Board culture is a key factor in board effectiveness. Boards of directors that enjoy strong relationships and good board dynamics have a positive effect on the leadership. Leaders who are motivated and encouraged are better able to lead an organization to success. Board dynamics are the way board directors interact with each other in carrying out their duties.
Dynamics between board directors reflect how they speak to each other, how constructive their conversations are, how they take action and make decisions, and how well they can have debates that are robust while being respectful. Good board of director dynamics generate economic value for an organization. The problem is that boards often don’t know how to build healthy relationships.
How to Achieve a Healthy Board Dynamic
The skills, knowledge, talents, abilities and diversity that each board director brings to the board are certainly important. At the same time, each director’s qualities are part of the whole that makes for a collective skillset. Each board director needs to bring a spirit of cooperation, collaboration and teamwork into the boardroom, where each of these skills is critical for good governance.
The challenge of how to build healthy relationships between board directors is for each director to have an independent mindset while being aligned to the organization’s goals.
Boards can institute a few initiatives to encourage good board relationships. Ongoing team building and team coaching exercises can be informative, and they can also be fun. Routine training unites boards because it gives them a common base for group discussion. Refreshers are a good way to establish and maintain a sense of cohesiveness among board directors.
These sessions can form a catalyst for board directors as they grow and mature in their roles. Each board director should bring the intention of ensuring a healthy board culture of independent oversight.
Healthy relationships between board directors provide them with the necessary confidence to identify situations where board communications break down and poor dynamics get in the way of board success. Board relationships are especially important as the board faces dynamics where there is a material change of circumstances.
Assessing the Current Health of Board Relationships
Many boards have a legal requirement to do a board self-assessment every year. For boards that aren’t required to assess themselves, annual board assessments are considered best practices for good governance. Many boards conduct annual self-assessments for the board and they also do self-assessments for individual board directors. Annual self-assessments are a good way to broach and address the topic of board relationships. By bringing the results of board assessments and individual board director assessments together, boards should be able to form a clear picture of the health of the board’s relationships.
It can be difficult to be objective when assessing themselves, so some boards find it helpful to enlist the help of a specialist to assist in benchmarking and measuring the results against best practices for board interactions. Boards that are willing to take a critical view of themselves and their interactions with others demonstrate courage, leadership and honesty in assessing the results.
Board dynamics inherently change as terms expire and new board directors join the ranks. Nominating and governance committees play a strategic role in board relationships in their duties of succession planning and reviewing the talent pipeline. Committees can plan for the future of good board dynamics by ensuring that the recruiting strategy for future planning aligns well with the current board dynamics and complements current board members’ skills and abilities. The right talent and diversity can make a huge difference in the success of an organization. For nominating and governance committees that need guidance in this area, education and training are a good way to fill this need.
Deloitte’s ABCs of Corporate Governance
To better explain how board dynamics work, Deloitte put together the ABCs of Corporate Governance, which is an acronym for attitude, behavior and candor.
As Deloitte so aptly states, attitude is a state of mind. Individuals willingly choose one side of an attitude: such as, good or bad, negative or positive, productive or unproductive. We all have a personal compass for how we approach others on small and large issues.
Attitudes come in positive forms, which we can describe using various adjectives like curious, engaged, proactive, independent, diplomatic or disciplined. Attitudes can just as easily take on a negative connotation and be described as disinterested, lazy, disrespectful, reactive or scattered. Board directors need attitudes of discipline and independence so that they are prepared, persistent and have the courage to challenge the status quo.
A boardroom full of positivity primes an environment that produces great thinking, sound actions, good outcomes and, ultimately, strong corporate governance.
The “B” in the ABCs of Corporate Governance refers to behavior. A board director’s behavior reflects how they think and act. Board members can and should be positive, whether they’re agreeable or not. Their behavior should reflect an attitude that’s committed, consistent and one that results in active participation.
Finally, the “C” stands for candor. Positive attitudes that are also open and respectful will drive positive behaviors. Constructive behavior will move board directors and managerial staff to higher levels of performance. Boards and managers must have mutual trust for this to happen. Difficult decision-making requires board directors to speak out when it’s necessary for the good of the organization. Trust and respect stand as the backbone for board directors that need to address uncomfortable or awkward situations without making someone feel like they’ve just had an awful confrontation. Board directors should hold themselves and others to the idea that it’s part of their responsibilities to challenge management and to disagree openly.
Using Board Management Software to Strengthen Board Relationships
Developing good board dynamics requires attention to good communication and collaboration. That’s where a board management software solution by BoardEffect can really make a big difference. Board members and senior executives can join to solve the company’s problems and plan for the company’s future on a digital board management platform. The platform is highly secure, and it allows board directors to communicate confidentially one-on-one or in a group. Continual communication will help to strengthen and improve board dynamics during that all-important time between meetings.