The quality of board governance defines an organization’s success. The directors’ job is to make informed and effective decisions to drive the company forward. The best way to approach such a task is by following a clear board meeting voting protocol.
Board voting processes and rules
Board voting rules exist for a number of reasons. Primarily, the guidelines streamline the process and ensure that all opinions and points of view are considered. The more outlined the voting procedure is, the easier it is for the board to navigate its responsibilities.
Additionally, sticking to a pre-established process of voting can solve any potential disputes or misunderstandings. The companies can also adjust the board voting process to the specifics of the organization, further improving the board’s effectiveness.
- Note: Board voting rules are guidelines that regulate the decision-making process for the boards of directors, committees, and other governing authorities.
Although the voting procedure details can vary depending on the organization, the voting process itself is similar for most companies. There are five stages of the board voting process.
- Stage 1: The motion
Making a motion means suggesting a topic for discussion, whether a statement or an action proposal. As soon as a board member makes a motion, another member has to second it to move it to the next stage.
- Stage 2: The discussion
Next, the chairperson opens the floor for discussion. Each board member must get a chance to offer input and ask questions. According to general board voting rules, the chairperson serves as a point of contact for all comments during the discussion.
- Stage 3: The amendments
Based on the remarks and inquiries from the discussion, the member who made the motion clarifies, modifies, or expands on the initial proposal. This way, the rest of the board has a clear understanding of the upcoming vote.
- Stage 4: The vote
Considering all the input from the discussion, the chairperson then chooses to move the motion to a vote or to withdraw it. Then, when the time comes to cast a ballot, each member can vote for or against the referendum or abstain.
The board voting process can be open or anonymous. Once the vote is complete, the secretary will record the results in the minutes.
- Stage 5: The decision
Finally, the board identifies the next steps based on the outcome of the vote.
While the general board voting rules create an excellent base for uniform corporate governance, some factors can improve or harm the decision-making process.
Effective board meeting voting protocol tips
The first step to effective board governance is an appropriate board meeting voting protocol. When constructing such a protocol, it is essential to consider all possible scenarios. In addition, the protocol will describe the voting rights of each member, explain the stakeholder hierarchy when applicable, and provide any other necessary details.
To understand how to make an agenda for a board voting meeting, consider the following aspects:
- Security. In many cases, the board meeting voting procedure is a confidential process. Some board members may express unpopular opinions, share sensitive data, or wish to remain anonymous during the voting process.
The board meeting voting protocol has to define the information protection boundaries for all members clearly. For example, in the case of remote board governance, the members will have to keep their digital access details secure to avoid data leaks or safety breaches.
- Inclusivity. A proper board meeting etiquette for voting suggests a complete lack of discrimination at all levels. The board members’ privileges and responsibilities should depend only on their role, not gender, sexuality, race, or any other factor.
- Compliance. All members of the board need to be aware of the rules and procedures in place. Additionally, the board meeting voting protocol has to offer preventive and corrective solutions for noncompliance with the guidelines.
- Digitization. If the board decides to go partially or completely remote, the choice of software will define the success of voting in board meeting processes. While the protocol might not go into too much detail on what particular tool the board must use, it is always good to include general requirements and characteristics based on the organization’s structure and goals.
- Attendance. Historically, only members present at a board vote were allowed to cast ballots. However, as many board meetings, and thus votes have moved online, organizations had to redefine what it meant to be in attendance. For example, the chairperson could announce time or location limits for the members to cast their votes. This way, the decision-making remains quick, effective, and fair.
- Unprecedented scenarios. Finally, the protocol has to describe the board meeting voting procedure during critical or unpredicted events. For instance, force majeure voting can happen without certain members present or much notice.
Thinking ahead and considering all possible scenarios in a board meeting voting protocol can significantly enhance the board’s productivity. However, at the same time, several things can slow down or disrupt the voting process.
Things that interfere with a productive board voting
Board members can knowingly or unknowingly interfere with the voting process in a few ways. Below are the most typical board voting disruptors:
- Lack of understanding. New or untrained board members might have several issues with following corporate conduct. For example, a member might not know what to say when voting on a board meeting and whom to address. Or, a newly assigned secretary could be unfamiliar with how to format board of directors meeting minutes with voting.
One of the ways to avoid misunderstanding is to prepare a logical and effective induction package for all new members. Plus, it can be beneficial to occasionally remind the existing members of their board responsibilities and privileges.
- Insubordination. The board meeting protocols dictate order for a reason. Refusing to obey the rules by interrupting other members, going against the system, non-profit board members voting on changes out of meeting, or skipping meetings can cause significant harm to the organization.
For the board to continue functioning, it is crucial to inform all members of the repercussions of ignoring the protocol and follow through with the corrective measures whenever applicable.
- Unclear rules. Another possible reason for dysfunctional board operation can be vague or misleading protocol wording. While it is important to express rules professionally, the language has to be as straightforward as possible.
The best practice is to create voting protocols based on the distinct characteristics of the organization. This way, for example, an HOA board meeting voting rulebook will focus on different areas than the guidelines for board meeting voting for president in a large investment bank.
- Lack of transparency. Internal corrosion always begins with dishonesty. When a member chooses to withhold information or meddle with data, the organization might soon face gruesome consequences.
That’s why it is imperative to persuade all members to bring their best qualities to the table and always act in the company’s best interest. Keeping detailed minutes for board meeting voting can also help improve everyone’s sense of significance and enhance transparency.
Obeying logical and clear board meeting voting rules improves board governance on many levels. And as long as the voting procedures at a board meeting are effective and evident to all members, there should be no issues with conducting the vote.
To facilitate the most beneficial board meeting vote, it is wise to consider all the potential nuances. For example, the steps of open board meeting forum discussion deliberation and voting or the specifics of the board meeting runoff voting, the board meeting voting protocol for a non-profit, can new board members approve minutes of the old board, and so on.
To sum up, a direct and relevant outline is the perfect foundation for productive board voting.
Whom does the company board consist of?
The typical members of a board are the CEO, CFO, executive vice president, key internal and external shareholders, and departmental heads. In some cases, boards include independent directors for inter-industry insights or expert opinions.
How do board votes work?
Board voting happens in five stages: motion, discussion, modifications, the vote, and final decision. When all protocol steps are followed correctly, the company benefits from an honest result.
What are the four types of voting?
In board governance, the primary types of voting are: single-option, by-group, two-round, and ranked voting. Depending on the company size and the proportions of the matter in question, the chair can decide to alternate between methods, provided protocol allows it.
What are the five methods of voting?
Although voting methods are virtually limitless, board voting commonly occurs in five ways: general consent, voice, a show of hands, via a ballot, or electronically. Remote boards typically employ custom tools built into their board management platforms.
Who is more powerful: the CEO or the board of directors?
Although the CEO is a very powerful figure, the board of directors can fire and replace the CEO. This means the CEO ultimately reports to the board, even when serving as the chairperson.