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Corporate boards function only as well as their members
communicate with one another—and indeed, many recent
scandals were enabled by reticent boards. To get a
clearer picture of how board dynamics inhibit members
from sharing information and speaking up, I observed two
consecutive board meetings at each of five public US
companies and conducted individual interviews with their
directors.
Two
important impediments to boardroom communication became
obvious. First, although a board meeting is commonly
seen as a meeting of one group, in reality it involves
two groups: directors and managers. The directors I
observed spent only about 15 percent of their in-meeting
interaction time communicating with one another and the
rest in exchanges with managers. Thus their ways of
communicating and learning other directors’ viewpoints
were indirect and often quite subtle.
Second,
directors play a difficult dual role: They are both cops
and advisers, monitoring management’s behavior and
ensuring compliance while also counseling and directing
management on strategy. They must tread carefully as
they move between the two functions and must cooperate
with one another in doing so. Because any director’s
contribution could be seen by others as stepping too far
into one role, this cop-adviser dynamic makes open
communication strained. I observed directors subtly
criticizing one another for comments that threatened the
balance between roles, or even failing to speak up in
order to avoid conflict.
These
two impediments often led directors to hold substantive
conversations outside board meetings, where open
discussion felt easier, safer and more efficient. Though
sometimes productive, these off-line conversations also
bore important risks. They left some directors out of
the loop and turned others into nexuses of information,
which distorted communication. In some cases they
replaced directors’ in-meeting interactions altogether,
with the result that management never got to hear
directors discuss anything at all. Two of the boards I
studied kept in-meeting discussions alive and meaningful
through two tactics: executive sessions and active
in-meeting leadership.
Boards
are required to hold executive sessions that exclude
management. However, these sessions are often treated as
an afterthought—left to the end of a meeting, when the
directors are eager to head out, or run without
structure or clear purpose. Yet given that management’s
presence inhibits board communications, these sessions
ought to have great weight. The two high-functioning
boards held regularly scheduled executive sessions led
by the chairman or lead director. The sessions followed
an agenda that included time for raising new issues. The
boards also developed a formal process for taking their
concerns to the CEO. This approach signaled the
importance of executive sessions to the work of the
board, and directors took them seriously. The sessions
helped create cohesion among directors, which translated
into better communication during full board meetings.
Active
in-meeting leadership went beyond traditional
administrative tasks to enabling communication and
getting the board to work as a group. Leaders on the
high-functioning boards set up discussions to clarify
what role the board would play and summarized them to
clarify what role it had played. They called on
directors to articulate concerns they knew were on their
minds, thus giving the directors both the opportunity
and permission to express criticism and dissenting
views. Some leaders periodically polled all the
directors so that each was required to weigh in on
topics outside his or her own expertise, which gave all
of them a deeper understanding of the various
perspectives and of how they might tap previously hidden
knowledge. And finally, these active leaders brought
discussions to a resolution even when conflict was
involved, allowing the board to feel unthreatened by the
prospect of conflict in future discussions.
Katharina Pick is a postdoctoral fellow of business
administration at Harvard Business School in Boston. |
