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Noses In, Fingers Out

Noses In, Fingers Out is a long-standard rule of thumb for boards of directors and the organizations they govern. What does it mean? Well, that’s not so clear especially as the world has gotten more complicated.

Fundamentally it means that board members should have their noses in the business. They should know what’s going on. They should understand risks, trends, issues, and wins. They should understand the market and the capabilities. They should understand what’s working and what is not. They should be sniffing around.

Fingers out means that board members should not disempower management from running the business by running it for them. It means don’t interfere. It means don’t second guess every decision or try to control every move. Keep your fingers out.

Mark Sickles argued that “NIFO” is outdated. His belief was that this is not a defensible position in the post-Enron environment. He states:

But if the dam is about to break, as it has in too many companies, “noses in, fingers out” is not only unacceptable, it’s indefensible.

I agree with him that more activity and advocacy is required from today’s board members. He goes on to say

If board members must insert their fingers, bodies, minds, hearts, and souls to assure shareholder value, then that’s what the shareholders are paying them to do at that point in time.

But this doesn’t really violate the standard of noses in, fingers out, except by inserting the word fingers. He seems to think that “fingers out” means “mouths shut.” That couldn’t be further from the truth. Board members should certainly be active, meeting with customers, distributors, suppliers, employees. Board members should be mentoring.

But that doesn’t mean you run the company. That doesn’t disempowering management from their role. It doesn’t mean paralyzing the organization waiting for board approval on ongoing business decisions. That’s what “fingers in” is really all about.

In one Cornell’s student editorial on the departure of the university’s president after disagreements with the board, he shared an interesting quote from another previous president of the university,

Trustees should be challenged. Our own colleagues should be challenged,” he said. And then, ironically: “The greatest discernment you have to exercise is selecting and retaining a president, but that’s not the only one. It’s a question of seeing the wood and the trees … I love that old phrase, that guideline for trustees: ‘noses in, fingers out,’ and it’s as applicable today as it was when first developed a century ago.

There are problems with boards micro-managing, some of which were outlined well in this article. There is a way to challenge without disempowering management. There is a way to engage issues without making it your agenda. How do you manage the balance? Here are a few tips:

1. Ask questions. Question, especially tough ones, force people to think. And the thoughts that are generated may often eventually lead to the right actions and decisions, but they are still the thoughts of management. For example, if you feel a process isn’t being managed carefully enough, you might ask “who has ownership over this process?” You already know the answer. The answer isn’t really important. You ask the question to force manager to think through the problem themselves.

2. Form mentor – manager relationships. Forging relationships between board members and management members outside of the board room create a less formal and more effective channel to coach and influence. And because you are operating within the construct of mentoring, both parties understand that it’s not control but influence, and the manager isn’t disempowered.

3. Topic focused board sessions allow board and management to collaborate at a deeper level, to explore issues, to provide advice but at an operational level. These sessions aren’t about approving plans or voting, but exploring how the organization is working.