Hi, Yes, it's me again, I can't help talking more about the ideas I've learned about and experienced firsthand that can help you either serve the board better or be a better director on a board of directors primary tool for fulfilling their fiduciary responsibility is by questioning management. When I first started working in private equity, my boss was serving on a number of different boards. And my role was in assisting him in turning around some of these companies that we were involved with. There was no particular rhyme or reason to these companies. They were all in different industries from seafood to cold storage and transportation to manufacturing, to even music, and I was astonished to see one man serving as a director and all these different boards, but his success came from two related skills. And the first was this idea of asking questions.

In fact, he asked a lot of questions of management. Sometimes he asked the same questions repeatedly. Sometimes He gets different answers to the same question from different people. In fact, this deep probing of management does two things for him. It educates him about the business to learn it from the ground up. But interestingly, it also evaluates the strength of the leadership pool.

When you ask the same line of questions, probing deeper and deeper, you find out pretty quickly who knows the business and who is just pretending. The second critical skill behind success was his ability to break down every business down to its more elementary components. Every business is about managing the money coming in and the money going out. And once you understand how this happens, with perfect clarity, then you begin thinking about the business in ways that can improve it by connecting the pieces or reshuffling the pieces or even cutting out certain pieces. Few people have the courage to ask 100 dumb questions to really get an understanding of the underlying business model because they are afraid to look stupid or to get intimidated by managers. Strong directors speak their mind freely and challenge management with as many questions as it takes to get at the heart of the important matters.

So in this bonus lesson, I'm going to give you 20 questions you can ask at your next board meeting, assuming that you are director of course, if your management you should be prepared for these questions or realize that these are the questions directors are asking themselves. First, we will look at five questions that should be put to the CEO, then five questions that should be discussed in private with the other directors. Next five questions that can be put to the CFO to evaluate financial health. And finally, five questions that can be put to the managers of the business units to evaluate operating performance. Are you ready to go? Let's begin.

Let's begin with five questions for the season. Question number one, what worries you the most about our current strategy? And how are you dealing with this? Question number two, how do you view the external trends and diagnose the opportunities and threats presented? Question number three, what sources of organic growth Have you identified and are actively exploring? Question number four, discuss how you're developing the leadership team around you and who is making the biggest contribution to our success.

And finally, looking forward over the coming year, what is your expectation of business performance? We're going to ask this question to the CEO and later on, ask it again, of the managers. Moving on five questions for the in camera discussion, which if you recall from our course, simply means that the directors are talking in private without management present. Question number one, do we have the right CEO? Now there's the million dollar question. Question number two, how well have we linked the CEOs compensation to actual performance?

Question number three, are we monitoring the right things? And has management provided us with adequate transparency into the business? Question number four, what is the strength of the leadership pool? Question number five, how productive are we as a board? And where can we improve further, which ties into our discussion during the course around preparing board self evaluations? Next, let's talk about five questions for the CFO.

Number one, will liquidity be sufficient under the worst case planning assumptions? Number two, what are the major differences between operating cash flow and earnings. Number three, what was our free cash flow? Which if you recall sets up a discussion of capital allocation, perhaps the second most important thing a board can discuss. Number four, what is our degree of financial leverage? And is this the right level?

Financial leverage is the amount of debt that's in your capital structure. And finally, number five, how are you managing the balance sheet, including efficiency of working capital and discretion of capital expenditures? And finally, we have five questions for the business managers. Question number one, what are the most important indicators of future financial results? Number two, what are the strategic drivers of each of those leading indicators and how are you managing prioritizing those actions Question number three. If you were to miss your financial target, what would be the most likely cause?

And how are you making sure that doesn't happen? Which gets at risk management? Question number four, are the performance results consistent with the expectations? And if they are not has the explanation been adequate? Question number five, what is management doing about negative variances to ensure they don't recur? There you have it 20 questions that get at the real substance of board work.

I love being a corporate director. I like seeing and thinking about the big picture, but at the same time, drilling down into details when necessary to problem solve and advise. I also like seeing how different organizations are tackling similar issues. Corporate Directors bring that diverse level of experience to the organizations they serve. encourage everyone, the managers and directors alike to benefit from each of the directors own and collective contributions and experience. If you'd like more information or you want to talk about matters specifically, please feel free to reach out to me.

I always enjoy meeting people from all over the world in different lines of businesses and different industries to share and spread ideas. Once again. Thanks for watching, and until next time, I'm Blair cook