Monday 27 May 2019

How to keep the directors on board and not make a splash

Beyond either perspective is the reality that any board of directors, no matter how powerful or experienced, is made up of people. Human beings with strengths and weaknesses - much like the rest of us mere mortals. (stock image)
Beyond either perspective is the reality that any board of directors, no matter how powerful or experienced, is made up of people. Human beings with strengths and weaknesses - much like the rest of us mere mortals. (stock image)

Gina London

The board of directors. Depending on where you sit within your organisation, this required-by-law group may seem like a faceless entity of all-powerful wizards who make dispassionate decisions from on high on behalf of shareholders. If you're a chief executive or part of your senior leadership team, you may see them as a group of veteran professionals helping to guide the company with their collective insights and influence.

Beyond either perspective is the reality that any board of directors, no matter how powerful or experienced, is made up of people. Human beings with strengths and weaknesses - much like the rest of us mere mortals.

I was reminded of this, this past week, when a long-time reader wrote to me to share a situation he recently witnessed between a couple of directors and the CEO of a company I obviously will not name.

According to my beloved reader (yes, "beloved" because I can't keep this up without them. So, thank you, readers. Please, keep the emails and letters coming), the company was going through a difficult time. He didn't specify details about the problems. For instance, I don't know if they were perceived or real - financial or governance. But it doesn't really matter. It's not always smooth sailing for any organisation.

It's how you navigate the waters that matters. The way these two board directors apparently behaved during the storm almost sunk the whole ship.

"Two directors went into the blame game," my esteemed reader recalled. Heated exchanges became fiery as they lost their cool with the CEO over management decisions, lobbing personal insults on top of insults.

Fortunately, the CEO's decisions prevailed, and the company made it through the tempest into calmer seas. Unfortunately, now, however, according to my reader, the negative ripple effects from the directors' behaviour continue to make waves. (OK, enough with the stormy water metaphors.)

The point here is that learning to communicate purposefully means learning to communicate sensibly under pressure. Even if you're faced with making difficult decisions or explaining to shareholders that returns may be down for a quarter, your message and tone in the tensest of moments will bear lasting results on your personal reputation - and in this case possibly upon the professional brand and value of the company you represent.

Dealing with dysfunctional directors is not a new concept. As I consult with managers as well as board directors, I've seen a variety of strained interactions over the years.

Today, however, especially with the rise of so-called "activist shareholders", who own enough equity in a company to put pressure on management, directors are feeling more pressure than before.

Here are some strategies to prepare and guard against such potentially debilitating breakdowns.

1 CREATE A DEFINED, POSITIVE BOARD CULTURE

This point takes the top position because it's the one from which all other points will stem. And while it may seem obvious, formally establishing this is often overlooked in favour of a presumption that people "at this level" will instinctively treat each other with respect and behave with positive intentions at all times. Take time to collectively draft a code of expected conduct or rules of engagement using words like "respect, empathy and encouragement". This will go far towards putting members on notice of shared expectations and empowering each other to maintain civility during times of pressure and peer police each other if someone loses control.

2 EXAMINE THE RELATIONSHIP BETWEEN BOARD AND CEO

Don't stop laying ground rules and defining expectations among board members. It's important to craft an understanding of roles between management and board members too. Is the board a real form of governance or a shadow of management? Clarifying expectations here is a critical component to future success.

3 BE VERY INFORMED

As I mentioned, the responsibilities and expectations of board members have increased due, in part, to the increasing pressure activist shareholders are applying. These activists, by the way, are not always wrong.

Therefore, you must strive for a thorough understanding of what's going on within the company. Don't just accept the materials presented to you in your board packet. If you're committed to creating a proper board culture, you need to examine the corporate culture too. Get hold of regular, neutral assessments made on the social, legal and compliance health of a company. Use that data to back up your knowledge about the company with information, not hearsay. If no such data is available, suggest that analysed check-ups be undertaken ASAP.

4 ARGUE THE POINT, NOT THE PERSON

Way back in 1936, Dale Carnegie wrote his seminal book, How to Win Friends and Influence People. Its words ring true today: "You can't win an argument. You can't because if you lose it, you lose it; and if you win it, you lose it."

Don't make it personal. From board member to CEO to brand new first-hire, this point applies to everyone. If you want to float boats and not sink them, take this on board. (Another water pun. Sorry, I couldn't resist.)

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