At a glance:
- Board effectiveness is critical to business performance
- Effective Boards focus on Board dynamics, disciplines and development, not just governance
- As all businesses and Boards are unique, the approach to Board effectiveness needs to be customised and contextual
Having worked with over 50 Boards, Barry Bloch, Gerard Daniels Global Leader, Board and Executive Leadership, believes that effectiveness should be a continual, and priority focus for all Boards.
“Effective Boards have a fundamental impact on the performance, strategy, sustainability, longevity and reputation of the organisation and the Executive team,” he says. “Yet despite the importance of Board effectiveness, we still see countless organisational failures, which link directly back to the underperformance of the Board.”
Why do ineffective Boards impact their organisation?
There are many reasons why underperforming Boards lead to underperforming businesses. One important factor is the relationship between ineffective Boards and their Executive team.
“For example, a significant failure of Boards happens when they resort to command and control, instead of accountability to lift the performance of their Executive team,” says Barry. “Accountability is a two way relationship that leads to performance, where command and control more often leads to exit. In fact, past research into accountability shows that effective approaches to leadership accountability can reduce performance-related exits by 99%.”
Boards are also accountable to stakeholders, and to the sustained performance of organisations in the long term. “It’s a competitive world, and the purpose of the Board is to protect and steward the organisation to a sustainable future,” says Barry. “As stewards, Boards have a fundamental role outside of governance, in defining the future for their organisation. Delivering on this requires Boards to have a clear relationship with the Executive team, and to provide guidance, mentorship, coaching and support to ensure that the organisation successfully competes for the future.”
Can Boards improve effectiveness?
As human beings we all learn and grow all the time. And just as individual and team effectiveness can be learned, Board effectiveness can also be learned. “I can’t think of any examples where Boards have undertaken a constructive, integrated, thoughtful process, and not become significantly more effective,” says Barry.
However, contrary to the notion and practice that Board effectiveness is a solely or primarily a product of logistics, process and tactics, Barry argues that it also needs to be about Board dynamics, disciplines and development. “Boards improve by achieving a deep and transparent understanding of their dynamics; by shaping their effectiveness around six key disciplines; and by continuously and strategically developing Board members and their competencies,” he explains. “This approach allows Boards to action real systemic change to how they work and perform, both as a Board and as a team.”
Effective Boards better apply six disciplines that lead direct to operational development, strategic competitive advantage, talent retention and positive organisation culture change. They include:
- Setting clear boundaries between the role of the Board and the Executive
- Constructively yet rigorously interrogating the arguments put to Board
- Helping Executives to make sense of the future
- Ensuring and influencing the achievement of goals that are committed to by the Executive team
- Role modelling consistently and persistently the organisation’s values
- And continuously, proactively and systematically learning and developing themselves both as individuals and as a team.
Sometimes the requisite Board disciplines are in place, but there are complexities relating to the Board dynamics.
“It’s not uncommon for Boards as a whole, or for individual Board members to experience conflict, but with the right facilitation these dynamics can almost always move forward,” says Barry.
“A Board is not a collection of individuals that come together for meetings, to read Board papers, make a few comments and leave. First and foremost, the Board is critically a form of leadership team, so we need to approach improving the dynamics and performance of Boards in much the same way as we approach building team effectiveness for Executive teams,” he continues. “Applying organisational, group and individual psychology to Board facilitation can be powerful.”
If the disciplines are in place and the dynamics are right, work might be needed to develop the competencies and capabilities of Board members. To successfully do this, all members must work towards five core leadership competencies, referred to here as SERVE.
- S: Stewarding the organisation towards its future strategy
- E: Exploring the future
- R: Reinforcing organisational leadership and helping leaders to grow
- V: Validating the organisation’s reputation and serving as visible representatives
- E: Exemplifying the behaviour and values of the organisation, at all times.
Historically, there was an assumption that when Board members were appointed that no further individual development was needed, but every Board member needs to continue to learn and grow. “The strategy and sustainability of an organisation is dependent on Board members moving forward, so in the same way that we expect CEOs to reinvent themselves, Directors need to reinvent themselves too,” says Barry. “Framing these board competencies around the SERVE acronym is also a reminder that the Board’s purpose is to serve its stakeholders, not to serve itself.”
It’s a marathon, not a sprint
“Every Board is unique, every business is unique, and we can only be completely successfully if our strategy and approach to improving Board effectiveness is unique,” says Barry. “Not all Boards will need CPR. Some may already be capable and effective, but if the strategy of the organisation of the competition is changing, or if the performance of the organisation needs to lift, the board must review its role in delivering on this future.”
Some Boards may take years to become effective, but Barry urges that it can be achieved. “I worked intensively with one Board for over four years, and where they started was vastly different from where they are now,” he reflects. “When this Board first looked at their effectiveness they had very poor reputation both internally and externally. Now they are regarded and perform as one of the best, if not the very best in their industry.”
To discuss developing or lifting the performance of your Board, connect with Barry or reach out to your local Gerard Daniels team.