Situation
The Board of a middle market company was concerned that the management team was not meeting expectations, primarily around delivering a stated return. Throughout a number of conversations and meetings, it became clear that there was not a clearly understood expectation. In fact, the Board praised the management team on a number of fronts, but had not specifically indicated concerns around missing earnings targets.
Solution
The Board was advised that the management team was not clear on the specific expectations, and further, there was not a process in place to agree on goals and annual plans. A number of sessions were held to walk through the Board’s expectations, which were pre-planned to ensure the desired message was delivered. Additionally, a dialogue was facilitated to gain alignment on the annual operating plan.
Results
The Board clearly outlined its expectations of returns and expectations of management, including which decisions are left to the management team and which decisions need Board approval. Short-term actions were targeted around eliminating unprofitable and non-core areas of the business to drive earnings growth. The level of anxiety among the Board and the management team was reduced.
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