How to fix a dysfunctional board
Dysfunctional behaviour by board members can often go unnoticed because it is not openly acknowledged or exhibited in most cases. Let’s explore some of these bad behaviours and look at ways to fix a board that simply isn’t working well.
Boards come in various shapes and sizes – public companies, family businesses, for profit, for purpose, but they are only as good as the decisions they make.
A proper functioning board of directors is an excellent asset to any organisation, but sometimes there a few ‘roadblocks’ can emerge that lead to dysfunction.
Sometimes a few board members might form a ‘secret club’ where all the critical discussion happens, and all the decisions are made.
The symptoms of a dysfunctional board
Lack of decision-making
One of the board’s primary duties is to make decisions. An unproductive meeting is where the board does not stick to the agenda and often wanders to various discussion topics without any decisions being made. The main topic of the business strategy does not get enough time for discussion, and the board often argues on trivial issues.
Lack of constructive challenge
Irving Janis defines groupthink as – “a psychological phenomenon that occurs within a group of people in which the desire for harmony or conformity in the group results in an irrational or dysfunctional decision-making outcome.
Cohesiveness, or the desire for cohesiveness, in a group may produce a tendency among its members to agree at all costs. This causes the group to minimise conflict and reach a consensus decision without critical evaluation.”
Challenging ideas leads to growth. It is a sign of dysfunction when the management team or other powerful voices on the board do not challenge any of their beliefs or proposals. The board agrees to everything suggested on the agenda without proper debate to avoid conflict; this often leads to rubber-stamping of decisions, and the board itself becomes a ruse to external stakeholders.
“A second board”
Sometimes a few board members might form a ‘secret club’ where all the critical discussion happens, and all the decisions are made; this leaves out other board members from the process and will lead to resentment and arguments.
There are occasions where board members feel like they are part of the management team and get hugely involved in the day-to-day operations of the organisation. This can create a lot of friction between the board and management team because managers feel undermined and disempowered, leading to dysfunction.
A good proxy for apathy from board members is to check their attendance at board meetings; anything less than 50% is a sign that they are not contributing their fair share and look at the board position as a ‘trophy’ position.
Sometimes members will attend board meetings but will not contribute to any discussion; this leads to a few influential voices on the board making all the decisions.
Building a good rapport between members and working relationships leads to great results in the long run.
Fixing a dysfunctional board
Fixing a dysfunctional board requires a lot of time and tact. Here are five steps the CEO and chair of the board can take to improve a board’s culture.
Get the agenda right
They say “well begun is half done”. Setting out a concise agenda with topics for discussion and time allotment is a great way to get the best out of board meetings.
The board can set aside a good portion of the time to discuss strategy and long term goals rather than focus on operational topics. This will also ensure that the meeting does not wander into unimportant issues.
The chairperson can ensure that the agenda items are covered within the stipulated time.
Organise away days
The board is a collective. Therefore, the members come with different sets of experiences and personalities.
Building a good rapport and working relationships leads to great results in the long run.
Organising away days is a wonderful way to build trust amongst directors and ensure they have fewer inhibitions to express their opinions during meetings. This is also an excellent way to get to know each other better and tap into their area of expertise.
Set clear expectations through terms of reference
To ensure that the board is not interfering with the business’s day-to-day running and undermining the management team’s job, it is necessary to have proper terms of reference for the board and the sub-committees. This will ensure that there is a line in the sand drawn and everyone is on the same page as expected.
The board’s job is oversight and not getting involved in the business’ operations.
The chairperson’s responsibility is to make sure that they get the best out of their board. Ensuring everyone is heard and taking on feedback from members is crucial for making better decisions.
The chair also needs to ensure that no one individual takes over the whole meeting. Another way to ensure all voices are heard is to ask people to share feedback before the meeting if they find it difficult to express their thoughts during the meeting.
Recruit new board members
New members are enthusiastic, and recruiting new board members will make sure that there are fresh ideas and energy in the room most of the time. This is the responsibility of the nominations committee, and they should always be on the lookout to add new talent to the board.
A proper skills matrix analysis can help drive the recruitment efforts.
Perform board reviews
The board must review its performance at least once a year. This review can be done internally or can be done by an external party. It is a great time to step back and evaluate the board’s performance objectively.
Reviews are an excellent way for board members to share their opinions on how the board is functioning and their suggestions on improving the board’s workings.
This is also a great time to check the information provided by the management team and make sure it is correct and reaches the board on time to enable them to make the appropriate decisions.
Are all your board members trained in corporate governance? If not why not?
Why it’s so important to fix dysfunction
A well functioning board can help an organisation deliver on its vision and mission; given the flux, the business world is experiencing, every organisation requires proper oversight to create and maintain stakeholder value. It is now essential more than ever that boards evaluate themselves, focus on constructive debate, and put their organisations on the path to success.
- Does any of this resonate with you and the working of your board?
- What are some of the measures you have taken to ensure your board is functioning correctly?
- Are all your board members trained in corporate governance? If not why not?