(Note: the following is an excerpt from my forthcoming book: A Primer on Corporate Culture for Boards and Non-Executive Directors)
“In life and business, there are two cardinal sins. The first is to act precipitously without thought, and the second is to not act at all”. – Carl Ichan
Perhaps the most difficult job in business today is that of non-executive director and member of the Board of Directors of a publicly traded company. In this time of great economic uncertainty and business confusion it is easy for a member of the Board to feel like “neither fish nor fowl”.
That is to say they must act as advisors and coaches, not allowed on the playing field but still held accountable for the score, as well as being responsible for potential illegal acts committed by the company. Add to that the public outcry over executive compensation during times of business failure and bailout and it’s the wise individual who will think long and hard before accepting a Board position. And the current global financial crisis has added a significant challenge to the Board, one in which the solutions are anything but clear and obvious.
And the uncertainty and confusion at board level is beginning to show. According to a recent McKinsey & Co report, less than half of the 186 board members surveyed say their boards have reacted effectively to the global economic turmoil. Not knowing what to do, or how to do it, has kept many boards from being proactive in helping their companies deal with the current mega-crisis.
There are no cut and dried formulas and few black or white choices for boards to follow. There never were, but today’s pace of global business means boards have to respond quicker. The luxury of time to mull it over or decide next quarter is no longer available. So how can the CEO and Chairman guarantee that the board is fully functioning and effective?
Selection has been one of the key routes to building effective boards and will always remain important. But selecting the most experienced players doesn’t mean the team will be effective. Look at the poor record of national sports teams. English National Team football is just one example – the best players from individual teams come together to play for their nation. More often than not the fans are disappointed because their superstars can’t seem to play as a team, and when they get soundly defeated by a third rate country, the poor teamwork is clearly evident. We believe some of the same characteristics happen on the most “stellar” boards – great experience but poor teamwork.
Why should teamwork among the board be important? We are not referring to the elements of teamwork that most people understand – collegial warmth, high spirits and group hugs! The real elements of teamwork that turn a collection of individuals into an effective team are much more hard edged – open and honest dialogue, continuously challenging ideas to arrive at the best solution, pressing each other to deliver their best, not yielding to the easy approach, breaking through deadlock to achieve alignment, understanding each other’s strengths and weaknesses so they can work together effectively. These are the “hard” skills of effective teams and we believe there is work to be done to help boards be even more effective.
No one of us is as smart as all of us. ~Ken Blanchard
When was the last time your board had a Team Alignment Retreat? If you can’t get them to take the time out for a 2-day event, then you may have the wrong members. Is their motivation to help the company be successful or collect board fees? Board positions should be hard work, not the perks of elder statesman. Board members should be passionate about the product, employees and the company. And like a good team, the whole should be greater than the sum of the parts.
Quality starts in the Boardroom. – W. Edwards Deming
Written and Posted by: John R. Childress
Senior Executive Advisor on Leadership, Culture and Strategy Execution Issues,
Business Author and Advisor to CEOs
Visiting Professor, IE Business School, Madrid
John also writes thriller novels!