Try These 5 Ideas to Foster Better Dynamics in Your Boardroom
Boardroom dynamics can make or break the effectiveness of a board. This could be why more than 600 governance professionals signed up for a recent webinar co-hosted by Martyn Chapman, head of strategy for Nasdaq Governance Solutions, and David Shaw, editor and publishing director for Directors & Boards magazine. While the webinar focused on the Seven Tactics to Engineer Better Boardroom Dynamics per a recent Governance Clearinghouse post, our hosts also brought new insights to executing these tactics, sharing these five new ideas that governance professionals can use to re-energize and refresh the dynamics in their own companies' boardrooms.
1) Design and implement a "reboarding" strategy.
An emerging practice, one the governance community may be hearing more about, is "reboarding." Reboarding is a process of re-energizing and refreshing the board without changing any of the existing players.
Reboarding is useful for directors who have been on a board for a very long time, or for an organization that has changed its business or operational paradigm significantly during the tenure of the existing board. For example, if a corporate board has pivoted its focus to more technology-based business operations, such as expanding from traditional retail stores to online selling, it will need to change its approach. The re-boarding process can help a tenured board better understand how the business operates in its new domain, as well the new risks (such as cyber risk) that the company faces. Re-boarding could become a useful element of continuing professional development for a board.
Whether onboarding a new director or reboarding tenured ones, it’s important to look at the particular passions, expertise and backgrounds of board members. The program should be individually tailored to ensure each member has access to the right information and makes the right connections with appropriate members of management.
2) Encourage communication between board members and management outside of the boardroom.
Ideally, board members "keep their noses in but their fingers out" of running the business. Boards walk a fine line between immersing themselves in company business and encroaching on the role of management, so any engagement between board members and management should be carefully supervised. A strong Corporate Secretary has the institutional knowledge and cultural fluency to be the key person in the organization to facilitate communications between board members and management that take place outside of board meetings.
The appropriate level of engagement between the board and company management is defined by a company's corporate culture and should be shared with board members during the onboarding process.
3) Bring the business to life with site visits.
Site visits are an excellent means of engaging board members and sparking knowledge sharing between board members and management. Companies can host board meetings at sites that are of significant operational value to them, such as factories, storefronts, or mines. New projects are also exciting to visit, such as a tunnel being built or a new research facility. These trips bring to life a better understanding of the business and foster a board that is more in touch with the company and its operations.
4) Actively manage tension to minimize the likelihood that tensions escalate into conflicts.
Challenge and debate are key to a board’s effective oversight of management, stimulating new ideas and leading to robust decision-making. When managed properly, tension and conflict form an integral part of boardroom dynamics.
There is a distinction between healthy tension and unhealthy conflict, and it is important to embrace the difference between the two. Tension, from a board perspective, is a disagreement which is uncomfortable but can be addressed by healthy debate. Conflict arises when that tension becomes aggressive and escalates to unresolvable levels.
There are three issues that tend to lead to tension and conflict in the boardroom:
- people and personality matters (i.e., retention, recruitment, compensation);
- historical disputes (issues and concerns that weren’t resolved, decisions where certain directors were not fully on board, transactions rife with conflict); and
- decision making (fundamental disagreements over strategy or particular actions proposed by the board).
It is important to identify how tension and conflict present themselves in the boardroom. Healthy tension can present as discomfort when discussing difficult topics, during open exchanges of information, and when directors are engaged in robust debate. Red flags that signify a conflict may be brewing are:
- passive-aggressive behaviors, such as board members who do not engage in a discussion or are overly polite or detached when responding to difficult questions;
- repeating a point;
- overly interrogative or heavy-handed questioning;
- pushing debate offline or out of the boardroom; and
- physical actions such as slapping on tables, banging glasses or leaving the room.
Tension generally tips into conflict when discussions become emotionally charged. There are strategies that the board chair, Corporate Secretary or CEO can take to manage tension and minimize the likelihood of tensions escalating into conflicts:
- Explicitly acknowledge and address concerns during the board meetings. Concerns that are ignored or not fully addressed can plant seeds for conflict later.
- Hold face-to-face conversations between the chairman and the conflicted parties (either one-on-one or in a group). These conversations work best when the board chair targets individual members with specific issues ahead of board meetings in informal settings outside the boardroom.
- Remind board members of the higher purpose of what they are working toward, who they are working for, who they are representing. The board chair plays a key role in that as well.
- Sit opposing board members next to each other during board meetings.
5) Add an "extra" member to each board committee.
An emerging practice among company boards is to assign at least one more member to each committee than is required by listing rules. This provides a margin of compliance if a member is suddenly no longer available to serve, and also allows boards to more easily rotate one of the committee members each year. Rotating committee memberships keeps viewpoints fresh, exposes board members to new aspects of company’s business and creates new working relationships between and among board members.
Listen to the full webinar: 7 Steps to Better Boardroom Dynamics>>
Read the companion article: Seven Tactics to Engineer Better Boardroom Dynamics>>
Martyn Chapman serves as Head of Strategy for Nasdaq Governance Solutions, supporting product development and commercial strategies for Nasdaq’s flagship governance offering, Nasdaq Boardvantage. He has over 15 years of governance industry experience serving boards of FTSE100 and Fortune 500 companies with a focus on innovating corporate governance practices through technology.
David Shaw is editor and publishing director of Directors & Boards, a quarterly print and digital journal dedicated to the topics of leadership and corporate governance.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.