Mechanisms for an Effective Board: Part Two
After answering the question posed in my earlier article: “what is the purpose of your board” it’s time to translate that vision across the four interdependent mechanisms that – when optimised towards your purpose – will lead your board to effectiveness, which is the foundation of high-performance.
This article discusses the third and fourth mechanisms of board effectiveness (to borrow from Cossin’s framework of High-Performance Boards)1: Structures and Processes, and Group Dynamics and Board Culture.2 You can find mechanisms one and two here.
Structures and Processes
Every effective and efficient group establishes and works within structures and processes that support its focus on delivers the right information at the right time in the right format.
Structures and processes – that sit within the board’s Information Architecture – are designed to be the most effective systems of organisation that enable the board to get done what it needs to get done: strategy, supervision, and support.
The structures and processes need not be complex, but rather form a framework for the board to follow that they know enables them to deliver on their mandate (established in pillar one) – including the fundamental purposes of a board such as adequate oversight, compliance, and risk management – and to support their information requirements.
What is included in structures and processes?
Structures include things like:
- Annual Board calendar (to smooth out the necessary tasks of the board across the year).
- Use of technology to support the board in its work.
- Annual strategy sessions.
- Analysing the impacts of long-term megatrends, changes in the competitive landscape, and opportunities.
- Board secretary as ‘chief governance officer’.
- Committee structures that meet organisation strategy and other requirements (for example, Singapore Airline’s Safety and Risk Committee)
- Agenda setting (strategic and tactical)
- Reviewing and monitoring management performance
- CEO succession
- Stakeholder engagement
- Continual Board improvement (individual roles, group performance)
- Tracking the success of the board’s decisions
How you work is just as important as what you work on. It is not possible to leave the ‘how’ – the structures and processes – to chance, continue with what you inherited because ‘we’ve always done it this way’, or hope that they evolve organically. It won’t happen or it will happen poorly, and the systems that supported you yesterday won’t be the ones to support and enable you today or tomorrow.
The necessary structures and processes must cascade from and support the board in its purpose within the organisation at a particular point in time. This also points to the fact that structures and processes must remain dynamic and change to meet the shifting needs of the board and organisation over time.
Group Dynamics and Board Culture
The majority of people believe that ‘Group Dynamics and Board Culture’ have the most influence on Board effectiveness.3 Even with the best intentions behind working through pillars one to three, if the dynamics within the group are unsupportive of the agreed upon focus, do not properly utilise the information architecture, nor follow the set structures and processes, the board will be ineffective.
However, a happy board is not necessarily an effective board. You don’t want to stamp down any dissention or a desire for change. Friction can be an important indicator that new ideas are emerging and would perhaps be beneficial to entertain. The better kind of conflict – productive conflict – can be welcomed in.
The best relationships include a healthy level of disagreement and conflict. The boardroom is no different. As I like to say, we expect board members to show up to board meetings but what we get are human beings.
This, of course, is a delicate situation to invite in, manage, and do in a valuable way. An agreed-upon and well-written document outlining the board’s values, behaviours, and rules of engagement can help facilitate robust discussion and maintain equal participation and respect.
The repeated behaviours and consequences of individual board members creates the board’s culture. Therefore, signs of dysfunction including disruptive or dominating board members, groupthink, and mismanaged conflicts of interest are red flags that must be heeded immediately.
Do not underestimate the influence that one or two “bad eggs” can have on the other board members. You are who you hang out with, so it is worthwhile regularly asking yourself, “is the sum of this board greater than its parts?” The answer to that question will help you to identify whether intervention is necessary.
You know that you have a good board culture, with beneficial group dynamics, when your board members can have a productive exchange of views that lead to high-quality decisions.
A high-performance board requires time and intention to establish, from setting a focus through to creating supporting infrastructure and culture. What is clear is that this isn’t a set-and-forget activity that a board undertakes. Effective boards know that they must regularly define and redefine its definition of effectiveness given the ever shifting and evolving circumstances of the organisation and its operating environment.
The task of revisiting what the board does and how it gets that done is an activity worthy of being included in your annual board calendar, so that it gets addressed at least once per year. Additionally, it is something that needs to be addressed when it needs to be addressed.
Is it on your agenda?
1 Cossin presents the mechanisms of board effectiveness as four pillars. I believe that this term is somewhat of a misnomer. In reality, the mechanisms are interrelated and interdependent, rather than separate, siloed levers that operate in isolation.
2 The titles given to each mechanism are those used by Cossin.