What Makes a Great Board Member: Part III | Bill Clendenen, Charlie Talbot & Michael Burcham on Turning Boards into Strategic Assets

Anderson Williams: Welcome to Bigger. Stronger. Faster. the podcast exploring how Shore Capital Partners brings billion-dollar resources to the lower middle market space. This episode is part of a series in which I talk with Bill Clendenon, Charlie Talbot, and Michael Burcham about what makes a great Shore Capital board member. This is a follow up to our series featuring Bill and Michael on what makes a great Shore Capital CEO. 

Bill, Charlie, and Michael know what a good board member and a good board look like from deep experience, not just serving on boards, but working as Lead Independent Directors for numerous Shore companies, in addition to being executives who have led and had to manage multiple boards themselves over their respective careers. 

In this episode, they get really practical about how a CEO can best leverage their board for strategy, talent, and execution. They talk about what to do, what not to do, and how to turn a board into a real strategic asset. In other words, how does a CEO use their board? Well, so Bill, from your experience, when we say use the board well, what does that look like? 

What’s a CEO doing or not doing that’s using the board well?  

Bill Clendenen: So one of the things I think a CEO’s primary job is in his or her relationship with the board, is to not only protect your own personal and professional credibility, but also your teams. And so I think being able to talk about the hard issues without necessarily rose colored glasses, that transparency not only gives you credibility as you have these difficult discussions. Over 20 plus board meetings, setting this foundation early is really important. 

So I think that’s the first thing you need to do. In my experience, CEOs often get into trouble when they set unrealistic or unreasonable goals. And so as you think about Shore, and its focus on setting annual quarterly goals, setting an annual budget, be realistic. 

And so as I think about boards that I’ve been on, oftentimes if the CEO and management team create unrealistic objectives, goals, and a budget, it’s often very hard for management to get ahead of the future. And so as I think about a great way for a CEO to use the board well is have the board pressure test your budget pressure, test your objectives. What does that look like?  

The other thing I would say in using a board, and I encourage all of my CEOs that I am a LID for is to create board profiles. So when I was CEO, I had essentially a dossier on all of my board members. And what I would do is if I was struggling with something or had a question about something, I could have, a quick sheet that I could refer to is maybe they had an experience that could help me here. So that was one.  

The second thing I would do is I would create quarterly check-ins with each and every one of my board members. And what I would do is I’d create a mini agenda. I’d block off 30 to 45 minutes for each call. I would send it to them a couple days in advance, ask for their input and insight on a quarterly basis. 

What that allowed me to do is develop strong relationships with my board, which actually then translated in the boardroom, right? Because a board member could say, I’ve been working with Bill. He’s been struggling with this. This is where I think he’s at. It really helps build your and your team’s credibility if you lean there. 

So, I’d say a couple of the things that have been very successful to me is leveraging your board in a meaningful way, and that means pressure testing your budgets and your objectives and your strategic plan. Then also bringing the board under the tent with you as a CEO. What are your challenges?  

Anderson Williams: Charlie, when you think about what Bill’s describing there, how does a CEO think about prioritizing that time? As compared to the infinite other seeming priorities in a way that sounds great, but I suspect when you’re sitting in the CEO seat, it’s really hard to think about managing and scheduling 30 to 45 minutes with your board. Talk a little bit about how, maybe we can reframe the thinking about the value of that time and the importance of that time of for a CEO. 

Charlie Talbot: Yeah. I view it as a really important investment for the team. One thing that derails us in terms of just sort of running a business and operating efficiently is when you have outside influences that start sort of pushing you in directions that you shouldn’t be going.  

If you have those relationships with board members and you invest the time to bring them along with your thinking you reduce the chance of being pushed in a direction that will create, you know, sort of disruption in the business and ultimately waste time in what we’re trying to accomplish.  

So I think as a rationale for making these calls and as, and building the relationships, taking the time to build the relationships, it’s really viewed in my mind as an investment to making you more efficient as a team. 

Michael Burcham: What Bill and Charlie are describing is this notion of taking time throughout your week to have at least a small window where you work on the business and not just in it. And these conversations with board members are sacred time when you’re actually working on your business, not just in it.  

The job of a CEO is pretty lonely, I would think most CEOs, if they’re really honest, have 1,000,001 things they can’t talk yet to their management team about, ’cause they’re just formulating in their mind whether it’s a worry or even an opportunity. Both have a timing sequence of when they’re shared or otherwise they’ve become distracting of the work of the day. 

So having a board member you can bounce some of those ideas off of is a really important part of the relationship. I think some of my best interactions as a CEO is when I would schedule a time with a board member and I would just simply ask them to play devil’s advocate with me that here’s what I’m thinking. 

In your experience, what could go wrong here? How might I de-risk this? What might I be missing? How could I make this even better? And I reserve the right to make my own call, but if I just give them permission to play devil’s advocate, well ahead of the board meeting one, I won’t get that kind of odd reaction in the meeting ’cause I’ve got it ahead of the meeting and I’m probably gonna be better prepared.  

So to me, asking a board member to play devil’s advocate on an issue you’re worried about or an opportunity you’re considering. Can be some of the most fruitful conversations you can possibly have with any board member, ’cause they’ll all have a slightly different view. And if you hear them all out, you’ll probably get a spectrum of ideas or thoughts that the truth for you is probably somewhere in the middle of all that. 

Anderson Williams: You guys have each described the importance of alignment with the strategic plan. How should a CEO think about proactively and actively keeping the strategic plan present in board communications in this board engagement conversations? How do you keep the board not just sort of, we built the strategic plan, we present it to the board once and assume they’re aligned over time until we refresh it. But what do the most successful CEOs do to keep that strategic plan present in their board conversations? 

Charlie Talbot: I think that it starts with how you organize the discussion and the materials around the org discussion. So I think it’s a really great practice to remind, you know, board members come in quarterly, sometimes they’re doing a lot of things in between, and so I think it’s worth the time to just reacquaint everyone with the strategy that you’re running against. 

Then I would just make sure that your board materials follow that strategy, and I think it’s a good way to organize your thoughts and your team’s thoughts around how you wanna present the business. It’s also a really important way in the context of engaging board members to remind them what it is you’re trying to accomplish. 

Michael Burcham: You know, each of our companies will have three to five strategic initiatives or objectives for that year, that build over time, because our whole period’s about five years and they become more sophisticated every year. I think having that listing in the front of the deck and a status report on each initiative. It doesn’t have to be lengthy, but just where we are with that is a really good reminder.  

Something I’ve seen a few of our CEOs do on the boards I sit on that I really appreciate is when each team member’s giving an update, whether it’s human capital or operations or finance, they refer to which of their strategic initiatives their update is addressing.  

That’s really powerful because even before they start talking about their update, I get a subtle reminder, oh, this ties to this growth initiative. So as I give feedback, I should keep in context of that when I’m giving thoughts, so I don’t just give random suggestions that aren’t tied to the strategy. 

Those are two I’ve seen that work really well is a really concise right up front in the deck. Says, here are three to five we’ve agreed on and a status of where each is. And then as each team member is presenting their functional area, a general reminder to the board, here are the two or three strategic initiatives that my report today reflects. 

Bill Clendenen: It’s a great question and I agree with both what Charlie and and Michael said, and as a CEO, it’s your job to translate the strategic plan into these operational initiatives that then tie to the budget, that then tie to the KPIs that tie to your annual goals, that tie to your quarterly goals. And so this is where the science of strategic planning translates into art. 

And so how you align not only the board but your management team in Shore along those initiatives is critical. And so I think as a board member, as a CEO, you have to cascade that strategic plan into actionable time-bound milestones with accountability to specific management team members who need to execute on those initiatives. 

And so translating the strategic plan into operational plans is one of the hardest things that new CEOs, do Michael and your team at Shore here help with that strategic initiative development. And then you have to execute it. So I think the challenge for CEOs, particularly new ones, is how to translate strategy into action. 

Michael Burcham: Good point.  

Charlie Talbot: To build on that. It’s a great point because a lot of times N-1s don’t necessarily have as much exposure as CEOs or people who have more experience in these settings, so it’s really important for the CEO to coach their N-1s to make sure that what they’re talking about is in alignment with how the strategy’s been laid out. 

Really, really critical.  

Anderson Williams: Fundamentally, as I listen to you all and think about the role of both the board and the CEO, you’re establishing a really critical relationship for the success of the business. And in addition to, you know, managing the meetings well, preparing and so forth. When you’re in a newly forming relationship with an often first time CEO and you’re on the board, what are one or two things that you’ve observed a CEO do that are the things that really helped you build that confidence and that trust early that this person had things managed, or there are a couple of things that you’ve seen the best CEOs, regardless of age or experience or industry do that made you feel really confident as a board member. 

Charlie Talbot: I’ll start. I think the biggest thing for me is that the conversations that happen where the CEO’s not talking as a board member, when I see the functional leaders, the N-1s are on the table talking about the business in a way that is fully aligned with the strategy and focused on execution with the right KPIs in place, then I know that things have been dialed in pretty well from the CEO chair. 

That’s, to me, is the biggest tell.  

Michael Burcham: So consistency of behavior is the first thing I look for. Inconsistency destroys trust. Consistency builds trust. And that’s true with the team and that’s true with the board. If I’ll observe a CEO inconsistent in the way they follow up, in the way they reach out to me, in the way they run their meeting, I know that it’s 10x amplified with their team and I’m worried. 

So consistency to me is the number one thing I look for because if that CEO is. Really consistent with the board, I feel like they’re probably consistent with their team and that consistency will create a bond of trust, that they’re really open, honest, and transparent with one another.  

I think the second thing that builds my confidence is when things aren’t going well, rather than a litany of excuses. I hear actions. This is what I plan to do. This is what happened. We did not expect it to happen. Yeah, it’s bad, but here’s what I’m doing about it. That to me is like, alright, I can get behind that. But if all I hear is excuses of why it didn’t go well and nothing that says, this is what I plan to do going forward. 

I get nausea really fast as a board member. ’cause excuses are cheap. Action and taking action is what’s gonna get rewarded.  

Anderson Williams: On the flip side of that, when you think about CEOs you’ve struggled with in terms of leading the board, building that kind of trust or that kind of confidence or otherwise, what are some of the kind of anti-patterns that are those red flag concerns? 

Michael, you just mentioned inconsistency would be one of those patterns. Are there other patterns that are kind of red flags or watch outs for you?  

Michael Burcham: Yeah, so the biggest one is the CEO who always has all the answers ’cause none of us, even us board members don’t have all the answers. So when you’ve got the answer to every single question or you’re even interrupting your team with a more eloquent answer, I worry for you ’cause nobody’s that smart. And if you think you’re that smart, you’re probably not listening to good counsel. So that’s a red flag for me.  

Also, any CEO, particularly our first time CEOs who put on this persona that everything is. Perfect worries me because I know on a daily basis they deal with anxiety, disappointment, let down, fatigue. I know the sacrifices they’re making for their family. Most first time CEOs are filled with imposter syndrome, and if I don’t see a little humility coming through and someone who has that sense of self-awareness. I know that their emotional intelligence even of themselves is pretty low, so I’m going to assume that that insight to their team and their customers and everyone around them is equally low, and that’s another big red flag.  

Bill Clendenen: For me, to follow up on Michael’s comments, I want to see the CEO with their hand on the helm. I want them to be in charge of the meeting. The Shore look, the buck stops with them. The CEO’s in charge and so how do you create trust, develop relationships? A lot of it boils down to time, right? And so as you progress through this five year partnership, time will help you develop those things. 

But there’s some things that I think you can watch out for, right? Things that I watch out for in the ones addition to Michael talked about are surprises. CEOs who keep their cards tight and don’t get ahead of problems, lack humility. And avoid having the hard discussions. That’s a watch out. 

Sandbagging the, you know, the opposite of, you know, oh, we’re gonna downplay the budget and they’re always hitting the number. You’re probably not being pushed or stretched enough. And so at the end of the day, I don’t think they will be as successful as CEO, uh, at the end. I see this also in some board meetings, particularly in the early stages where we’re only getting what I call headline only updates. 

I don’t see the work behind the headline. And so as a board member, not only do I wanna see the headline and the conclusions have been made from that, but I also wanna see their work. And so what are they providing to help me understand the problems that they’re facing?  

And the last one, because I’ve been a board member, an LID, and a Shore CEO, I think it’s really important that the Shore, CEO, own the relationship with the board. Don’t delegate that relationship to the CFO. Don’t delegate that relationship to the LID. Don’t delegate that relationship to the investment team.  

This is your board. These are your people. They are behind you a hundred percent until they’re not. So use him as effectively in developing your strategy and execution plan. 

Anderson Williams: I have to believe that when you’re thinking about trust and relationships and the opportunity for red flags or otherwise to surface, that’s often in some of the more complex decisions that you’re facing as a CEO, where maybe you’re tested in ways that you haven’t been tested. Maybe you don’t feel as confident as you would in other decisions. 

You mentioned avoiding surprises. Bill, if I’m sitting in the CEO seat and thinking about navigating my board, how do I pre-wire complex decisions to make sure there aren’t surprises, but also to make sure we have the right transparency, we have the right amount of debate and so forth. How do I get ahead of those kind of more complex decisions? 

Bill Clendenen: Some of those things we’ve talked about is tips for managing those relationships. So if you have quarterly calls with your board members, if you have effective monthly calls with the board as it relates to financials or M&A, your weekly calls with Shore, all those things should avoid those surprises, but you’d be surprised that sometimes that always isn’t the case.  

And so one of the tips that I find really useful, Michael talked about it earlier, talk to your board 72 hours before the board meeting, they’ve received the deck pre-wire, or let them know, Hey, this is gonna be an issue. Let’s talk about it. The way that I most effectively manage these things is what we call the pre-board meeting dinner. 

So you get your board in a social setting and you personally work the room to identify issues that either you or your team is facing and just pre-wire before the meeting even starts.  

Another technique that I’ve seen CEOs use effectively is having a pre non-executive board meeting where most non-executive sessions occur after the meeting, the CEO can ask the board and the chairman to have a pre non-exec session where you can identify some of the issues privately with the board before opening that issue up in the middle of a board meeting.  

So those are some techniques and tips that I found useful.  

Charlie Talbot: A couple things to add to that. One is, and this is where you can really use your Lead Independent Director to support what you’re asking about Anderson. 

So one of the things as a Lead Independent Director, I connect with our CEO weekly, but then a couple weeks before the board meeting, I have one-on-one reach outs with all the board members. Really, there’s no agenda from my perspective. It’s just a simple, what questions do you have around the business? 

This is in advance of them getting board materials. So it’s really just basic, fundamental, general issues that are on their minds. And while I’m not trying to have the board meeting in advance of the board meeting, I am trying to gauge where their questions and potential concerns are. That way I can sort of, I can manage that back towards the CEO and make sure that he or she is aware of where the board members’ heads are at.  

I think that’s not hard to do, but it’s a really easy way to get the conversation directed or to get in front of issues. In some cases that just the coaching of the CEO is, Hey, you might want to get in front of this with this potential board member in advance of the, of the meeting if there’s a real concern. 

So I think there’s this communication is critical. I think that use your Lead Independent Director, and I think that just making sure that, as we’ve all said, there’s an attitude of no surprises when you get to a board meeting.  

Michael Burcham: The issue of bringing a complex issue to the board requires some pretty thoughtful preparation. 

Most of the time, if it’s going to go poorly, it’s because the CEO is taking too big a bite, and the board is learning about the issue and hearing a plan all within 10 minutes with no time to think about it. You’re gonna get emotional, visceral reaction if you do that as a CEO. And it may not be pretty. 

You would do better to talk to board members in advance, and then when you come to the board meeting to follow up on Bill and Charlie, say, today we’re bringing this up because we’re going to be assessing this. We’re not looking for a decision today, but this is how we plan to assess this. And over the next few weeks, I’ll be bringing you our assessment with a plan. 

And if you’ve talked to board members, you should say, and I had the opportunity to talk to Bill ahead of the meeting, and here’s how Bill asked me to think about this. And I had the opportunity to talk to Charlie ahead of the meeting and here’s how Charlie told me to think about it. So you basically are validating your board members’ support for how you’re gonna proceed before you ever open it up for any discussion. 

That kinda neutralizes the negative news if you’ve done it in advance and cut it at least into two parts. We’re gonna assess, we’re gonna bring you back our findings, and then we’re gonna propose a plan. And even when I proposed a plan, I’ve done the same thing all over again. And I know Charlie’s already weighed in on the plan bill’s already weighed in on the plan. A different board member’s already weighed in on the plan.  

That’s so much smarter than hitting the board with new concepts on a complex issue that could change the direction or course of the company. That’s never a good thing.  

Anderson Williams: Well, and you, you led me, Michael right to my last question for this episode. Uh, and thinking about CEO and best ways to engage with the board, when you brought up the emotional and visceral reaction that can emerge from a board, I mean, let’s be honest, you’ve got experienced, knowledgeable, confident, probably pretty strong personalities in a boardroom. It isn’t like you always have complete control of the meeting or the conversation.  

So to wrap this episode, what do you do as a CEO when you feel you’re losing control of the conversation or the meeting and the board starts to take over? 

Charlie, maybe I’ll start with you, but any tips for just that reality where you’ve accidentally triggered a bigger question than you intended to trigger? You’ve triggered emotions you didn’t intend to trigger, stuff happens. What do you do?  

Charlie Talbot: Well, one thing is just to be open about it and just suggest that you may have triggered something that you didn’t intend to, and you’d love to get the meeting back to the course that it was on before. That may or may not work, but it’s, it’s always at times worth a try.  

I think a couple things. One is this is where a Lead Independent Director can help to be that bridge between the board and the CEO and good Lead Independent Directors will sense that and they’ll be able to redirect the conversation either by taking it offline or, or having a follow up or whatnot and getting the meeting back to where the CEO wants to take it. 

But you know, I think, so that’s one option. Other than that, you know, Bill, I’d love your perspective, given that you probably were in that situation before  

Bill Clendenen: many times. You’ve never had it happen. I’ve never had that happen. Um, I, I have a more tactical approach. I call for a quick bio break and then redirect with a partner and the Lead Independent Director and say, how do we want to push this, right?  

Because oftentimes, you know, Michael talked earlier about really what we value and board members and sometimes, board members have a perspective from the rear view mirror that they bring to bear onto the company. And in that situation, if the Lead Independent Director, CEO, and board member, I mean, uh, investment team member wanna redirect, I think it’s oftentimes the three together in partnership. 

Essentially putting a fence around. It’s usually a board member with a particular experience that was negative for them that they’re bringing to bear on this company. And so unless it is a true measure or experience that is of benefit that we want to table for a future time, I find that partnering with the LID and the investment team leader, the partner in corralling that situation is most effective. 

Charlie Talbot: Yeah, I agree.  

Michael Burcham: I usually would say something like this. This topic clearly requires a good hour of our time, and we don’t have that today, and my team is not completely prepared to answer the questions you have. We’ll be setting up a call next week for all of us to talk about this one issue and we’ll all we’ll be sharing information with you in advance.  

That doesn’t dismiss the topic, but instead it says it’s worthy of time. We just don’t have time today. Then before I do that next meeting, I’m certainly going to follow up with each board member, get their temperature on it so that I’m completely prepared. 

Something that though this triggers for me to think about, and I think it’s helpful as part of this podcast, is that people have patterns of behavior, whether you’re a board member, an investor, a CEO, and if you’ve got a board member who constantly has this pattern of disrupting a board meeting. By asking either questions that should be obvious, the answer or it’s clear they did not read the material, or they’re just naive to the whole business. 

You’d be so much smarter as a CEO to go ahead and do your one-on-one with them as though it were their own little board meeting ahead and simply say, here are the three topics I plan to bring up in a few days. What are your questions? What do you need to know? What are you worried about? Can you get behind me and support me on this before they walk in the room? 

Force them to be prepared. And is it will likely avoid the disruption. And I think my final thought on this is there are board members who just love to give you suggestions. They just are like a big old suggestion box of to-dos. I usually have somebody on my team keeping that list and then I will reach out and say, Bill, you made these 10 suggestions at the board meeting. Let’s go one by one. Here’s how we evaluate it. Here’s what we can and can’t do. And I go through it at nauseum.  

If I start to do that. Bill will be much more selective about his questions in the future, and it’s just a great way to inversely teach someone how to be a good board member and stay in the lane of a board member and not trying to be your shadow as the CEO. 

Anderson Williams: If you enjoyed this episode, be sure and check out our five part Bigger. Stronger. Faster. series on What Makes a Great CEO. Additionally, throughout our Microcap Moments series, you’ll find interviews and profiles of successful CEOs, Executive Partners and Lead Independent Directors, including our one-on-one with Charlie Talbot. 

This podcast was produced by Shore Capital Partners and recorded in the Andrew Malone Podcast Studio with story and narration by Anderson Williams. Recording by Austin Johnson. Editing by Reel Audiobooks. Sound design, mixing, and mastering by Mark Galup of Reel Audiobooks.  

Special thanks to Bill Clendenen, Charlie Talbot, and Michael Burcham. 

This podcast is the property of Shore Capital Partners, LLC. None of the content herein is investment advice and offer of investment advisory services, nor a recommendation or offer relating to any security. See the Terms of Use page on the Shore Capital website for other important information.