THE TRICKY BUSINESS OF BOARDROOM ETIQUETTE
BELINDA HUDSON provides some essential advice to ensure your board is operating at maximum effectiveness
We’re all just human after all. And when it comes to a ‘good board’ acting as more than just a watchdog, the way directors behave matters. A board should add value by guiding executives, contributing to strategy development, providing alternative views and questioning assumptions and received wisdom. How far that happens depends critically on boardroom behaviours.
As the style of board life has changed, we mainly see well-behaved, conscientious and self-aware boards. But, from time to time, we still see defensive and irritable executives facing off hectoring and superior non-executive (NEDs) or independent directors. Discussions can be bland and boring – and at worst become tetchy and tense. Being on a board should provide an enjoyable and rewarding experience for directors – but, while not frequently, still too often corporate boards are ineffective and just no fun at all. So how do you get it right?
Be polite but not too polite. There needs to be mutual trust and respect. This means listening, giving others a chance to speak, building on a discussion and putting questions with tact. At the same time, it is all right to disagree. A good debate needs diverse views and people should be encouraged to put forward alternative opinions. Boards can easily get too cosy and lack a good degree of healthy tension. Constructive challenge needs to be well-framed, principled and proportionate to come across as a supportive effort towards joint goals, rather than the pursuit of a personal agenda.
Be open with one another. Again, this can only happen when there is mutual trust and support. Executives need to share their thinking and let the board glimpse the stumbles and unexpected outcomes, as well as their successes. To foster openness, the NEDs or independent directors have to respond to bad news in the right way, not looking for guilty parties (whilst still trying to get to the root cause and right response), and not lecturing the executives on what they ‘should have done.’
Get to know people. What goes on outside the boardroom sets up the dynamics for the meetings. By spending informal time together over dinner or on visits to different parts of the business, the group is likely to gel better. Offline conversations help iron out differences and prepare the ground. An experienced NED told me he always likes to call up the CEO ahead of the meeting to give him a heads-up on the questions he’s planning to ask. “We’re not there to catch them out.”
Nip bad behaviour in the bud. Boards can drift along for years with low energy, going through the motions and adding little value. An experienced and effective Chairman will seek to ensure that the discussion is positive, constructive and balanced with good contribution from those that have something useful to say and steer the debate to a satisfactory consensus. This may involve reining in those who go off at a tangent, cutting short overlong statements and policing interruptions and parallel conversations. His or her own behaviour sets the standard and goes a long way to creating a positive collegiate atmosphere in the boardroom. Giving regular feedback to individual directors seems an obvious thing to do, but many captains of industry fail to do this or do it months after the behaviour has manifested itself.
Get the right people round the table. There needs to be a mix of viewpoints coming together to create constructive tension without it becoming disruptive unpleasantness. Selection needs to be handled carefully with a clear brief on what the profile is of the new recruit – not just in terms of their skill sets and experience, but also their personality traits. Paradoxically, this doesn’t mean always looking for a perfect fit – sometimes you need a director who is a bit disruptive to liven things up and avoid ‘groupthink’.
Make the change. It’s not easy to shake the tree – especially when bad habits have taken root. An external board effectiveness review should provide a good forum for looking thoroughly into behaviour. It should encompass the many tangible aspects that impact dynamics – is the Chairman sitting in a place where he can’t see the body language of half the directors? Is everyone even clear on the role of the board and what the purpose of the discussion is? Is energy low because some directors are jet lagged or the air-conditioning doesn’t work? Often the simple steps are the most effective.
A good sense of humour helps too!