Is your Board working as a Team?
How Boards must balance debate, consensus, and efficiency to function as effective teams.
It’s hard to balance open debate, consensus and efficiency, but one can curb the excesses.
The Board is a unique type of team which defies traditional team dynamics. People who spend little time together must rapidly build trust and collectively make big decisions in short, focused moments. Comprising a mix of executive and non-executive directors, they are ostensibly equal, but the latter is expected to hold the former to account. They are loyal to the company, but hold similar positions elsewhere. Appointed as independent free-thinking experts, they rely on information from the CEO and management team and can be removed, albeit not easily, with little ceremony.
There’s a unique chemistry that makes the Board work together. Yale School of Management Professor Jeffrey Sonnenfeld, refers to a “spirited give-and-take … [They] know how to ferret out the truth, challenge one another, and even have a good fight now and then.”
The odds seem stacked against them from the outset. Differences in personality, opinion, and even etiquette can grate. “When you are going into a new Board, one needs to work out norms, behaviours, degree of formality, the way questions are formed,” says a non-executive director (NED) in the healthcare sector. “Recently I was asked to submit questions in writing in advance for the papers. I ignored this; it was very odd.”
Meeting agendas can be long and technical, with little time to discuss them in depth. “The greatest hindrance to Boards is time… Tricky issues can become very transactional,” notes an NED of several Australian-based companies.
In essence, Boards must strike a balance between three interdependent and often clashing characteristics: open honest debate; finding consensus; and efficiency (see diagnostic tool below). Focussing excessively on any one of these elements can create problems for the others. For example, a tendency to seek consensus may create harmony and collegiality; but doing so risks avoiding tough conversations and can encourage groupthink. Similarly, constructive disagreement can bring welcome rigour and nuance to decisions; but too many arguments can result in defensiveness, cliques, conflict and dysfunction. Everyone wants meetings to be run efficiently. An effective Chair will assess and synthesise different views to reach good decisions; but when under time pressure, the Chair can become overbearing and partisan, resulting in hasty, risky decisions.
Even when any two imperatives are in harmony, there may be tensions with a third. A constructive, psychologically safe debate can bring about agreement, but if the process is allowed to continue for too long it will undermine efficiency. Yet, a well-managed debate can turn hostile if the Chair rushes through one side’s view, leaving dissenters unhappy and resentful. Moving quickly to reach a consensus may seem efficient, but members can feel pressured into silence, leading to superficial decisions that miss the real underlying problem.
Not all companies will view the ideal balance in the same way. For example, a listed company with numerous compliance obligations around remuneration, diversity and sustainability, may prefer to lean towards efficiency to get through the agenda. Alternatively, a company in a rapidly-changing industry might prioritise open debate. A Board that has been riven by division in the past might veer towards consensus, even at the risk of inaction. Each company must determine where their own particular “sweet spot” lies.
Constructive debate within limits
Getting that balance right comes down to how well certain core aspects of teamwork are managed. These include ensuring psychological safety, avoiding groupthink and containing serious conflict. Engendering a sense of psychological safety is hard to pinpoint, let alone measure. It is that “sense of confidence that the team will not embarrass, reject, or punish someone for speaking up,” says Amy Edmondson, Professor of Leadership and Management at Harvard Business School. Put simply, everyone should feel comfortable asking what might otherwise be deemed the proverbial “stupid question.”
A sense of groupthink is palpable when one sees how Board directors always sit in the same seats. It sends a message.
Peer pressure and time constraints make it all too easy to dismiss niggling doubts. Yet not wanting to rock the boat can be dangerous for the company. Niamh Brennan, Professor of Management at University College Dublin, recalls how in 2001, staff at US energy giant Enron, which collapsed in scandal, had been reluctant to challenge endemic fraud, knowing that the company had a policy of sacking a portion of its workforce each year. For them, speaking out simply didn’t seem worth risking the boss’s opprobrium.
“The Chair must understand different directors’ approaches, and call on those who aren’t the loud speakers” says one NED. “Often, the ones that come up with the gem that helps crystalise a problem are the quiet contributors.”
Psychological safety also acts as a check against ‘groupthink,’ a condition in which everyone agrees with one another while barely questioning their assumptions (See Diversity article). That sense can be palpable the moment one steps into the room. One NED noted how at each meeting “Board directors always sit in the same seats; it sends a message!”
However, giving members free reign to debate has its limits. Another NED remarks: “For Board directors, there often isn’t the time to get the true depth of understanding to support a decision. The ones who want more can become a real drag on processes. Chairs can get frustrated in response to perfectly valid questions.” On the other hand, “tension is created by the Chair who understands the issues themselves but may be more focused on efficiency, which can impair good decision making.”
There often isn’t the time to get the true depth of understanding to support a decision. Those who want more can become a real drag on processes. Chairs can get frustrated by perfectly valid questions.
The late Professor Andrew Kakabadse of Henley Business School warned of another drawback to unconstrained disagreement. There is a “tipping point” where healthy tensions can spill over into outright conflict. This may reflect deeper political divides within the Board. Plotting can be rife. As an Odgers client writes: “Some Board members routinely meet outside [Board] meetings. They can frame a Board discussion without other Board members knowing it. Offline conversations can shut down a challenging discussion that’s important to have.”
Board members should expect to disagree; but they should also genuinely want to find common ground. “Board unanimity is the ultimate goal. When you join a Board, it’s not always understood what your purpose is. There are many different views but they must come together as a team,” says an Australian NED. “Everything is harder and more dysfunctional if you can’t support the ultimate decision.”
From theory to practice: a diagnostic tool to help Boards improve teamwork.
Odgers’ diagnostic tool aims to help Boards frame the challenges and stimulate systematic discussion around improving teamwork. The goal is to find a “sweet spot” that balances the pros and cons within a triangle of three interdependent imperatives: consensus, challenging debate and efficiency. As noted in the article, moving towards one or other element may involve important issues for Boards to consider, such as groupthink, psychological safety, collective responsibility and others.
Although imprecise and subjective, the framework can help Board members evaluate themselves through a set of customised questions (scaled 1-10) relating to how well the Board functions on its three vertices. E.g.: “To what extent do you believe there is sufficient psychological safety, allowing you to disagree with the majority view?”). The aggregated totals of all members’ answers would indicate where the Board is positioned within the framework. This visual representation can open discussion around what behaviours might change or what future Board appointees might help to shift the Board towards the teamworking “sweet spot.”
CAROLINE DEVER
Partner, Board Asia Pacific, Public Sector and Health
Australia
www.odgers.com