10 high-performance board barometers

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By Debra Brown – President and Chief Executive Officer of Brown Governance Inc

 

 

 

For the longest time, I was puzzled that, despite best efforts in time, money and relationship-building to get just the ‘right’ people to serve on a board, that ‘perfect’ high-performing board remained elusive. What I have found over 25 years of research – both anecdotal and academic – is that the puzzle can be solved by adopting and embedding 10 cultural norms.

Our first response when our board falls short, or we are confronted with boardroom dysfunction, is to blame the very people we worked so hard to recruit to our board. However, often the problem lies not in the people, but in the underlying culture.

It doesn’t help that most directors fit into the established boardroom culture rather than proactively deciding what kind of board they want to be. If you are not leading your culture, your culture is leading you.

Cultures can – and need to – be changed. While a daunting task that takes perseverance, championing and time, any board can set a course toward becoming a high-performing board. This begs the question, what does a high-performing board look like?

This article describes the top 10 cultural markers of a high-performance board. It also provides a practical tool to assess your board against those markers.

Ultimately, becoming a high-performance board that is centred – a board that proactively builds a culture based on the best of all possible cultural norms – should be the aspiration of any board. Here are the top 10 markers of a ‘high performance’ board.

1. Practise participative leadership:

Participative leadership means that, as far as is reasonable and possible, decisions are made with the most participation from those making them and those affected by them. This type of leadership can be particularly challenging for boards as they are typically faced with making big decisions in a limited amount of time with only the information they have in front of them. The board chair is the key to successfully ensuring maximum participation and input, balanced with flexible and nimble decision-making.

Watch your board chair to test how participative your leadership decisions are. Does the chair draw on all members of the board? And, are your board’s decisions well-informed with the views of those who will be affected by your decision?

2. Share responsibility:

In the healthcare sector, a shared responsibility model means that everyone gives a little so that all can benefit. The same principle can be applied in the boardroom. No one director is more responsible than another. No one director has the authority to make decisions on behalf of all directors. All directors are equally responsible and accountable, while at the same time these are equally shared. For this reason, all directors must give something so that the organisation receives the benefit.

In the real-world boardroom, things can play out quite differently from this. Some directors hold more sway than others for any number of reasons. Perhaps they enjoy a certain skill set, such as an accounting or legal degree, are a well-connected industry leader, have been around for a long time, or have a strong personality that commands attention.

Watch the engagement level of your board members. Is there full engagement of all directors – not just those with a specific expertise, a loud ‘voice’ or position in the ‘family’? Do some directors carry more of the burden than others?

3. Align with purpose:

To be aligned with purpose means that everything you do as a board member is in service of the purpose – the mission of the organisation. Too often directors serve on boards for all the wrong reasons—for money, ego, influence, power, or they just can’t say no—when their legal, fiduciary reason for being on the board is to serve the organisation’s purpose and to act in its best interests.

Before agreeing to serve on a board, you must ask yourself ‘why’ am I willing to serve on this board and, am I able to put this organisation and its purpose ahead of my own?  If the answer to the ‘why’ question is anything other than you feel you can uniquely add value to the purpose of the organisation, or if you cannot put its best interests ahead of your own, then you should not agree to serve. Test this on your own board – does your board act in the best interest of the organisation or are individual directors allowed to act in their own self-interest?

4. Encourage high levels of communication:

The primary responsibility for ensuring a message has been received lies with the sender, not the recipient. Operating at a high communication level means your interactions with management, shareholders and stakeholders alike:

  • Are open and transparent, with full disclosure
  • Safeguard against confidentiality breaches
  • Ensure conflicts of interest are declared

And it means that everyone on the board has complete access to the same information.

In other words, the board should invest the effort and put policies in place to support information flows that are easy to see and understand by those who legitimately need to see and understand.

“Culture change puts pressure on people to change. Boards, led by their chair, will need to actively reframe cultural expectations in the minds and hearts of the people involved”

The board must also take responsibility for the information it receives from management. Boards regularly complain about receiving too much, too little, or the wrong level of information. It is the rare board, the high-performing board, that proactively lets management know what it wants and needs.

5. Focus on the tasks of the board and the results of the organisation:

A board member once told me they know when they have gone over the board-management line because they start having too much fun!

Serving on a board is hard work. It is also cyclical and repetitive. After all, governance is the system by which organisations are directed and controlled and boards are responsible for the governance of their organisations. Systems are not that much fun, but they are necessary for good governance.

The governance system is the work of the board and it requires members’ undivided attention and focus. Is your board focussed on the strategic governance work of the board, respecting the board/management line and readily moving beyond the task to results? Or does it get bogged down in operations, management-level decision-making and generally the fun parts of operating a business?

6. Orient toward the future:

Just as individuals who are future-focussed are happier and more successful than those who are present or past-focussed, so the organisation that remains optimistically future -focussed is more successful, innovative and has a higher tolerance for risk and ambiguity.

High-performing boards remain focussed on their forward-looking strategic role in direction and control. At the same time, they make strategic decisions by integrating lessons learned from historical facts, present realities and reasoned projections.

7. Make use of diverse and creative talents:

There is significant value to boardroom diversity. Gender, visible minorities or geographic diversity are but proxies for true diversity. Real value-added diversity lies in diversity of thought, experience and skill sets.

At its best, true diversity brings healthy debate, a view of business problems from different angles and experiences, fresh ideas, perspectives and enhanced creativity. High-performance boards exhibit a deep respect for the background, skills, experience and attributes of all directors and its management team along with a communal desire for innovation.

8. Respond rapidly to organisational needs:

Boards should never become a stumbling block to organisational nimbleness. When faced with pressure to make a quick decision, should they take the time to constructively challenge management recommendations, test their assumptions and consider the pros and cons? Yes they should!

It is for this reason that high-performing boards are attentive to policy, risk oversight, best practice and performance measures. These due diligence processes and systems are in place long before they are faced with making that next big decision. The decision-making foundation has been laid so they are ready to respond rapidly when called on.

9. Have a healthy risk appetite:

One of the perverse effects of modern corporate governance regulation and even director education programmes has been a tendency to significantly reduce the risk appetite and tolerances of boards of directors.

An inordinate amount of focus has been placed on the downside of risk at the cost of upside opportunity. A high-performance board has a risk appetite suitable for the organisation and the sector it is in – it decides on opportunities in a calculated and measured way, while at the same time acting with courage, wisdom and common sense.

10. Be comfortable with dissent:

Life and board meetings, just seem easier when we all agree with one another. But is that best for the organisation? Or, is there value to be had in dissenting views?

When dissent is allowed in the boardroom it builds critical thinking, collaboration, mutual respect and board member engagement. It is often the dissenting voice on which a strategic decision may turn and an organisation gains the courage and confidence to act or it is brought back from the brink. Building a board that is comfortable with dissent takes a great chair and emotionally mature directors. High-performing boards maintain solidarity while being comfortable with dissenting voices, challenging assumptions and building consensus.

Culture change puts pressure on people to change. Boards, led by their chair, will need to actively reframe cultural expectations in the minds and hearts of the people involved. Doing so will bring real change to individuals and therefore to the board and the organisation.

At other times, it may mean replacing individuals who are at odds with the preferred culture and are just not willing to make the changes asked of them. Boards should not fear either of these outcomes in their quest to become a high-performance board. Change the culture and you change the people – or you may need to change the people!

 

About the Author:

Debra Brown is the founder, President and CEO of Brown Governance Inc. Since founding BGI in 1991, Debra has developed it into a full-service firm providing governance consulting, research, training and tools. Additionally, Debra is the founder and a lead faculty member of The Professional Director Certification Program™, a world class, online director education and certification program.

Currently, Debra serves on major international boards, and has worked in corporate governance in North America and as far afield as Malaysia, Bahrain and Guatemala. She is an acknowledged and sought-after thought leader in corporate governance, authoring over two dozen major research articles published in Canada and internationally. Prior to forming Brown Governance, Debra spent several years in the Canadian financial sector, working most recently as CEO.

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