Board culture: It is more than talking the talk
It’s not the rules and regulations. It’s the way people work together.
– Jeffrey A. Sonnenfeld, What Makes Great Boards Great
Fundamentally, it is the role of every Board to ensure their organisation’s prosperity. Yet, as they convene to decide the organisation’s strategic direction and discuss governance, financial performance and current risk profile, it is often their own culture that directly influences their effectiveness in this role.
Too many times, my clients have contacted me when they reach crisis point. Not being able to pinpoint what is going wrong or how to fix it, but understanding that there is an underlying dysfunction working at cross purposes to the organisational goals. More often than not, it is cultural. It may surprise you how often that dysfunction reflects the beliefs and behaviours within the Board, even when they are an affable bunch who work well together.
Culture and engagement are seen by 87% of organisations as a top challenge. About half of them see it as an urgent issue (“Global Human Capital Trends 2015: Leading in the new world of work | Deloitte Australia | Human Capital”, 2021). Much more than a group of carefully selected directors with a broad range of experience and complementary individual traits, the Board must perform as the ultimate, cohesive and high-functioning team. Quite aside from all of the Board’s conventional requirements, it is the human element that set the standard for how Board directors think and act.
Jeffrey A. Sonnenfeld hit the nail on the head when he said that robust, effective social systems distinguish exemplary boards. Specifically, a virtuous cycle of respect, trust, and candour and a culture of open dissent (Sonnenfeld, 2002). In practice, a high-functioning Board needs to:
- Walk the walk – consistently name and model those strong, healthy behaviours that build a culture where the best decisions are reached through informed, robust and challenging discussion
- Put culture on the agenda, discuss it, and make it happen – getting everyone on the same page will build respect, trust and candour across the Board, but also with the management team
- Be mindful that culture can and will change over time – every organisation is dealing with a myriad of challenges daily; keep culture at the forefront of discussions and decision making, especially during drastic change or when in crisis mode
Boards are a collection of people. Very intelligent and highly skilled in their own right, the collective culture often drives personal agendas or accepts mediocrity to keep the peace. By committing to continuously challenging, adapting, and aligning perspectives, a Board transforms from being a compliant group heavily focused on the governance aspects to a dynamic, value-adding function.
Global Human Capital Trends 2015: Leading in the new world of work | Deloitte Australia | Human Capital. (2021). Retrieved 5 February 2021, from https://www2.deloitte.com/au/en/pages/human-capital/articles/global-human-capital-trends-2015-leading-new-world-work.html
Sonnenfeld, J. (2002). What Makes Great Boards Great. Retrieved 5 February 2021, from https://hbr.org/2002/09/what-makes-great-boards-great