Category Archives: Governance

Compensation, Governance, Operations, People Matters

Dual-Track Goal Setting: Harmonizing Management Ambition with Stakeholder Assurance

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The best approach to setting annual performance goals for an organization is to simultaneously pursue two paths, one for the management team and one for the board, investors, and lenders as outlined below.

Stakeholder Plan: The Under-Promise-Over-Deliver Approach

Set goals to get the results you want base
Figure-1: Under Promise and Over Deliver

Target Audience: Board, Bankers, and Investors

Objective: Manage downside risk while maintaining credibility.

Strategy: Present conservative, achievable targets to ensure a high probability of meeting or exceeding expectations. This approach builds trust and reassures stakeholders about the management team and their investment, offering a solid foundation for the future.

Outcome: Exceeding conservative estimates provides a reason for celebration and reinforces stakeholder confidenceas suggested by the under-promise and over-deliver lines graphed in Figure-1.

Management Plan: The Aim-High-Do-Better Method

Set goals to get the results you want full
Figure-2: Aim High and Do Better

Target Audience: Internal Management and Operating Teams

Objective: Maximize team performance and drive to achieve top-tier results.

Strategy: Set aggressive, yet attainable goals, understanding that they might be achieved 75-80% of the time. This encourages teams to stretch their capabilities and innovate, often leading to superior results compared to a conservative approach even when the goal is not attained.

Adaptation: If mid-period results deviate significantly, either above or below, from plan, be prepared to revise the goals to maintain momentum and direction through the rest of the performance period.

Outcome: Even if actual results fall slightly short of ambitious goals, the organization often ends up in a stronger position than if it had set more cautious targets as suggested by the aim-high and do-better lines added to the graph in Figure-2.

Summary: The Dual-Faceted Approach for Business Growth

  • Key Insight: Leaders of growing businesses should adopt a dual strategy in goal setting. Internally, aggressive but achievable goals fuel motivation and high performance, while externally, conservative, and intelligent goal setting satisfies the risk-averse nature of bankers and investors.
  • Result: This balanced approach ensures robust operational performance while maintaining the confidence and support of external financial stakeholders.
Do & Review, Executive Reviews, Governance

Optimizing Your Board of Directors: A Guide for Fast-Growing Private Companies

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Growing private companies often encounter challenges in establishing an effective board of directors. Typically, boards comprise well-meaning individuals who meet periodically, usually for a few hours up to a couple of days. However, these meetings frequently become sessions to celebrate company successes rather than critically examining company performance against its board-approved plans and strategic initiatives for the year.

For these companies, it’s vital to have a diverse board, including external directors who offer unbiased insights and prevent family / founder / owner dominance. Establishing clear governance policies and procedures is essential, as they define the roles and responsibilities of each board member. Moreover, regular board meetings focused on progress towards strategic goals, rather than on operating details, are crucial.

This post outlines best practices for efficient private company board meetings, ensuring that your time together is well-spent. We also provide a template for an effective board meeting agenda.

The Board Agenda – Your Roadmap to Efficiency

Preparation is Key

  • The board chair should distribute a draft agenda 4-5 days before the meeting, soliciting upgrades and additional topics.
  • Agendas must be clear, concise, and focused on performance metrics, strategic goals, and pressing issues.

Best Practices for Productive Meetings

  • Limit meetings to three hours to maintain focus and energy.
  • Introduce new items for information only, with decisions deferred to subsequent meetings after thoughtful review.
  • Distribute materials a day or two in advance, allowing members to come prepared.
  • Allocate time for informal interaction before and after the meeting to foster trust and collaboration.
  • Record and distribute key action items, decisions, and insights promptly after the meeting.

Agenda Template

  • 10-min: Administrative matters (e.g., by-law updates, approve minutes from prior meeting, etc.)
  • 15-min: CEO’s overview of the business state
  • 20-min: Financial performance review of actual results vs. plan and projections
  • 20–40-min/ea: Updates and discussion of strategic initiatives (up to three) and / or committee (e.g., compensation committee, governance committee, audit committee) reports
  • 10-20-min: New or walk-on items
  • 5-20-min: Future meeting topics
  • 5-min: Adjournment and reminders of meeting Action Items, Decisions, and Insights

This template is flexible and can be adjusted to fit the unique needs of your board.

Conclusion

Setting up and managing an efficient board for fast-growing private companies is both challenging and rewarding. By adopting these best practices and using a structured agenda, boards can offer valuable guidance and oversight, enhancing their collaboration with the management team.

See Also

Click the figure above for a summary of Accountability Board Support Characteristics

 About The Author

David Halwig, IntelliVen Co-Founder and President of Mid-Atlantic Region, provides strategic management consulting and advisory services to leaders whose organizations are at critical inflection points. David helps improve governance, leader development, strategic planning, and risk management. He also has substantial experience with merger and acquisition strategies, valuation, and transition approaches.  

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