An effective board must become more than the sum of its parts. A company with a board consisting of the most experienced, qualified and enthusiastic individuals can still find itself failing if the dynamic between those high-flyers obstructs the board from functioning in the best interests of the organisation and its shareholders.
Corporate history is littered with examples of boards that, on paper, would seem to have had all the right ingredients for success, but, in reality, failed to thrive. Excessively dominant personalities, internal politics, ‘boards within boards’, director homogeneity and character clashes are all factors that can contribute to poor boardroom dynamics and ineffective decision-making. In one recent scenario, tensions in an allegedly toxic boardroom led to a public physical confrontation between Chair and CEO.
Highlighting the challenge, research from Stanford University points to a level of director dissatisfaction with boardroom dynamics: “Only two-thirds (64 per cent) of directors strongly believe their board is open to new points of view; only half strongly believe their board leverages the skills of all board members; and less than half (46 per cent) strongly believe their board tolerates dissent.”
So, to get the most from your board and to avoid hitting the headlines for all the wrong reasons, how can you promote healthy boardroom dynamics in your organisation?
Zero debate is as bad as an argument – getting the tension right
The first point to note is that lack of robust debate in board meetings can be as damaging to a company as constant conflict. A key role of the board is to challenge management and to raise queries, as well as to present a variety of opinions and options in the decision-making process. If all of the directors tend to agree with each other, the board is offering only a one-dimensional viewpoint. This risks developing into stagnation, groupthink and a culture that stifles innovation due to inertia and support for the status quo. If this is a characteristic of your board, it is time to look closely at its composition and to evaluate the need to increase diversity. Recruiting directors with different backgrounds and specialisms has been shown to increase the quantity and quality of discussion and to lead to better decision-making.
At the other end of the scale is a level of conflict that goes beyond constructive criticism and healthy debate into the realms of personal clashes and argument. Internal politics on this scale can paralyse decision-making and discourage frank discussion, as less-aggressive directors may fear raising points of contention.
The challenge is to develop a boardroom culture that is neither too pliant nor too prickly, but, as Goldilocks would say, “Just right.” Henley Business School’s Andrew Kakabadse recognises the essential role of tension in the boardroom and notes: “A good board is one with managed tension, while a dysfunctional board allows it to fester and escalate into conflict.”
Appointing a talented Board Chair
Critical to developing and guiding the dynamics of the boardroom is the Chair. Chairs need particular characteristics that enable them to discharge their role effectively. These include strong communication skills, the ability to liaise between management and the board, experience in managing different personality types, a consultative style when appropriate and the facility to distil clarity from wide-ranging and complex discussions.
The position of Chair should not be appointed by default – for example, to the longest-serving member or the director with specific experience in a particular field – but should instead be the person who can best bring the aforementioned skills to bear in facilitating the board’s activities. The Chair will play a pivotal role in managing tension on the board so it remains positive and does not develop into conflict.
An important part of the Chair’s role is setting a tone of open, constructive discussion and ensuring that all directors have opportunities to contribute their views. This can be challenging if there are dominant personalities in the room, and it is up to the Chair to manage those personalities and keep the board focused on what it exists to achieve.
The Chair’s role is so crucial to the proper functioning of the board that a report by the Association of Chairs suggested a Chair should consider stepping down if board dynamics were poor, noting that: “a dysfunctional board should prompt the chair to consider how their behaviour or approach is helping or hindering the board, and this should include considering whether a new chair is required and seeking the opinions of other board members.”
Similarly, robust succession planning for the position of Chair is an important way to maintain healthy dynamics and to ensure things don’t go off the rails when tenure changes. Boards should look to develop leadership talent from within by monitoring the performance of members of committees, and succession should be a clearly understood, well-defined and open process.
Putting a framework around powerful personalities
Board directors are appointed because of the experience and insight that they can offer, something they have generally developed in positions of authority in their own businesses or in other major organisations. They are intelligent, focused and accustomed to leading. Put a lot of them in a room together and sparks can fly because, while they may share many characteristics, each draws on their personal history and approach when coming to conclusions: there’s no guarantee they’ll reach the same ones. If directors don’t understand why others have reached different conclusions, then healthy tension can start to pivot towards unhealthy conflict.
When disagreement threatens to paralyse decision-making, it’s important that the Chair can point to a framework that sets out the way forward. There should be an agreed-upon and clear decisn-making protocol to be followed if consensus cannot be reached. When recording a majority decision, dissenters should be offered the opportunity to place their disagreement on record in the minutes, which is particularly important if they are concerned that future analysis could find the board liable for the outcome of a decision with which they did not agree.
Allied to this is setting the expectations for what is discussed in the boardroom and what may be handled outside of it. Boards should avoid the situation in which decisions are discussed in advance of meetings by sub-groups who arrive effectively as a bloc with a ready-formed view. This can cause tension with directors who were not privy to prior discussions and can result in a ‘board within a board’ dynamic which outsiders find difficult to challenge.
Ongoing engagement – online and offline
Just as important as what happens at board meetings is the way that directors engage with one another and the company outside of them. Offering regular opportunities for education in the market sector and deeper insight into the organisation helps directors to stay engaged and to apply their expertise more effectively to the company. It also enables them to challenge when necessary from a position of direct knowledge, which can be very valuable.
Boardroom dynamics are built upon the quality of communication between directors, both during and outside meetings. Organisations can facilitate this and also keep their information secure by providing bespoke messaging systems and access to board and committee documentation that directors can access 24/7 and update in real time.
Fundamentally, maintaining healthy boardroom dynamics comes down to actively managing that essential tension to make the most of intelligent, focused debate. Talented Chairs, robust frameworks and a programme of ongoing engagement and communication all contribute to the Goldilocks effect of getting things “just right.”
October 30, 2019
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