Where Is Your Board's Annual Agenda?

For the past two months, most companies have been caught up in the whirlwind of closing out 2024 and approving the budget for 2025. Each company has its own rhythm and way of navigating these final months, and they will finish the year with varying degrees of effectiveness and stress. But they will get it done, closing out the year to start a new cycle in 2025.What most companies did not do adequately, however, was to build the Board’s Annual Agenda for the upcoming year.

Clearly, I’m not referring to planning the dates and times for board meetings. All boards do that: “Last Monday of each month from 9:00 AM to 1:00 PM,” or “Every 28th of the month or the next business day,” and so on. I’m talking about the annual calendar of topics to discuss, areas to analyze and evaluate, and decisions and actions to take throughout the year. A document that requires the careful attention of the entire board.

Today, more than ever, boards must operate in highly complex environments, with increasing regulatory requirements, growing demands from investors, rising pressures from customers, employees, and society in general, rapid technological advancements, and volatile, unstable markets, among others. This puts board members in a very vulnerable position, as they are ultimately accountable for the success or failure of the companies they lead. Their leadership, management, and oversight can only be exercised through the reports they receive, their interactions with management, and board and committee meetings.

Given this reality, boards should approach their responsibilities with careful planning under a mindset of transparency, flexibility, agility, and teamwork.

The Board’s Annual Agenda is a very simple yet effective tool to support boards in their governance role because:

• It ensures that all the topics the board is responsible for receive the required attention, ensuring urgent matters don’t overshadow the important ones.
• It fosters transparency and alignment among board members regarding management priorities.
• It organizes interactions throughout the year, providing management with clarity and a structured rhythm for planning their work.
• It creates a framework that helps board members stay informed and prepared for each session.
• It lays the groundwork for effective, organized, participatory, and conclusive board meetings.

Unfortunately, very few boards build a strong annual agenda to use as an effective management tool.

Why is that?

There are several reasons: the leadership style of the board chair, force of habit, lack of time, not knowing how to build an annual agenda, and—believe it or not—a lack of interest and motivation among board members.

Here are some common responses I’ve heard from boards when asked, “Where’s your Board’s Annual Agenda?”

Every company should have an annual board agenda—one that’s neither a blank sheet to be filled in aimlessly as time passes, nor a rigid straitjacket that limits the board’s flexibility and agility. The best analogy I can think of for this situation is the following: Have you ever gone on a road trip?

You can approach such a journey in various ways: On one extreme are those who are content with just filling the gas tank, charging their phone, and having a general idea of the destinations they want to visit. On the other are those who need a clear schedule of destinations, accommodations, expenses, and more.

An annual board agenda strikes a balance because:

• It provides clarity on the direction (we know our final destination) and priorities (the key stops along the way).
• It offers security to both the board and the company’s management (we’ll always have a place to stay: hotels are booked without penalty for changes).
• It provides order (we’ll move east to west or north to south, not in circles or erratically) and rhythm (we’ll limit driving hours to X hours daily).
• It allows for adjustments (we’ll carry maps, portable chargers, tools, and supplies to adjust our plan in case of emergencies or unforeseen events).

Among the topics that should be part of a board’s annual agenda are:

1. Strategy: Planning, implementation tracking, monitoring, and control.Budget: Preparation, approval, monitoring, and control.
2. Regulatory compliance: Milestones, approvals, and reports.Company performance: Review of commercial, operational, financial, and organizational indicators; analysis and decision-making.
3. Risk and compliance: Policy and procedure definitions, indicator reviews, analysis, and decision-making.
4. Stakeholder management: Reports, updates, meetings, etc.
5. CEO performance evaluation: Definition of the “yearly performance contract,” monitoring, evaluation and feedback, incentives, and succession planning.
6. Board evaluation: Self-assessment survey, analysis, and action plan.

Building the annual agenda involves determining which topics, subtopics, and additional issues will be addressed in each session, as some require monthly frequency while others are addressed quarterly, semi-annually, or annually. The key is to know, map, and schedule them.

The responsibility for building this annual agenda lies with the board, led by its chair. My recommendation is to do this with the full board present, as an additional item on the agenda of the final board meeting of the year.If there’s still time to incorporate this exercise into your December session, that’s ideal. If not, it should undoubtedly be the first item on the agenda for your board’s first meeting of the new year.

Wishing you great success!

Ximena Jiménez Managing Partner

LITup www.litupnow.com

“Your Independent Thought Partner”