The trouble with boards (and what to do about it) – Pt1

Enabling boards to exercise appropriate oversight is often a struggle, both for members and those advising them. There are two related issues that seem to come up time and again.

The first issue is the presence of different constituencies within the board. Much is written on the benefits and need for increasing board diversity, but most boards do not handle their existing (minimal) diversity well. The different constituencies are usually represented by three or four types of directors. The relational dynamics of those different director types has a significant impact on the effectiveness of the board.

The executive directors from an organisation will meet each other frequently. The alignment and power dynamics between them will have a significant impact on the overall board dynamics.  At the other extreme, the independent Non-Executive Directors are often kept at a distance and may have no natural interaction with the company, stakeholders or other directors between meetings.  The representative directors from large or controlling shareholders (or other stakeholders such as unions) are technically Non-Executive Directors but may be executive for the company they represent. They tend to be relationally closer with each other and reasonably close to the executive directors.

An alert Chair will realise that low levels of trust within or between those groups impacts the effective board deliberations. At first glance the solution would be to make sure there is cohesion between the directors. It is certainly true that the board do need to have effective working relationships. However, board members can be too close. This is highlighted by Margaret Heffernan’s idea of Wilful Blindness.

Removal of diversity is not the solution. In the debates about deliberately increasing diversity there is sometimes a call for us to be so accepting of others that we are blind to their differences. It is certainly tempting for a Chair to ignore the differences between board members. However, it is not diversity alone that is required.

Research by Samuel Sommers of Tuft university (published ten years ago in the Journal of Personality and Social Psychology) found that awareness of diversity improved cognitive processes of everyone before deliberation as well as during deliberation.  It is not merely that there is a benefit when diverse perspectives are expressed. It is that if people in the group are aware of diversity, they are likely to deliberate more deliberately.

It is reasonable to assume that if people are aware that there are other perspectives (knowledge) that may be relevant they will pay attention to the data more carefully and prepare to have a more nuanced view.  You might call this the condition of Director Humility, “I and people like me don’t have all the answers – I need to actively seek a range of perspectives.” In my experience this need for awareness of diversity is not just about those present (as was demonstrated in the study) but also with regard to awareness of stakeholders not present.

Similarly, if people are aware that there will be a need to explain or justify the conclusions to people with different perspectives, they will deliberate more carefully.  You might call this the condition of Director Transparency, “I am going to need to explain this to people who are not like me – I need to have an answer that legitimately makes sense to more than just people like me.”

Ideally what is needed is a combination of closeness and difference. Enough awareness of diversity that there is Director Humility and Transparency but enough closeness that the diversity can be integrated to allow for movement. The idea of Relational Proximity® (coined by Schluter & Lee ) includes the idea that strong, healthy relationships can be close because they have a positive attitude to difference.

Put simply, the greater the awareness of diversity of perspectives coming into the meeting and going out of the meeting, the greater care is taken in the meeting. This point is not to eliminate differences between groups in the board or outside the board, but rather to benefit from them. This means an effective self-reflective board will periodically consciously review its Relational Proximity® in some form or other and adjust its attitudes to differences.

This idea of Proximate Diversity (actively managing the relationships inside and outside the board) is key to ensuring healthy decision-making. In part 2 of The Trouble with Boards, we will look at the influence of Issue Proximity.