When done well, assembling a peak-performing board pays off in dividends for engineering and construction firms.
Companies throughout the engineering and construction industry are seeking innovative solutions to the myriad challenges they face in today’s competitive business environment. Leaders are confronted with talent pressures, changing technologies, increased competition, demographic shifts, economic uncertainty and various other seemingly random obstacles on a daily basis.
To find solutions, leaders are considering a long list of options, including re-examining the way they recruit, onboard, train and develop their people; hiring talent with unique skill sets; re-examining their business models; forming new partnerships; joining peer groups; and finding ways to cut costs and increase productivity. Through it all, one powerful asset is often overlooked or not fully utilized: the board of directors (even more specifically, the use of independent outside directors as members of those boards).
Based on extensive research on boards and in-depth conversations with key leaders in the industry, FMI designed the Peak Boards model to help organizations ensure their boards of directors reach their peak level of performance. Here are the four guiding principles of the model:
Vision: Before any board-related discussion can take place, an organization must clarify its own unique vision. The best organizations have clearly identified and communicated their Core Purpose, Core Values, Big Hairy Audacious Goal (BHAG) and Vivid Description1. The board must understand the organization’s vision and align its actions accordingly. Without a clear vision to guide the board, its members can easily lead the organization astray.
Membership: Many organizations select board members in a haphazard fashion and wind up with disappointing results. Leading organizations understand that who sits around the table is the most critical piece of board development. The best-designed boards have members with complimentary knowledge, skills and abilities, rather than large overlaps among individual members. The value of outside perspectives can be priceless. When properly assembled, the directors bring a slate of talent that can help the business achieve its long-term goals and realize its vision.
Process: Many companies mistakenly believe a board will be effective simply by assembling a group of smart, experienced individuals. The best organizations are intentional about building a truly effective team at this level. In our interviews with industry leaders, exactly how the board interacts, emerged as one of the biggest weaknesses of existing boards. Without careful consideration of the structure and format of the meetings, they can easily deteriorate into unfocused, frustrating and ineffective events. The most productive meetings require advanced preparation and engaged board members who can focus their energies on organizational goals.
Focus: Far too many boards lose sight of their intended roles. Members of these dysfunctional boards do not fully understand their roles and typically devote time to operational and day-to-day issues rather than fulfilling the broader, more strategic roles of the board.
In the engineering and construction industry, effective boards serve a vital role by keeping an eye on the horizon and encouraging the organization to think long term about its vision and business objectives. This includes encouraging innovative thinking throughout the organization, driving strategy, assessing and mitigating risk and fostering financial health.
Based on FMI’s research, there is no greater untapped resource to help propel a business to new heights than a solid board of directors. When done well, the cost of assembling a peak-performing board is more than offset by its overwhelming benefits.
1 Collins, J. & Porras, J. (1994) Built to Last: Successful Habits of Visionary Companies New York: Harper Business.