Governance Bites #138: Board-only or in camera time, with Steven Bowman

Tune into Governance Bites as Mark Banicevich interviews governance expert STeven Bowman, who draws on nearly 40 years of experience in the board and CEO space,. This conversation dissects the crucial yet often misunderstood practice of Board Only Sessions (or ""in camera"" time). Steven reveals why this dedicated time, which excludes executive staff, is vital for managing director bad behaviour. Learn the best practices for handling sensitive topics, including CEO performance management and succession planning,. Discover how to make these sessions structured, transparent, and a standard part of board hygiene, rather than a crisis signa,. Steven also outlines the strict rules regarding decisions and minimalist minutes to ensure legal compliance.
Steven Bowman is founder of Conscious Governance, a global, independent advisory service specialising in strategic planning, board governance, leadership, and risk management consulting for Boards, CEOs, and directors. The firm provides resources and guidance to organisations across virtually all sectors, including health, education, government, faith, disability, and housing.
The governance model promoted by Conscious Governance is defined as running an organisation with conscious awareness. This approach moves beyond 19th-century systems focused on policy and conformance, prioritising conscious leadership to steer the organisation toward a defined vision and align day-to-day management with organisational strategies. Conscious Board leadership is vital for improving both financial and social results. Core services include Board governance evaluations, risk management strategies, and leadership development, such as CEO performance management. Conscious Governance has reported completing over 500 successful strategic plan facilitations and serving more than 4200 clients.
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Transcript

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Hi everyone. I'm Steve Bowman from Conscious Governance. I've been working in the board and CEO space for close on 40 years and have come across some of the best and some of the worst in board techniques and strategies and behaviours, and I'm happy to share that with you today. Our focus today is on board only or in-camera sessions of the board. Hi. Welcome to Governance Bites. My name is Mark Banicevich, and as you just heard, I again have pleasure of spending time with Steve Bowman. Steve, thank you very much for sharing your expertise with me. It's really appreciated. And this is a topic that I haven't covered yet, and being one that's been on my list, wanting to cover it for quite some time. And as you said, you wrote an article on this around 20 years ago. And so great person to have a conversation about this with. My first question for you on this topic is how do you define board only time an what purpose does it serve? So often you'll have come across something called in-camera sessions of the board. Now that's an ancient Latin term, which is if you're an ancient Latin still is, it still makes sense. But it means out of session [literally, "in a chamber"]. The term most commonly used these days is board only time. That is where there are no staff, including the managing director if they also happen to be a staff member and also a director. So board only time. And the purpose of the board only time is to talk about those issues where you don't want to be influencing the perception of the staff in how you go about having these conversations. Where it would be uncomfortable for the staff to be involved, in particular the chief executive or the managing director. So typically board only time is when we talk about behaviour of directors. You know if someone's misbehaving or behaving badly. The most typical instances of that is where someone is acting really aggressively, thinking they're asking questions, but what they're actually doing is going for the jugular of people and using questions as a weapon. So you either take that offline and have a chat with them. Or if that's not working, then you use the board only time. And say,"Okay, you need to be aware this is what's happening. We'll help you change the"behaviour, but you do have to change that behaviour." You don't want to do that in front of the CEO or the other stuff. It will undermine them. It will undermine it. And also, yeah, so if it's the CEO where this is an issue, then the chair has a conversation with them. And that's picked up in their key performance indicators. Yes. Typically the board only time is when we're talking about how the boards functioning and what it is that we need to do to raise a level up. I've got one board at the moment, for example, where there's a couple of the directors on there that all they want to do is to prove the other director's wrong. And the issue with that is it's a total distraction from how that board can actually function. Yeah. To me, the biggest issue facing boards these days is not necessarily how can we be more strategic? How can we better understand risk? It's bad behaviour. And that bad behaviour can be an incredible distraction if anyone who's listening to this is never been on a board where there's any bad behaviour. Good on you. I guarantee you'll come across it at some stage. So, so board only time is a really powerful way for that to occur. Performance management of the chief executive, there's conversations that the board need to have there about both the process and then updates and monitoring of that. That should be done without staff involved, including if it's the managing director or the chief executive. So that performance management. And then looking at things like succession planning for the CEO's position. So those sorts of things where it's not appropriate to have that the chief executive involved in those conversations. Now the trick behind the board only sessions is that they're not there to make decisions. Only the board can make decisions. So if, in the board only time, they've said,"Here's what needs to happen," that needs to be minuted in the board minutes. Because it's the board minutes that are the formal. Recognition of what's been going on. You can keep minutes of the board only session. Okay. Of which only the people who were there can see it. The directors, not the chief executive, but they should be very factual and not get into he said, she said, they said. Right. And if any decision arises from that, it must be in the board minutes itself. Because the board is the legal authority. Yes. The board only session is just a tool. So are you saying that a decision can be made in board only time, and then minuted? No. We can choose to do something in the board only time and then it can be minuted and then becomes a decision. Right. Okay. So does that decision have to be ratified to then get included in the minutes? So how does that process work? So you know, for example, particularly in a scenario, where you might have seven people around the table, including a managing director. The managing director is not there. Yes. So you really shouldn't be making a decision without the managing director having an opportunity to be involved, right? Around the business strategy risk and so on. But that's not what these sessions are about. Right, okay. So this is about, "Okay, so here's how we're going to do the performance management of the CEO," right. Yes. And then the decision is to engage an outside company, for example. Right. That is then minuted. It just gets added to the minutes. Added into the minutes. Right. Or it could be, "Here's the behaviour that we need to modify. And what we've"seen from our director's is that they haven't been reading their board papers"the way they should be. I'm not going to pick up anyone in particular, Mark,"but yeah, obviously there's been some instances where people haven't read their"board papers, and that needs to improve." So that goes in the minutes? No, that doesn't go in the minutes. There's no decision. Right. Okay. It was just a conversation that we had. Yeah, okay. Okay, that makes sense. There's another example that you gave. Oh, some things that you said you would minute, but you wouldn't make available to management. So do you have a separate document for those? Yeah. Right. If you're using a board portal. And boards should be using board portals. Right. There's some really good board portals around. I mean the the New Zealand homegrown one, which is one of the top three in the world

is BoardPro [https: 6:47

//www.boardpro.com/]. Yes. If you're not using a board portal, you really should be using it as a board. Because that keeps, in a very safe, secure environment the things that the board need to be keeping. And it also helps streamline processes, so you can set up a section where only the director's have access to that particular series of papers in there. But they should be minimalist. Yes. They might, here are the two topics that were talked about. Any decisions that come out from that have to be minuted in the actual board minutes themselves. Right. I think the answer to the next question is implied from what you've said, but I'm going to ask it to allow you to be more specific. What are the key benefits that boards gain from having time without management present? It means that we can talk about stuff that we would feel uncomfortable if the staff were in the room. So we can talk about,"Look, how we going as a board? Do you"feel comfortable with our diversity of view around it? How's it going with the"papers that were getting from the staff? Are they actually helping us focus on"what we need to do? How do we find our level of inquiry and curiosity as"directors? Is there anything we need to do there?" There might also be instances, I mean, the stories I could tell of where this doesn't work well. I've one just recently where there is some evidence of some directors speaking against the decisions of the board out in the public arena. Now you think that doesn't happen. I'm sorry, it does. So that needs to be called out. And it's best to do it not just with the individual, but actually have the peer pressure of the board knowing this is not acceptable behaviour. One of the biggest issues always, is if bad behaviour is not called out, it festers. It goes on and on. And unless it's called out and managed in the, the role of the chair in this is to make sure it is actually called out. The other directors can be a contribution to that, but in the end, if it's not called out, it will absolutely distract the board from what needs to be done. And I've seen many, many instances of where that's the case. And it would continue. And it continues on an becomes the way we do things around here, an unwritten ground rule. So board only time is a really effective tool to continually improve the process of what's happening in the boardroom. Correct, correct. Through those, and you build those relationships. And the the key thing is that for the chair to understand what board only time is. Do some reading up about it. You know, find out, there's all sorts of really good articles around what board only time is and what should be included. So, have a little list of those things, and then remind the director's that we, on a regular basis. You know, the best time to have a board only time is when you don't need it. Right. So what many boards do is that they start off a board meeting with board only time. And then the staff come in, right. Okay. So if there's nothing major to talk about, it's a three minute meeting. Yes. If there is something, then we've allocated some time for it. Right. The last thing you want to do, is to call a board only time where all the staff are out there, they're about to come in and you say, "Now, hang on a second. Just sit and wait for an hour"while we have board only time." And then the CEO is sweating going,"What the hell is this? Have I got a job? What's going on?" You don't want that. No. So some boards do aboard only time at the end, some do it at the start. And some do it both at the end and at the start. And they shouldn't take that long. So if you've got an unexplained board only time, everyone gets nervous. It should be managed. Yeah, right. That makes absolute sense. What risks or governance failures can arise if organisations don't have board only time? Bad behaviour continues. There's no self reflection as a board on how we're going. The biggest issue sometimes is without that board only time to talk about setting up the parameters for the CEO's performance review, it's left up to the chair to do it, who's got no experience in it. So, one of the biggest issues that we find, and again for those listening here, please take this one to heart. If you want to lose a good CEO, mess up their performance management process. Best way to get rid of a good CEO. And typically many boards do not have experience in how to do high performance management monitoring. So get some external advice, or put someone onto a subcommittee that actually has experience in that area, so that when you're doing your performance management, setting your KPI's or your performance indicators for the CEO, and possibly the senior executive team, you've got some experience and skills around there. Rather than, "Well, we've never done it,"I've never had it done to me, so therefore, I don't know. So let's try and work out what this means." And that's why in many instances, and I would see thousands of these a year, you see the performance indicators for the CEO, and there's two pages of a whole lot of dot points. Which is essentially a reflection of their job description. That's not performance management. Right, absolutely. Should be a standing agenda item or should only be used when needed? It should be a standing agenda item. So the most hygienic way of doing this is for it to be an expectation. And that the CEO or the managing director knows that the purpose of this is to do the following things. The really good boards will actually let the managing director or the staff know that here are the two topics that we're talking about in this board only session. Now, if they are commercial in confidence or something along those lines, you may or may not want to let the CEO know, but. It's really up to the chair on how to manage that. But the best way to do it is to have them as a standing agenda item. And that transparency that you suggest there will take away that fear factor for the staff sitting around outside going, "Oh my God, what's going on?" The number of stories I've heard, and I've been involved in this myself. I was once asked to come in and talk to a board about XY&Z. So it was to start at 6:30 in the evening. And then I got there, and the chair said, "Oh, would you mind waiting? We're just going into an in camera session." An hour later. I mean, I was pissed. Yeah, I bet. Because they hadn't set things up in advance and they were actually talking about the report that I was about to deliver to them. Where as an in camera session should never be about that. Nor do you keep people waiting there. It's just it was just bad form. Yeah. So I've seen other instances where it's called, an immediately the CEO goes into, "What have I done wrong?" Yes. That should never be the case. If they've done something, then you need to alert them that we're going to be talking about this. There needs to be some sort of discussion around what that means. There's one just recently where they went into an in camera session to talk about the behaviour of the CEO, and how it was putting the organisation at risk, and what are our steps forward in doing this. And when they came out of that meeting, they said to the CEO, "Okay, so we're going to"set up some new performance management indicators. We've got a three month time frame around it."This is pretty serious. We need to talk to you about that. The chair will spend time going through it with you." So at least, - There's clarity. - so there's transparency there. Yeah, right, right. Okay. What good practises ensure that these sessions are structured and purposeful, rather than just informal chats? So, sometimes an informal chat can be quite good for a few minutes. So yeah, in many instances. "How do you think, how do you think we go? This is a really touchy subject"that we're coming up against. There's all sorts of implications with stakeholder engagement,"the whole range of things, and our interactions with staff. What do you"think the best way forward would be?" Or something like that. So that might be a conversation. But typically they should be structured, in that,"Here are the two topics that we're going to talk about." You can even as part of your annual board work calendar, structure some of those things. So, "We're going to talk about the CEO's performance management process in November of this year," and that will be part of the board only session. Right. We do. So you know in advance. So it's part of your board plan. Yeah, part of your board plan. And again, there's some maturity of the board. Too many directors see a board only session as something where grenades being thrown into the middle of the room, and everything is going to hell and high heaven, and we need to sit down and really do crisis management. No. The board only session should be well planned out what you need to. If there is a crisis, then you know where that comes up. It'll come up in that board only session. Yes. Yeah. Now, I think you've answered this already, but I'll ask it just in case there's any action wanted to bring out. How do you maintain a healthy relationship with the CEO while preserving the confidentiality of certain matters that are discussed in the board only time? Well, the first thing is that you make your board only time a standard thing. So it's not just when there's a problem. Right. Second thing is that you let the CEO know of any decisions that were made out of that. Immediately. It can be after the board meeting or it can be, sometimes if there's a real issue, that sometimes I'll hold it at the end of the board meeting, there will be something they want to do. It's a decision that's been made. It will be ratified at the next board meeting, but then the chair takes the CEO aside and says, "We need to work our way through this." Right. "That came out of that." Again, it depends on the on the situation, but the key thing is it should be a standard process. It's a part of the board's hygiene. But it's not just about the CEO. It could be about director behaviour. It could be about a process. It could be about, you know, a particular real, perceived or potential conflict of interests that we need to figure out how we're going to deal with. Succession planning, as you said before. Could be that, yep. Yep. Yes. Are there situations that may call for additional board only time? Where you may have to call it very quickly? There's always that possibility. I mean, if it hits the fan, then you do what you need to do. Right. Typically the board only time is not about out of the blue surprises. That sometimes happens. You can always call a board only time meeting that isn't attached to a board meeting. Right. It's up to the chair. The chair has the power to do that. Okay. And as you said before that you'll have a couple of items that you're going to discuss. Essentially an agenda for your board only time. That may cover off any other matters that arise. You'll take minutes of that time, and there'll be some that only the board will have access to, and others that will get added to the formal minutes that the CEO and everyone else have access to. If there's a decision associated. If there is a decision that is made. So the trick of the trade there is that you can keep notes of that board only time, but they're not formal minutes as such. Yes. Right. And you're best off to keep them as minimalistic as possible, because they are discoverable. Right. So, you know, you just want to have items of fact in there, rather than a whole lot of discussions around who said what. And then if there is a decision that comes out of that, it has to be minuted in the board minutes, because then it becomes a formal decision of the entity. Right, right. What are the most common mistakes that boards make regarding board only time? Oh they use it as a bitch session. So they use it to complain about something rather than, you know, behaviour is often seen as an incident, whereas if you look at it appropriately, you look to see, well what's the issue behind this? So, if a director does something, for example, you can censor them for doing that. But the better way of doing is to say,"Well, what's the issue behind this piece of behaviour that occurred? Ah, it will have an impact on"stakeholder engagement. Okay. We need to talk about stakeholder engagement then."This is just an instance of where that can have an impact on stakeholder engagement."The bigger issue for us is how we engage with stakeholders, and the confidentiality of"information and the impact that has on how the market perceives us." That's a bigger question than just what that one director did. Right. Yes. So you raise it to the next level, which is, "Well, what are the strategic implications behind this for us?" Same thing with behaviour of the CEO, for example."There's an instance of what happened, Isn't that terrible?""Yeah." "Well, what's a strategic issue behind that for us?" So you can actually raise and elevate that level of conversation. Solve a deeper problem. Yeah. Yeah, right. One final question for you, slightly off topic. What advice would you give to a first time chair? Do a chairing course. So one of the things, typically we're not trained to be chairs. You can see other chairs as you go through. But they may not be particularly good. Yeah, right. So I've seen many chairs who have taken up on the chairing position, and they've based how they chair on the bad behaviour of other chairs. So that becomes a self fulfilling prophecy. So get some training on how to be a chair. Now, it's not the content that's the main thing in a chair training course. It's the fact that you mix it with other chairs. Right. And you get to talk about some of the tricks of the trade and some of the things that you come across. The key thing is to understand, as chair, you own the agenda, not the board. The board doesn't own the agenda, so you own the agenda. At law, it's been shown in many case or studies that the chair owns the agenda. Now they will get input from their directors. You will listen to your directors. But in the end, you as chair, are the one who owns agenda. So if your agenda is not strategic, that's on you as a chair, not on the board. Right. If your agenda is all over the place, that's on you as the chair. You have total control over that agenda. If a director wants something put on the agenda, they can petition you as chair to put it on there. But it's your choice is a chair whether it goes on there or not. Right. So having a bit of training in that area. Sometimes some chairs get themselves mentors from other chairs who have actually been really good at what they do. Right. It's a great, you know, having a great chair is amazingly good for the organisation. Having a chair who doesn't know how to manage behaviour, just wants to get on with everyone, they're there to read through an agenda that has been the same agenda that's been there - Forever. - forever and ever. That's not what you need. You need someone who can actually be the chair. Steve, again, thank you so much for your time. Pleasure. I really enjoy our conversations. Let's do it again. And I'll see you again soon. Bye. Thank you for watching this episode of Governance Bites. We have more episodes on YouTube and your favourite podcast channel where I interview directors and experts on various topics relating to boards of directors and governance. We'd love to see you back, and please like, subscribe and share the videos and podcasts.