Cutting Through The Grey

Building Better Boards

 

Multiple lists specify the knowledge, skills and experience that boards need in order to perform their role effectively. There is no universally applicable formula for building a better board. Good approaches suggest that establishing a framework relevant for your own organisation is the foundation for succession planning, development and recruitment of directors. Excellent approaches also provide granular strengths analysis to specify the diversity of attitudes, beliefs, thinking approaches and behaviour that contribute to board performance. 

Enabling directors to play to their strengths improves contribution. Effective Chairs recognise the different strengths which each individual could contribute and create the environment in which imaginative discussion and constructive challenge take place prior to decision making. 

The canvas of strengths is broad and complementary. For example, to deliver a robust strategic process, your board requires a range of different strengths to analyse your organisation and environment, explore different strategic options, choose a path to the future, excite stakeholders to join in that journey and track progress and performance. 

Over the last 18 months, the level of external scrutiny of strategic process, board decision-making and behaviour has increased. Focusing on one aspect - Attitude to problems - astute observers ask: 

“Where are your problem anticipators, your opportunity spotters? ‘ 

In times of crisis, problem solvers often get most headlines. They are the individuals who are quick to act to recover difficult situations and mitigate risks. Stories are told of their success, they prosper.

Less overt are the individuals who quietly prepare plans to take advantage of strategic change, selecting the opportunities to maximise value and minimising the risks associated with the changes. 

Whether on the board or informing the board, both sets of strengths are essential. Well done to the Chairs who enable a board culture that allows both approaches to be heard and applied. Their boards invest concurrently in modifying their current organisation model, developing new models and designing innovative approaches to the emerging macro environment.

The Governance Echo Chamber

In the Governance echo chamber, we are biased to listen to voices that agree with our sentiments. It is challenging to recognise that our truths and perceptions are not universal. Our focus is often on the common view that it is no longer enough to target compliance.

We agree that more is expected by multiple different stakeholders. Governance is described and required by regulators and legislators. Investors lobby for better evidence of behaviour and intentions. Talent is drawn to organisations based on their positioning and messaging and consumer behaviour is similarly informed by perception of brands and reputation

We aspire to embed governance. We understand that this will involve developing a coherent story of how we align our organisation’s purpose, belief system, strategic decision making and governance behaviour. We recognise that success will depend on developing an effective and committed board, enabled by governance professionals.

In response to this challenge, academics call for more research to aid evidence-based decision making. Longitudinal studies of practitioner thinking exist, but forecasting the impact of current perceptions in changing circumstances is notoriously difficult.

Regulators, legislators and institutions provide rules, principles and examples of best practice.

And in each organisation, the leaders realise that there are no universal solutions to embedding governance. Time, effort, energy and judgement must be exercised by boards to establish 'Situationally Intelligent' responses. Three early insights generally emerge from our discussions:

It is necessary for us to curate the mass of information available in order to synthesise relevant and important messages and recognise patterns and trends.

We need to listen attentively to voices that challenge our perceptions and while this can be uncomfortable, it is valuable in developing better understanding.

Our strategic decision-making and behaviour will be widely scrutinised to ensure alignment with the beliefs we subscribe to and the intentions we have shared.

August often provides a welcome opportunity for individual reflection and catching up on reading. This year my Summer reading stack includes recent publications on strategy, governance and leadership and several rather dusty books from authors I have had the pleasure of working with over the last forty years. It will certainly provide food for thought.

And in September I return to participate in conversations with Boards and governance professionals who have scheduled time to think collectively about their capability and application. 

 

 

Perspectives on Governance

On 9 and 10 July, a global audience of governance professionals is gathering in London to explore ‘The Future Board.’ Multiple speakers from academia and practitioner communities will share insights on structure, composition, behaviour and dynamics. Central to much of the debate will be the perennial problem of how to embed governance in the hearts and minds of boards and their stakeholders.  A simplistic response is that in order to build trust in a world of instant, global connectivity:

Be clear about your organisation’s belief system

Ensure that it informs all strategic decision making

Individually and collectively evidence a commitment to your decisions and their underlying ethics and values

Whether you view the need to embed governance in your organisation from the perspective of a director or as a governance professional, there is a need for a new set of frameworks and tools to inform the choices you make.

In 2018, ICSA – The Governance Institute published a Competency Framework. It highlights the understanding, practice and values which equip individuals to enable their boards to deliver good governance. Building on the expertise required to apply knowledge wisely, the framework advocates anticipating and navigating board dynamics and ultimately influencing the practice of governance across the profession.

Competence frameworks have existed for the director community for several years. Investors, regulators, commentators and governments are paying significant attention to the contribution of board strategic decision-making and behaviour to organisation failures.  

Governments have updated the regulatory and legislative requirements for boards in public, private and third sector organisations to provide better evidence of their robust strategic decision-making processes and governance. Regulators provide guidelines on effective Board behaviour. Investors and other funds providers have increased their level of scrutiny and demands for strategic intelligence. Individuals sitting in those boardrooms can be in little doubt of their collective and individual responsibility, accountability and liability.

The logical case for embedding governance is known but universal application of governance principles is still a work in progress. Powerful individuals approach the conversation with different motivations. Beyond Aristotle’s ‘modes of persuasion’ (appeal to Logic, appeal to Emotions, appeal to ethics/Values) is a fourth factor. The need to establish whether an individual is motivated by self or collective Interest can help inform dialogue. By establishing each individual’s motivation in a given situation, it is possible to start to build consensus and commitment to going beyond compliance and embedding governance.

 

The LyonsBateson Motivational Risk Model © 2018 Laurence S Lyons and Anna Bateson