Thinking like a director
Directorship is very different to management. Directors act differently and have different liabilities and duties. They need to think differently.
Good managers are often invited onto boards. They need to make a critical shift in their thinking if they are to be successful in their new environment.
The biggest shift is the move from personal to group accountability and authority. Whilst many managers in modern corporations have experience as team members and are accustomed to being personally rewarded for team achievements many are not comfortable with an environment where they bring no personal power into the boardroom.
Board Leadership
As a leader (and directors are leaders) you are never powerless; you may, in some circumstances, lack authority. This is especially true in circumstances where an individual director wishes to influence the course of events. He or she has no authority over the board but, working through the proper processes and providing insightful contributions to the board debate, is able to make an impact. Some managers find this confronting and dislike the sensation of needing to bring the group to consensus before a decision is made and the board authorises a course of action. These are often the naturally authoritarians but can also be people who, as managers, were very democratic. The difference is that even a democratic manager has the final say on issues that are decided whilst in the board there is never any guarantee that your most persuasive arguments will convince the board to follow your chosen course of action.
The role of the Chairman
Sometimes an experienced chairman can assist a director in making the transition to ‘board thinking’. This is usually best accomplished by a private discussion after a board meeting in which the director has failed to achieve an outcome. These conversations are difficult as the director concerned will feel threatened by the failure. It is important that the conversation be supportive and, where possible, that the chairman highlight issues raised by the director which, whilst not having the outcome that the director desired, have been picked up by management and will be used to enlighten risk management as the company progresses with implementation.
These conversations are only possible in a board with strong collegiality and mutual respect between board members. They will never work if the board is divided or simply failing to work as a team. Boards with shareholder representatives or other nominee directors will find these conversations more difficult than those where the members have selected each other.
When to intervene
Specific indications that a board member is ready and able to be coached in accepting the group decision (and their inability to override this) are hard to define; they may include approaches to other board members whom the director feels are more sympathetic to their point of view, statements to the group in general about concerns or risks raised by the decision, and/or deferential and submissive behaviours that are just slightly out of character (caused by the director attempting to reintegrate with the group after the potentially divisive decision). Responding positively to these indicators will assist the director in coming to terms with their board role.
Behaviours that indicate a board member is not likely to be receptive to coaching are more overt. They include refusal to stop arguing their case, lobbying outside the board meeting for the decision to be overturned, undermining the decision, upsetting the chain of command by direct communication with staff involved in implementing the decision and/or lobbying stakeholders or regulators o encourage them to step in an overturn the decision.
These behaviours do not, however, indicate that a chairman should back off and allow the director to continue. Rather than coaching, in this instance, the chairman must make a firm statement regarding behaviours that will not be tolerated on his or her board. It is helpful to have a written charter to which the director has already subscribed to back up this statement. If a board lacks a charter and finds itself in this position it can rely on external codes of accepted practice but should note that these are less powerful than a specific charter written by the board to describe how it will regulate its own conduct. Directors who place a high value on authority will often be comforted by a display of authority from the board chair. When things are proceeding well again the chairman can attempt to have a coaching conversation to ensure that the director is aware of the issue and also of the board’s intent to support him or her as they deal with it.
Setting standards
Resolute adherence to good practice coupled with an understanding that the change from management to directorship is difficult and can be traumatic are required to assist novice board members, especially those who have been good managers in the past, to become excellent directors in the future.
What do you think?
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Julie Garland-McLellan has been internationally acclaimed as a leading expert on board governance. See her website and LinkedIn profiles, and get her book Dilemmas, Dilemmas: Practical Case Studies for Company Directors.