Henri Eliot: Directors should spend more time on the shop floor

Spending time on the shop floor allows the directors to gain a better understanding of company culture. Photo / Thinkstock

Opinion

Getting your board to see how your organisation operates is critical for every director in New Zealand.

Directors have busy schedules and trying to add more elective tasks to their calendars is often met with resistance or minimal support.

However, a director must spend time visiting the operations of the businesses for which your board holds ultimate governance responsibility and accountability. This is one of the most critical investments in your time and should be part of the board's annual calendar.

Spending time on the shop floor allows the directors to gain a better understanding of company culture. It creates an opportunity to ask questions of staff and get to know the conditions they work in.

The full board should participate in this activity, not limited to newly appointed directors. For example, directors of a major New Zealand retailer spend time visiting stores and can chat with any staff members.

You learn a lot from the front line where customer interaction is happening on a daily basis. It provides valuable insights that inform, and provide context to, the strategic planning process.

This approach must be customised to meet the needs of each organisation's circumstances - a global company such as Fonterra operating around the world will differ from a domestic business operating in one sector.

The logistics around visiting sites across New Zealand does not have to be a costly exercise - where the business can be accessed by directors as part of very day life (for example, popping into a Mitre 10, The Warehouse or Z petrol station) - just turning up at the business can provide you with very insightful and clear evidence on how a business is running and how the business is perceived by the customer. It may help identify major issues that have not found its way into the board papers.

In summary, the key benefits of walking the shop floor or regular visits to the business are numerous but may include the following:

Meeting staff. A great opportunity to improve staff morale and provides the directors an opportunity to ask employees about their experience working in the business as well as any challenges it faces.

Witness how things are manufactured or logistical processes. A huge educational experience for directors to see how the companies goods or services are made, created, shipped, designed, transported or stored. You won't be able to gain insights like this in a board report.

Assessing the "mood" of the organisation. It provides a director the opportunity to have a "finger on the pulse". Are things going well? How ordered, productive, collegiate or dynamic does the company's business appear to be in? Do staff appear to work together? Do the premises look clean or messy? Are staff happy and proud of the company?

Connecting the dots. Visiting the businesses often helps directors better understand the vision of the organisation. It may provide a better understanding of any interdependencies which exist between the layers of the business. This often a very difficult task of you are a director of a company in a complex industry where you may had no prior executive experience.

Health and safety. Especially in light of the new legislation here. Directors can observe safety in action through pure observation, discussions with staff and comparing those outputs with what is reporting in the boardroom. This is a critical activity where human life is routinely put at risk due to the nature of the industry such as mining, farming and transport.

Finally, visiting the business should reflect well in the eyes of shareholders. This will also allow directors to confidently speak to investors, customers, suppliers and community stakeholders. Showing that the board is prepared to invest time in a very important stewardship role for the company, employees and community.

Henri Eliot is CEO of Board Dynamics.