Your Board Effectiveness Review: fig-leaf, genuine diagnostic or neither?

In what circumstances would you or a fellow director not want to know how effective your board is? None surely, except of course if you and or they are part of the problem.

That’s why board effectiveness reviews are not embraced as fulsomely as logic would dictate.

After all, your objectives as a board depend to a large extent  on the quality of the relationships between your directors so why wouldn’t you want to know what’s getting in the way of success, if only from self-interest?

The answer is the same answer people give when self-interest would suggest they should eat and drink less and take more exercise, which is “it’s hard to do”.

Indeed it is but that’s no reason why you shouldn’t try. But, whilst I’m not trying to find excuses for you, it is nevertheless true that a number of factors work against you attending to this matter, effectively.

First, management speak doesn’t help. Note how business language distances you from the problem. It turns everything into a noun. Instead of encouraging you to find out how effective your board is, as in “very”, “middling” or “not at all” it forces  you to address a concept called Effectiveness.

Concepts like these are remote and somewhat fungible. Effectiveness can be in the eye of the beholder. It is a mass noun meaning the “degree to which something is successful in producing the desired result” allowing users to drive “a coach and four” through its meaning.

Then add two more nouns: put the noun “board” before it and “review” after it and, hey presto, you have three  serious nouns together giving the impression that you have measured the effectiveness of your board.

But we all know that most companies who publish these do so only because of the Code and that the information published tells us nothing substantive about how successful or not the board is in producing results or what the underlying problems are.

This outcome occurs despite the vast amounts of high quality information produced by skilled consultants who carry out the reviews and evaluations.

It’s not my area of expertise but I know from the reports they produce that they invariably surface key issues which boards do not address.

These issues typically relate to roles, composition, dynamics, relationships with the executive and stakeholders, as well as the performance of the committees, the chair and the secretariat if there is one.

One area in which I have experience is in supporting behaviour change. Frequently board effectiveness reviews reveal a need, indeed a desperation amongst some directors, for that type of change.

I propose three steps that you and your directors could take immediately which would make a significant impact on performance through behaviour change:

First, that you submit to a voluntary board effectiveness review annually whether you are listed or not, main board, operating board, executive committee or function management team. In other words, if you are part of a group that makes key decisions then embrace a review.

If you honestly believe that you and your colleagues are taking important decisions which will directly impact outcomes then why wouldn’t you want no stone unturned to clear a path to success?

Second, ensure that the review contains the most painful behavioural data available, otherwise it’s a complete waste of time. By this I mean the review must contain language like “The relationship between X and Y directors is at breaking point”. Everyone will know this, so why not make it official?

The important point is to have a plan and a process for dealing with “the elephant” once named.

Third, don’t publish anything save what’s required by law and even then, the blander the statement the better. In the case of listed companies I don’t believe that the current trend of having two beautifully produced pages in annual reports telling readers that the board is doing what it’s technically paid to do is adding any value.

Boards are like families, as recent research (HBR) bears out. And families rightly don’t want to squabble in public. Tempers fray. Often there’s more heat than light.

But if people have shared objectives then they shouldn’t mind shared feedback, no matter how painful, in the service of better personal and organisational fulfilment.

Do you agree, or are you part of the problem on your board? Either way, would you not like to find out?

www.ciaranfenton.com

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