How much conflict is there in your boardroom? Is there a healthy discussion before every decision…or do your directors tend to be in agreement on the choices you have to make?
An interesting article in The Times last week quotes Marks & Spencer chairman Archie Norman as saying: ‘I don’t want harmony. I want arguments and debate. I want a board that can wrestle with problems without fear or favour, and I don’t want us all to be sitting around holding hands.’
The article then goes on to explore the pros and cons of directors who favour honest, robust debate.
It claims that ‘Our blue chips are governed by people too fond of harmony at all costs, too keen on following the herd and too nervous about changing course’.
Do directors agree too easily?
Directors, the article points out, tend to be ‘drawn from a narrow, homogeneous talent pool and usually subscribe to a narrow orthodoxy: better to fail conventionally than succeed unconventionally’.
This is a theme we’ve covered before, asking whether your non-executive directors focus on risk rather than success.
And with many members being of a similar ilk, is it any wonder that behavioural tendencies like group-think and herding can hinder a diversity of views in the boardroom? You can read more about why this is – and help to prevent it – by reading How to stop social processes undermining your board decisions.
Getting the right balance between debate and decisions
Identifying the ideal mix of perspectives for your boardroom isn’t always easy. But if you have a board that branches out from the typical demographic, it can have a positive impact: it’s been suggested that the female brain is the secret weapon of the best boards – and of course, women aren’t the only under-represented group that your leadership might benefit from.
The Times article suggests that Archie Norman is taking a lead from Alfred P Sloan, chairman of General Motors in the 1940s and 1950s, who once asked a board who were all in agreement on a decision to ‘go away and find some drawbacks so that they could have a proper discussion’.
And while ‘A decision too easily reached smacks of group-think. A board that believes it is working smoothly can be an accident waiting to happen’, there is a balance to be struck between useful debate and drastic disagreement.
For reasons of good governance, it’s important for execs and non-execs to consider all the angles and consequences of the choices they face. With recent reports suggesting that boards should be more proactive on governance issues, you need to steer clear of decisions made because everyone is too polite to disagree with the proposed approach.
What information do your directors need for informed discussion?
To have a constructive debate, you need to furnish your board members with the necessary background information.
Find out how they prefer to receive briefing documents and make sure your papers meet their needs. Read our 5 strategies for best practice board packs for tips so you can make sure your members are all reading from the same page.
Ultimately, the purpose of a board is to drive strategy. To make decisions that ratify or reject proposals from the business. For this, there needs to be debate – but eventually, there needs to be agreement.
As the article points out, you cannot ‘half-fire’ an executive, or ‘half-acquire’ another company. Some corporate decisions are binary, and however much debate precedes them, the majority need to come down on one side or another.
Provide your directors with the information they need, in a format they engage with. Be aware of the social processes that can jeopardise honest debates. And make sure your directors are a varied group, able to bring a range of experiences and viewpoints to the table.
Having the right data at your disposal is an essential component of good board papers, and vital to the decision-making process. You can read about how a board portal can be the solution to best practice board packs in our whitepaper, Board portals - what’s in it for directors? The whitepaper is free and you can download your copy here.