Inspired for Impact: What do we need to change in the boardroom?
Recently, I joined Christina Gerakiteys, co-CEO of SingularityU Australia on the ‘Inspired for Impact’ podcast.
I was invited to discuss 5 important elements that I think need to change in the boardroom in order for them to be more effective. It was such a great chat, I wanted to share the key messages of my chat here with you (including two additional factors exclusive to this article).
1. Personnel
Boards are all about people. At their core, they are just that: a group of people. But boards often fail to consider each director’s unique traits, abilities, viewpoints and perspective, and how these differences impact decision-making. Boards are a convergence of different minds – at least, they should be.
Let’s ask the questions, who’s in the room and how are they performing? More importantly, let’s also focus on who’s not in the room and what we are missing. Who do we need to bring in to disrupt groupthink and remove that element of stagnation and homogeneity?
2. Purpose
Boards of all types, like companies, go through different lifecycles. Their purpose, responsibilities and role should evolve and adjust to the strategy, mission or goals of the organisation. However, boards have all largely been cut from the same cloth. They’ve been backward-looking, with monitoring, compliance and rubber stamping management decisions their main activities.
We are seeing this change (slowly), with an increasing number of boards focusing on the strategic aspects behind our board’s purpose. It extends to personnel as well. More directors are coming with essential strategic experience, rather than just finance, compliance or legal.
3. Perspective
Who does the board actually serve? In the corporate world there is a renewed tug-of-war between owners/shareholders and other key stakeholders. In reality, they should be symbiotic. Legally, in Australia, they serve “the Company” and that has led to differing interpretations. We're now broadening our view and asking ‘who are the most important people we need to serve in the long term, and why?’
This might be more of a battle for small and large listed corporate boards than it is for nonprofits or startups, but as a collective, boards are starting to look at the needs and impacts of their decisions and how they impact stakeholders like customers, employees, regulators, society, even (dare I say it) the environment. Shocking!
It’s impossible to please everyone all the time and good governance has always included making informed trade-offs decisions. However, changing perspective from shareholders to stakeholders is shifting the overarching purpose of boards, and we love to see it.
4. Professionalism
What does a professional board look like now, and in the future? This is a big one. There are millions of board directors all over the world. Yet, according to the Corporate Governance Institute fewer than 1 in 1000 of them have any form of recognisable training. An untrained director isn’t necessarily a ‘bad’ director but why aren’t more directors getting professional director and board training? Why aren’t more boards getting trained collectively.
Two main reasons. Accessibility and attitude.
Unfortunately, professional training for directors is historically expensive and self-funded. It might be inaccessible geographically. Dare i say, it’s elitist.
Most professional director training is out of reach for the average board director, especially the vast majority of voluntary ones. But, we need them and you might say we need them to be the trained ones given the impact of their decisions.
There’s also this general myth that training shouldn’t be required at the director level, so why budget for it? Directors are seen as bringing experience, knowledge, skills and networks. The key word is bringing. They are not there to learn. But there are so many blind spots in the boardroom. There is so much change. Once we acknowledge we don’t know everything, we can start evaluating what we need.
5. Performance
Most boards are built on skills, experiences and knowledge. But great boards are also built on shared values, agreed standards and behaviours, as well diversified skills, experiences and knowledge. Boards should be a safe space where all voices and views can be heard equally. A collaborative culture boosts morale and performance.
But, we need to measure performance. Boards are generally tasked with setting performance measures for the CEO, but they rarely look at their own performance. It ties back into many of the points above. This lack of a learning mindset can seriously inhibit a board. Great boards measure their own performance at both a collective and individual level, formally and informally.
At an individual performance level, we can go even further. Directors are recruited for their brains, but how many of us actively train our own cognitive abilities? We’re human. We have life stressors, issues, problems, all manner of things that we take in our minds and into the boardroom. I call this ‘boardroom baggage’, and with it, a director can’t make great decisions.
Train the brain. Up your game.
Ok. That’s the 5 P’s from the podcast, but here are the 2 extras, just for you.
6. Partnerships
Boards need to begin seeing various stakeholders not as adversaries, but as partners. You work together-yet-separately with operations, customers, employees. You have a partnership or collaborative mindset.
Great boards cultivate true partnerships between all stakeholders, with equal parts empathy and respect for each others’ positions. Plus, the ability to truly listen to one another.
7. Preparation
If you’re a long-time reader, you’ll know I firmly believe directors AND boards need to up their game with their preparation. It’s a huge part of taking responsibility for your role and, not only does this tie into professionalism (a well-prepped board is a more professional one), it’s also about making the effort to be knowledgeable, confident, aware, and understanding of what’s happening at the board table.
Preparation isn’t limited to reading the board papers or pack. It includes getting to know your fellow directors, the needs and views of stakeholders, your own research and (often most importantly) seeking upfront clarification of the information presented in those papers. Please don’t wait for the meeting. Seek clarification prior, and if the papers need to be updated, it benefits everyone and saves time later on.
One final point to make here. Preparation is not supposed to stifle free-flowing generative conversation. Great boards are always present with new possibilities and do not use preparation as an excuse to have fixed mindsets or pre-determined outcomes. You do want discussions to build not repeat what should already be known.
This was a great chat with Christina. Click here to listen to the episode, and see what they’re doing over at SingularityU.
You can also check out more articles from us, listen to our own podcast or say hi over on LinkedIn.