The Board of Directors is responsible for managing every aspect of the company per its charter document. For that reason, the board must ask thoughtful and practical questions to better assess if its business strategy aligns with the company’s end goals or legally specified purpose.
The board’s job is to think of the bigger picture and respond according to it.
Therefore, keeping the organization’s overall vision close in mind is of utmost importance for each board member.
One must remember that questions are not criticisms or attacks. They aren’t meant to be disrespectful or disparaging. Any question the board members ask is fostering an opportunity to delve into something more deeply and make sure the board is best informed to make the subsequent decisions. Ideally, any question members of the board will ask encourage more clarity about the issue at hand and provoke thoughtful conversations. The board will make the best decisions when it truly understands every aspect of an issue, especially if it happens to be dynamic or complicated. The board will need to address and consider every facet and impact of an issue before deciding together.
For example, let’s say that the CEO is recommending an increase in rates or prices. Here are some thoughtful questions to consider asking to get down to the bottom of why now might be the time to raise rates/prices.
- What do we hope to use the extra capital for?
- Has demand grown enough to warrant this type of increase?
- Do we have loans we need to repay that this extra income generation will help?
- How will this affect our net income?
- Is it necessary that we raise this now?
- Are we behind in the market?
- Will this help us attract more savings, and how might we use that going forward?
- What will this increase help improve?
- Is it necessary that we do this now instead of later?
If your CEO is recommending a decrease in rates or prices or cancelling/ending something such as a product line, these are some other questions that would be helpful to consider:
- Did a risk not pay off?
- Do we have the money/liquidity to be able to handle this decrease?
- How will this affect our net income?
- Is it necessary?
- Did we underestimate a risk?
When evaluating a budget, income statement, balance sheet, or expenses over a quarter, here are some other thoughtful questions to ask:
- Has accounting resolved all line items?
- Is anything still outstanding?
- What was the outcome of the risk? Did it pay off or not, and why?
- How are we funding our loans or long-term investments?
- Are we within policy?
- Does more evaluation need to take place before we consider establishing/doing ____?
- Why is there a negative balance or a negative line item?
- Are we going in the right direction? Why or why not?
- What is losing or gaining market value?
- Do we need to reassess our risk factors?
- What should we know about the market to better understand these deviations?
The board is responsible for managing the investments, so it is crucial to make sure investments are within policy and are being managed appropriately. Here are some questions to ask around those:
- What investments are losing or gaining market value?
- Should we reconsider our risk factors?
- Do we want to be more aggressive or conservative?
- What should we know about the current market and market forecasts?
Most importantly, the board needs to be future-focused. Any questions should be couched in that mindset of, “Is this the best way to help our organization move toward our vision of prosperity?” Also, do ask general questions as necessary:
- Do we have more research on this topic? Possibly reports or news articles that would better help us make this decision?
- What are our most recent financial statements about this metric?
- How do you think that discussion of ____ went? Is there something we need to discuss further?
While a board, especially the ones with new members, may still be figuring out its stride, the most critical part of any board meeting is having thoughtful and healthy conversations about every aspect of the organization.
An organization is best served by its board’s ability to ask questions thoughtfully and to listen, consider, research, present, and reach a consensus about its future growth.