The Importance of Understanding Language

By Bill Dann
BoardGrowth™ Founder

Time to read: Three to four minutes.

Years ago I was sitting in on a presentation covering the financial condition of a very large non-profit, which had been scheduled prior to my beginning governing board training on an entirely different subject. I watched the finance director drone on and the eyes of the 20+ board members glaze over. When the finance director had left the room, I began my presentation with the question, “who can tell me the financial condition of the organization?” No one raised their hand.

I suspended my training and spent four hours going over the terms in financial statements. To help with understanding the concepts, I would use analogies from the everyday life of those on the board. At the close, each board member was able to tell me the financial condition of the organization.

The source of misunderstanding

It is my experience that all misunderstanding is sourced in not understanding the words being used. Understanding a word requires more than simply being familiar with it. It means you are able to accurately use the word to explain something. Then you truly understand it. Too often all of us become familiar with words, having seen them before and knowing generally what they are about. But we don’t truly understand what distinguishes that word from one that is similar. For example, what’s the difference between equity and retained earnings? Current vs. other liabilities?

If you proceed on beyond a term that you don’t understand, your mind loses interest, and your full understanding of what you are reading or being presented is lost.

If, as a board member, you don’t understand what is being presented by management, you aren’t in control of the organization; management is. That’s the net of it.

Language in business

In addition to commonly misunderstood terms, like the financial ratios in the presentation I witnessed, every organization has its own language and unique set of terms. In the example above, not only did the language of finance have to be learned, but also the language of that particular organization. The business in which you serve as a board member is the same, whether for-profit or non-profit. It has its own language.

The challenge is to have the courage to ask a question about the meaning of a word or acronym that you don’t understand. No one wants to appear confused or unintelligent.

The cure

Since having the courage to ask the question is oftentimes missing, I propose the following three steps that board members and particularly board chairs can take to help prevent misunderstandings:

1. Develop a glossary of terms for your business and make a review of the definitions part of the orientation process for new board members.
2. If you are the Chair, be mindful of the words, concepts and acronyms that are not familiar to those new to the board and ask presenters to define them before going on.
3. Again for Chairs, look for that glossy-eyed look and stop a presentation when you see it, determine what term or terms are not understood and insist that they be defined before going on.

Questions or thoughts?

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