience will get out of it?
Brown: Financial executives give many presentations throughout the company and to the board. The board presentation is perhaps the most high-stakes one.
The board is always assessing talent in the c-suite and assessing talent on the bench. It would be extraordinarily important to do a great job. By the way, it's also important to do a good job for your boss. If you don't, that may reflect poorly on them.
During the session, we'll go through the common pitfalls that we've seen in management presentations to the board and ways for management to put its best foot forward. My main focus is that board members and management have very different roles. Board members are not operators. That's up to management. The board’s view is a much longer view. That's important for management to remember, particularly financial management. Board members want insights from management so that they can do their job in assessing how well management understands trends and really have confidence to keep management in place.
Lastly, attendees of the session will have the ability to ask questions of a seasoned boardroom advisor in a “safe environment;” questions they probably wouldn't ask their boss and that they probably wouldn't ask a board member.
To hear more from Stephen Brown on how to reset the board relationships and ways to put together a quarterly game plan for success, register for this year’s 2019 Financial Leadership Summit.