You don’t have to be a ‘Succession’ aficionado or a fan of ‘The Apprentice’ to appreciate the alchemy of the boardroom. In its mystical cauldron, confidential discussions determine the fortunes of companies, the futures of their employees and the success of our economies.
Board Director
Board directors carry a weighty responsibility. And most will admit that, whilst individual contribution is important, their board’s success rests on a complex and delicate web of interacting factors.
It looks simple on paper: a diverse group of skilled individuals, operating with a clear purpose, informed by timely, well-written board papers. Yet a high-functioning board is so much more than the sum of its parts.
Chair
The number one determinant of an effective board is its chair. A great chair is like a conductor: a master at knowing when to bring in the right section of the orchestrawhich instruments should play loudly and which should be soft. And the best chairs know to speak last, to avoid constraining views that may be contrary to their own.
The chair sets the cultural tone for the whole organization. Great cultures prize honesty, integrity and respect, and these aspects are particularly important in the boardroom. A psychologically safe space allows board members to express their views and to be vulnerable; When you are selected for your skills and wisdom, it can feel difficult to admit to knowledge gaps.
Much of the chair’s work takes place outside the quarterly board meetings as part of a chairing cycle, during which they build a healthy dynamic of trust, rapport and understanding with the executive team and the board, a strong foundation for the inevitable robust discussions and challenges .
Chemistry
But a great board is not simply a strong chair and a collection of accomplished board members: a group of high-flyers can be trumped by a less qualified group able to work together more constructively. It comes down to chemistry. And it’s a fine art to get it right. There is no time to waste getting around personality clashes and dysfunctional factions that derail decisions and prevent progress, but equally when a group gels too well complacency and groupthink start to creep in. There needs to be just enough glue, allowing for different perspectives, creativity tension and grit in the system, to push the boundaries and the art of the possible.
So is there a secret formula to create this elixir of board chemistry? While there is no guarantee of success, certain ingredients go a long way. Mutual respect is fundamental to disagreeing with confidence. Size is important too, as communication degrades once a group numbers more than eight, and it stops being a conversation at all at 18. Small is beautiful, with the optimal size being as small as possible whilst having enough people to staff committees.
A good mix of old and new blood blends continuity with fresh ideas, so turnover should be planned and staggered. And getting the right balance of executives and NEDs is important: typically more executives are needed in younger businesses and NEDs can plug skill gaps in nascent executive teams. In more seasoned companies, the requisite skillset is often present so the NED’s role is skewed towards oversight, guidance and wisdom.
Businesses spend a great deal of time recruiting senior executives, often taking many months and multiple rounds of interviews. By comparison, hiring NEDs feels like quite a light touch, particularly given they are typically in post for three consecutive three-year terms, considerably longer than the average executive tenure. What should boards look for when hiring? Skills are only part of the equation. NEDs bring important qualitative strengths to the table, like strategic thinking, attention to detail, networking, creativity or high levels of empathy. It is arguably just as important to have a blend of these less tangible strengths. One way to target them is to seek out diversity.
Diversity
It is widely acknowledged that a good mix of people leads to better decisions: diversity can help synthesize new thinking and circumvent enduring disagreement or ghastly compromise. However, introducing diversity will alter the board dynamics and there may well be a trade-off between ease-of-proceedings and the heterogeneity we seek through ED&I. And what do we do? actually mean by diversity? Visible diversity has an important role to playand is very important for social signaling: “You can’t be what you can’t see”. But visible diversity of itself will not necessarily capture the different thought processes that lead to better decisions. What we actually Require is cognitive diversity – nuclear physicists and theologians will approach a problem very differently. This is much harder to solve forwhich is why hirers seek more tangible ways of getting at it, recruiting people from a range of socio-economic backgrounds, nationalities, generations, and neurodivergences.
Once we have our well-balanced team in place, we need to make sure they are trained. Some boards offer excellent induction programs, ongoing training days facilitated by board coaches and suggestions for improvement from independent board effectiveness reviewers. Many have board dinners and away days and these offsite, less formal get-togethers punch above their weight for building trust and sparking chemistry.
Papers
Another determinant of an effective board is the quality of its papers. Too often, board packs deliver “too much, too late”. If we gave someone a copy of “War and Peace” on Wednesday and asked them to discuss it at a book club on Sunday, they would look at us as if we were mad. Yet that is pretty much what we do to board members, presenting them with badly-written, overly-detailed 1000-page-long papers. They might as well be written in Russian. Important points get buried and, with electronic documents, the temptation to scroll through page after page of an impossibly dense document can be hard to resist. Instead, each board paper should start with a crisp, clear summary sheet setting out the document’s purpose and ask, with appended detail for the interested board director.
Meeting formats
And the final ingredient is to get the meeting format right. Virtual meetings are perfect for task-based matters, in-person is essential for difficult conversations where nuance and body language are key. And hybrid meetings should be avoided at all costs. Everyone hates them. They are notoriously difficult to chair and those joining remotely do not have an even footing with those in the room: if you want to make a point convincingly, you need to be there in person. And what of meeting length? Can even the smartest, most focused board director concentrate for four plus hours? There is a reason why the school day is broken down into 40-minute chunks, with regular drink and snack breaks. Educators understand the limits of the human attention span.
Too often, we inadvertently set boards up to fail. A few judicious tweaks at the margin can go a long way to setting them up for success.
