In this newsletter, Human Capital Advisors begins an occasional series examining issues confronting CEOs. Today, John Tydings, managing partner of HCA’s Executive Advisory services, interviews Tony Cancelosi about board relations, a key responsibility of every CEO. Mr. Cancelosi, who was a founding member of HCA, is now CEO of the Columbia Lighthouse for the Blind, a non-profit organization. He previously was CEO at several for-profit technology companies, including Ibyte, Inc., eStara, and Source Digital.
JT: What qualification do you look for in a board member?
TC: Overall, I need a mix of skill sets – financial skills, legal expertise, fundraising and development programming skills, etc. They don’t all need to be CEOs, but most of my members are.
Obviously, they must be people with stellar reputations. I look for people with good interpersonal skills who can work cooperatively to find solutions. I need people who are adept at analyzing a situation and can offer keen advice about how to fix what might be broken. Board members shouldn’t be too opinionated. And I especially don’t want members who look for someone to blame when things aren’t going right. That’s not helpful. Identifying a problem is fine, but we all need to work together to make things better, not look for scapegoats.
And the search is ongoing. I look to my board members to recommend candidates who can promote us to community and who may have expertise in sectors we focus on. It’s a process of sustainability. We’re always looking for board members in case one leaves before his or her term is up.
JT: How do you organize your board to maximize its benefit to you?
TC: I form committees. That’s important in a couple of ways. One, I have a small subset of my board that focuses on one area. The committee is small enough to be workable and when they find answers and good ideas, those ideas are vetted and have strong champions who can then help more easily sell them to the full board. Sometimes if the entire board is asked to address a problem from scratch, things can become unwieldy.
I frequently will match a committee with one of my direct reports, so when there are issues that need to be addressed, they can work together seamlessly.
JT: Is that the way you involve them in day-to-day operations?
TC: My boards are not responsible for daily operations, but I will come to them with operational problems and assign the issue to a committee. But generally board members don’t get involved in day-to-day issues.
JT: What if they try to?
TC: That’s not something I can let go too far. I’ll immediately bring it to the attention of my chairman and will sit down with the chair and the board member to sort things out.
JT: Are there any differences between board members you recruit for a non-profit versus a for profit enterprise?
TC: I might want a member or two with strong P&L experience for a for profit baord, but otherwise, there is really no difference. In both cases, I look for members with passion for our mission, our charter and the impact we hope to have on society. Also, in a non-profit, all board members must be fundraisers. That may not be their skill set, but whenever they talk about our organization to others, they always need to be on the lookout for possible funding sources and alert our development people to those who may want to help fund us.
JT: What lines of communications do you try to establish with board members?
TC: We have board meetings every quarter. But in the interim, I try to at least have one-on-one phone conversations with members to get their advice and apprise them of our status on issues that are of particular concern to them.
When there is an issue a committee chair is working on, we’ll meet prior to the board meeting to make sure we are in sync and have prepared our presentation. If we can demonstrate that we’ve considered things from all angles and the committee is backing a particular approach to an issue, it’s a lot easier to sell the board.
JT: What can get in the way of attaining board cohesion?
TC: The board must be workable, and to me that means small is better than large. I now have seven board members. That’s a good number. I think that often in both the non-profit and for-profit worlds, boards are often too large. You more often will find factions forming on large boards. Sometimes you’ll have board members who may be more interested in proving they’re right than helping the organization. That’s counterproductive.
JT: What metrics do you use to evaluate board members?
TC: I look at attendance, how proactive they are in solving problems, how well they understand our mission and strategic plan, how careful they about conflicts of interest, and how they conduct themselves at board meetings and how they fundraise. I also ask them to rate themselves. But it takes only one instance of purposefully going around me to get to my staff to ensure that their days are numbered.
JT: How do you replace a non-performing board member?
TC: I’ve never had to do that in mid-term. But as all board members have specific terms, when a term is up, if I need to make a change, that’s when I do it.
JT: Give us an example of a time when your board was hopelessly split on an issue. How did you work it out?
TC: I’ve never had a situation that dire. But if it were a really serious issue, I would do more due diligence. I would review both side of the arguments. I’d examine how I presented the issue. I’d search for new information.
If new information and re-presentation didn’t help, I’d put the issue on a shelf for a month and allow everyone to rethink it and then review it again.
If new information, re-presentation and time don’t resolve the matter, I may bring in an expert on the issue to ensure we’ve considered all the implications. It’s not necessarily binding arbitration, but an outside source may help us clarify our thinking.
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