Boards Behaving Badly: How to Improve Board Room Culture & Mitigate Governance Risk

In February I sat in on a webinar hosted by the Conference Board of Canada. The presentation was excellent outlining board relations, power, and governance impacts. I'm not convinced it was value for the money though; lesson learned.

My notes from the webinar follow:

Boards Behaving Badly: How to Improve Board Room Culture & Mitigate Governance Risk

Conference Board of Canada

February 20, 2015  John T. Dinner

·         Focus:

     ·         Boardroom dynamics and relationships

     ·         Directors working better together

     ·         Sharing power and control with the CEO

     ·         Giving priority to board behaviours/culture

     ·         From governance inputs to impact

·         Increasing recognition of importance of boardroom culture

·         Passive boards: lack meaningful steps to foster cultural issues

·         Good intentions can lead to bad culture and governance

     ·         3 tips:

          ·         Sit somewhere else

          ·         Wait for others to speak

          ·         Rather than criticize give card and coach

·         A lot of elephants in the boardroom

     ·         Getting directors on the same page

     ·         Difficult to express contrarian views

     ·         Fear disrupting momentum

     ·         Difficulty addressing people dynamics

     ·         Legacy governance practices

     ·         Disconnect between board/management performance standards

          ·         Boards often not at same level as management for behaviour

·         How to get rid of elephants

      ·         Need a tool to hold each other accountable for behaviour

      ·         No rationalization for bad behaviour

·         Board performance doesn’t happen in isolation; there is context

     ·         Logic for Board culture

     ·         Stream of regulation, guidelines, best practices, etc

     ·         Little attention to human dynamics (task oriented)

          ·         How directors work together

          ·         How the board shares power/control (more structural than relational)

     ·         Addressing boardroom behaviour

          ·         Focus on board structure and process

          ·         Culture critical to how boards perform

               ·         Without culture good process and structure doesn’t get you far

·         Broader context

     ·         Board culture: lack of leadership, lip service, Director assessments

     ·         Risk Adverse: status quo vs disruption

     ·         Western Values: individualism vs group collective

     ·         Key Drivers: regulation/guidelines, group think

     ·         Focus on governance inputs: generic best practices, comply or explain “loophole”; some boards are handcuffed. (Do best practices help or hinder – because others are doing it doesn’t mean it is effective

·         Proof of Context

     ·         Lack of will for boardroom change: culture is ill defined but entrenched

     ·         Lack of leadership on gender balance issue: need for legislation, Board of Directors modernization bill

     ·         Lack of rigorous assessment: avoidance, everything is fine

·         Key drivers

     ·         CDN security Association, other regulations

     ·         CCGC guidelines

     ·         OSFI guidelines

     ·         Industry practices produce followers, not leaders

·         OSFI Guideline

     ·         Role of the board

     ·         Board responsibilities

     ·         Board effectiveness

           ·         Lack of definition for metrics

     ·         Proactive: accountable, ownership – addresses key drivers

     ·         Rigour: proof of effectiveness – outcome focused, beyond best practices

     ·         What serves Kindersley?

·         Outcome focused

     ·         Intended outcomes: rarely understood/defined

     ·         Poor orientation

     ·         Results?

     ·         Gaps

·         Transformational Questions – 5 questions, culture can be a strength

     1.       What does governance mean for your organization? Common understanding of the Board’s role and what governance means?

     2.       What would be lost if your Board ceased to exist The unique contribution the Board makes; the value it brings. – strategic, competitive,

     3.       What is the boardroom culture?

                    i.                                    Conduct themselves, relate to one another

                   ii.                                  Tenor and tone of meetings

                 iii.                                   Does Board model behaviour expected of management? Board owns and models values and expected behaviour

                 iv.                                   What are the Boardroom elephants? Look from a risk perspective; not intentional or deliberate poses lots of risk with poor decisions (be proactive and take ownership)

     4.     What’s the working relationship between the Board and the CEO? (better define)

                    i.                                    How power will be shared

                   ii.                                   How the Board and CEO will work together

                 iii.                                   How conflict will be addressed

                 iv.                                   Maintaining measured reliance on management

     5.       What does it aspire to become?

                    i.                                    What does the Board want to be able to say is true about its value, contribution?

·         Bad behaviour is not intentional

·         Board self-assessment tool? (Kindersley Council conducted a review of ourselves before Christmas including a review of the Mayor - the CAO was reviewed previous to this)

     ·         A process

     ·         Start with self-assessment

·         Human Resource: compensation, principles, not too engaged with implementation of policies