4.5 Physical Presence or Teleconference

In the 21st century, particularly for technology companies, it would seem that Board meetings could effectively be held by teleconference, using Skype, GoToMeeting, or other online communication tools. This would allow Directors to be appointed irrespective of geography, and eliminate the expense of travel for the cash-strapped company, and the time wasted in travel for the directors.

However, Boards that meet only by teleconference are less effective. First, the directors cannot develop the personal relationships over the phone which are important for building trust and reliance. In times of stress, the personal trust may be critical for resolving difficult issues.

Second, directors participating in Board meetings by phone cannot "read the room", and see the physical and emotional reactions to information and events during the meeting. They are relying solely on what they can hear over the phone. Often, the acoustics in conference calls are poor, particularly if there is a lot of paper-shuffling, or the noise of a projector. Further, they are more easily distracted by events around them in their remote location. In sum, directors on the phone are not as engaged as directors in the room, and this negatively affects the quality of the meeting.

For these reasons, teleconference Board meetings are effective only when the matters are routine and the decisions easy to reach. When the issues are difficult, and the Board must integrate their collective wisdom, a teleconference call significantly impairs the discussion, just when it is needed the most.

The earlier and less mature the company, the stronger the argument to appoint local directors who can be physically present at meetings, and are more readily available to the company.

Many companies holding monthly Board meetings make every third or quarterly meeting an on-site meeting with all directors present. Directors can meet informally over dinner and have meeting independent of management in addition to the formal Board meeting.

The need for Directors to meet in person, frequently if not at each Board meeting, is essential preparation for when problems arrive.  As noted in the accompanying article  6.3 Directors Need to be on Common Ground, in times of crisis when quick response is needed, directors need to have built trust with each other to feel confident in the advice they give.  If the Directors don`t know and trust each other, it will be difficult for the Board to advice on difficult issues.