I was delighted to be invited by Kevin Mallia to contribute at an EY event for Maltese business leaders to discuss ‘The high performing board’ on October 20. I am keen to learn more about the specific features of the governance landscape in Malta and very much looking forward to Kevin’s opening scene setter on the new requirements for PIEs arising from the recently enacted EU Audit Legislation.
Besides legislative updates, there are many other factors which can influence board performance. Context, composition, capabilities, culture and so many other things combine to create a distinctive situation for each board, all playing their part in helping or hindering success.
There are, however, patterns and characteristics which seem to be present among the top performers and absent from their less successful peers. These tend to come under the headings of ‘Purpose’, ‘People’ and ‘Process’, as well as the approach that the board takes to making decisions.
In working with dysfunctional boards it is often the case that when you pose the question ‘What’s the point of the board?’ you get as many different answers as there are people around the table. For a board to be high-performing it needs clarity and unity of purpose and that purpose has to fit the nature and ownership of the organisation. In the best boards it tends to be ‘Right strategy, right resources and right governance’. In the worst it is a muddled cocktail of strategic and operational focus that seldom has any consistency.
To be successful, a board also needs to connect and work well with the other bodies it interacts with, most notably the executive team. We shall spend some time on this key interaction and explore how best to avoid the board and executive operating in a disconnected manner. The board and executive may at times operate in parallel universes. In such cases, board meetings tend to be a bit of a show for the non-executives and a chore for the executives with the execs, then getting back to doing what they were going to do anyway.
For a board to be high-performing it needs clarity and unity of purpose
On the other hand, at times the board and the executive functions mingle to the extent that they end up doing each other’s jobs. An innocent observer attending such board meetings might find it hard to figure out who was an executive and who was non-executive, as the executives appear to be giving advice and the non-executives appear to be giving orders.
High-performing boards on the other hand have real clarity about what the roles of the executives and non-executives are and work well together in the intersection, for example on strategy.
At the same time as striving for unity and harmony you don’t want to overdo it and to end up with a bunch of cosy clones, over-susceptible to group think or other classic decision biases. In our discussions, we will be looking at some of many decision biases we are vulnerable to as well as the individual characteristics of the best directors.
Guided by Socrates’ wonderful remark that “It is easier to win an argument than to make the right decision”, we will also be considering some of the ways boards are attempting to achieve the right balance of evidence and instinctive based decision making.
Good chairs also know that it is important to have really good ‘plumbing’ in place. They pay attention and work hard with the finance director and company secretary to make sure that there are good processes for: setting agendas, producing board papers and minutes, managing board meetings and away-days, communicating with key stakeholders and for the board’s own performance review. Increasingly technology is helping in this area with a number of apps now available to make the admin burden a little lighter for all concerned.
As the leader of the board team, the chair has the ultimate responsibility for ensuring balance on the many things for which it is required, not least board composition. Great chairs are able to build and manage a diverse board with a range of skills, experiences and personalities and to create the right atmosphere, momentum and relationships, both in and outside of the boardroom.
They also have the capability to bring the board in and out of the zone of uncomfortable debate with a deft touch, keeping everyone grounded and with enough edge to avoid complacency in the process.
I am hoping that our meeting on October 20 will have some of the hallmarks of a great board meeting in that we will gain some fresh insights, make some good resolutions and come away with a united view on the things that matter.
Patrick Dunne is a member of the Financial Times Non-Executive Directors’ Club’s advisory board and chairman of Boardelta Ltd.