Opinion: Understanding boards

Executives often fail miserably because they're ill-prepared, and don't understand what boards want to hear.

Senior executives need to ace their presentations any time they step in front of the company board. Unfortunately, many fail miserably, largely because they’re ill-prepared. These 10 steps will help to make an impression that you won’t regret.

1) Understand the board. Executives often walk into a situation they don’t grasp. They think one thing, but the board thinks another. Focus on three key elements.

First, the general context of the organization: i.e., Is performance in a division poor? Has a major customer defected?

Second, the primary focus of the meeting. Is the chair unhappy with a recent product launch? Is the meeting focused on the strategic direction?

Third, the board members. Get to know their backgrounds and their preferences. Canvass the chair’s opinion to better understand their headspace.

2) Bring the right people. Ask the chair who should attend. Typically, the person making the presentation should be the one accountable for the issue. Perhaps bring a supporting executive, but don’t parade an entire team. That can leave an impression of confused accountability.

3) Keep the numbers simple. Presenting any business issue demands numbers. The board needs to see substantive analyses that quantify financial and operational impacts for every decision. But don’t try to impress with fancy quantitative analyses. Boards really care about: How much money do you need? How much will we get back and when? What return does that imply, and is that the best use of the money?

Your quantitative analyses should be easy to explain. If the question is, “Should we build this new plant,” leave the discounted cash flow for your appendix. Instead, use a simple analysis to demonstrate that the new factory will lower the average cost per unit by $10,000, which will pay for itself in just two years.

4) Articulate key assumptions. Don’t present any analysis without clearly walking through key assumptions. To understand whether a discounted cash flow (DCF) analysis is right or wrong, directors need to see the five key assumptions that matter: revenue growth, margin evolution, reinvestment rates, discount rates, and terminal value. An average DCF model may have 100 to 200 detailed assumptions, but it is only those five that matter at a high level. Highlight those clearly in your presentation and put the details in the appendix.

5) Present your answer first. We solve problems by defining them, generating solutions, designing decision criteria, choosing the best alternative, and creating a plan. But this isn’t the way to lead the board through your thinking. Tell them the answer and then back it up. Too many presentations dwell on how the problem was solved.

6) Read your audience constantly. Don’t barge through your presentation without checking in with your audience. Ask about pacing, and find issues before a director gets frustrated. Check in by watching the body language of the chair and key directors. We’ve seen executives get into trouble that could have been avoided with better attention to body language. At one meeting, presenters using an onscreen PowerPoint presentation failed to recognize that one of the most influential board members seated at the back of the room couldn’t read any of their charts and was visibly upset.

7) Be transparent about risks and challenges. One of the board’s most important functions is to understand risk and ensure plans are in place to mitigate it. Boards rely on executives to highlight risks fully and transparently. Too many executives forget their role as risk manager and focus instead on spinning, or muting bad news. Identify and discuss problems and controversial situations without sugar-coating or obfuscation.

8) Address questions immediately. Don’t commit career suicide by delaying questions until later in the presentation or until the end. Delaying an answer can create unneeded animosity and is sometimes perceived as disrespectful. When a director asks, answer promptly.

9) Frame the outcome. End your presentation by asking for something. Boards close issues by approving, denying, or asking for further study. Frame the end of your presentation by asking the board to act.

10) Role play your presentation. You’ve spent weeks creating an amazing presentation. Don’t fall on your face by presenting poorly. Practise both the presentation and answers to the tough questions to make sure you don’t get embarrassed. Board members like to ask tough questions – it’s part of the job. Spend as much time anticipating and preparing for questions as you do preparing your presentation.

When the meeting is over, don’t forget to seek feedback from the chair to help improve your next board performance.

Carol Stephenson is dean of the Richard Ivey School of Business and John Kelleher is CEO of RJ McCarthy LP.