Managing Your Board of Directors Through Uncertainty

Market volatility can significantly impact the dynamics and interactions between company leaders and the board of directors. Board members are likely to be more concerned about the financial health of the business and seek to understand the strategy for balancing growth and profitability. For CFOs in particular, anticipating and managing these dynamics is critical for maintaining strong board relationships and gathering the feedback they need to finalize their annual plan and financial strategy. 

To give CFOs in The Circle some insights into navigating choppy market waters with their board, we invited three leaders with experience on many sides of the boardroom table: George Anderson (Partner and Leader of Board Effectiveness at Spencer Stuart), Khozema Shipchandler (CFO turned COO at Twilio), and David Travers (CFO turned President at ZipRecruiter).

Three major Takeaways emerged from the conversation:

#1 Be Transparent

A poll of CFOs in The Circle revealed that interactions with their board have become more frequent this year due to market volatility. CFOs need to be ready to field tough questions about how they plan to manage cash burn, recalibrate their balance of growth and profitability, or make offensive moves during a downturn to meet new public investor expectations. The increased interactions go both ways: board members also want to provide more support, said George. “​​Most board members would like to be positive contributors to the leadership team’s thinking in a challenging time,” he said. “They’re more willing to engage in collaborative problem-solving rather than just receiving a presentation from the CFO.”  

In almost every situation, being transparent and forthcoming can lead to better outcomes and relationships with board members.

“In all times, but especially in times of uncertainty, transparency is your friend. Aside from the fact that boards hate surprises, proactively engaging them to ensure they’re aware of the state of things also allows them to help you make better decisions.” – Khozema Shipchandler, COO of Twilio

Khozema recommended spending time with individual board members on a more regular cadence – quarterly or even monthly – particularly those board members that can offer advice on people management and other leadership issues that can arise during volatile times. To make those conversations as productive as possible, David recommended customizing the agenda for each interaction to the areas board members are most enthusiastic or knowledgeable about rather than a generic check-in. Both sides will get much more out of the interaction that way.  

Transparency should also increase between the CFO and CEO. “Within four hours of any conversation with a board member, I’m making sure my CEO knows exactly what was said in that conversation,” said David. “It allows the CEO to be more prepared, and also creates a reciprocity where both CEO and CFO are proactive about sharing important board feedback.”

#2 Offer Solutions

While board members are there for support, they also don’t want the CFO to come with them with a laundry list of issues and no solutions. CFOs need to remember that a critical aspect of their role with the board is building confidence in the company’s strategy.

“As the CFO, you’re the safety blanket for board member concerns. Before getting in the room with them, I would make sure to know every board member’s top area of concern. Then, together with the CEO, you have to decide how to focus those concerns into a single mandate that the board agrees is the right directional strategy.” – David Travers, President of ZipRecruiter

It’s essential to demonstrate to the board that you’re actively pulling every lever to address major financial issues, added Khozema. “To the extent, you can show that you’re working on getting to a place where you control your destiny, not the market, it will make those conversations a lot easier.” When new issues arise, be proactive about volunteering that information, but also emphasize that you are actively working on solutions. “Even if you don’t have the ultimate solution, it’s important to show you have a process in the short term to say, ‘we’re on top of this, we’ve properly seized the issue,'” said David.

In unstable market conditions, there will be a lot of uncertainty in the CFO’s financial plan. Offering multiple scenarios with shorter time horizons can help calibrate the board’s expectations and give them confidence that the company is prepared for uncertainty. George recommended laying in multiple levels of assumption into each financial scenario, with cascading financial plans based on those assumptions. Khozema also cautions CFOs not to ignore the potential upside scenario and ensure that the team and the board have a solid plan for unexpectedly positive outcomes.

#3 Set Boundaries

More involvement from the board has the potential to increase their influence on major business decisions. This outsized influence can be particularly challenging to navigate with newer board members who may not have as much context on the intricacies of the company. If the CEO or CFO disagrees with a piece of board guidance, it’s incumbent on them to create a balance between encouraging board feedback and not allowing them to dictate the entire strategy. “Every board has a base-level desire to make important decisions and have their input taken to heart,” said David. “But as CFO, you have to be very intentional about where you draw that line around where they can provide input versus make decisions.”

One way to set clear boundaries with the board is by dictating up front what is up for debate or discussion:

“Categorize specific items in the board agenda for board decision, input, or information. This approach sets expectations ahead of time for what you’re looking to get out of the discussion.” – George Anderson, Partner, and Leader of Board Effectiveness Services Spencer Stuart

It may also be helpful to remind the board of prior examples where you’ve implemented their feedback before sharing that you’re choosing a different direction this time. If a board member is adamant about their recommendation and the Executive Team disagrees with that approach, David recommended a three-step strategy for mitigating conflict: “First, make it clear that you heard what that board member said. If you decide to go with your approach, have a process for measuring whether your thesis ended up being wrong and own up to it. Finally, be thoughtful and united as a management team when responding to that board member.”

The Takeaway:

Market volatility can lead to some uncomfortable interactions between company leaders and the board. However, managing and leveraging the board effectively through proactive communication, a solution-oriented approach, and clear boundaries can turn that discomfort into a solid strategy. It allows the CFO to foster more productive conversations and stronger relationships with individual board members, which are valuable in any market environment.

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