The atmosphere in board meetings can range from the serene one usually associated with prayer group meetings to the turbulence that is more likely to be found in a courtroom deliberating on a celebrity criminal case. Excessively dominant personalities, internal politics, boards within boards, director homogeneity and character clashes are factors that can contribute to a toxic environment in the control deck of most organisations.
One of the top regulatory priorities of the European Central Bank in the last few years has been the focus on bank’s corporate governance. The European banking regulator today insists on reviewing board minutes of the banks they regulate to ensure that the boardroom dynamics promote good governance.
The tone set from the top is what usually determines how organisations function. If the board defines the right priorities, the rest of the organisation will usually toe the line. If the board abdicates its responsibilities and leaves it to executive management to do what they deem best to run the organisation, then nasty surprises will eventually expose the ineptitude of a passive board. As Peter Drucker wrote: “Culture eats strategy for breakfast, every day, every time”.
Getting the tensions right is a tricky task especially for the chair of meetings. I believe that locally most organisations aim too much for consensus. Everyone knows everyone else in a small island and upsetting a colleague can ruin your social and professional life. In such a climate an organisation runs the risk of stagnation, groupthink, and a culture that stifles innovation due to inertia.
The absence of robust debate in board meetings can be as damaging to an organisation as constant conflict. Another common feature that characterises weak boards is the attitude of some executive teams to gang against the board that they often consider as a rubber-stamping body that should be kept away from getting involved in understanding the complexities of the day-to-day management of a business. Public organisations have even more complex boardroom dynamics as internal politics are intertwined with external politics. Executives, as well as directors with political clout, can often sacrifice their independence of thought that is so essential to good governance. They seek ‘guidance’ from their political patrons before they decide what stand to take on a particular issue. This is when good governance suffers as loyalty to the organisation is sacrificed on the altar of political expediency.
The absence of robust debate in board meetings can be as damaging to an organisation as constant conflict
Robust debating in a board should focus on challenging executive management’s recommendations and decisions. It is every director’s responsibility to shake executive managers out of their comfort zone, not for the sake of confrontation, but to ensure that strategies and tactics are well thought out before they are implemented.
The most critical element that should guarantee healthy boardroom dynamics is the presence of a competent chair. Chairs need particular characteristics that enable them to discharge their responsibilities effectively. Perhaps the most important is excellent communication skills. Straight talk rather than innuendo and understatement is often the right approach to communicating effectively. A good understanding of human psychology will also help chairs to manage different personalities sitting around the board table and in the executive team.
A weak chair will often lose control of meeting by letting debate become tainted with personal clashes and arguments. Similarly allowing debates to ramble off at a tangent and losing focus on what needs to be decided can render board meetings ineffective. A good chair will have the ability to distil clearly from wide-ranging and complicated discussions.
Constructive discussion and an equal chance given to all directors to express their views are essential for productive meetings. These are often acquired skills for chairs that may have vast experience in managing a function within an organisation but lack sufficient expertise in moving organisations forward.
One of the more challenging aspects of chairing meetings is how to deal with dissenters. It is always a good tactic to allow dissenters to record their views in the minutes of meetings. Almost inevitably there will be some destructive types who will not be satisfied with this and will try to foment trouble for their organisation by leaking sensitive information to the media or competitors. They will pretend that they are whistleblowers when in reality they are just dysfunctional adults who have failed to grow up and accept that their views may not always be the right ones for their organisations.
Healthy boardroom dynamics will deliver the result for organisations that are committed to good governance, as much as dysfunctional boards destroy value for stakeholders.
johncassarwhite@yahoo.com