7 Small Changes to Achieve Better Board Effectiveness, Conduct & Leadership

ChangeThese are the seven steps I use to facilitate better board effectiveness, conduct and leadership on main and operating boards, executive committees and senior function teams:

Step 1: Acknowledge uniqueness

You and your colleagues are unique individuals. No two board members are the same. If you behave as if they are you cannot expect to get the outcomes you want. If each board member is unique it follows that your board is unique. Why would you use generic processes for a unique situation?

Step 2: Understand uniqueness

At work, the components of your, and each of your colleagues’ uniqueness are their skills and experience, reputation and emotional intelligence. Whilst many share aspects of these, no two board members share the precise mix. Why, therefore, would you treat yourself and your colleagues as human capital assets?

Step 3: Understand emotional intelligence (EI)

The most important components of emotional intelligence are empathy, self-awareness and the ability to negotiate needs productively. All three are important. While organisations may perform well for a while without these in harmony in each director, research suggests that organisations that fail to foster these, often struggle to develop long-term capability. In which case, why would your board ignore individual EI problems, even if those colleagues with issues are delivering good results in the short-term?

Step 4: Understand the negotiation of needs

Experts tell us that if your ability to negotiate your needs productively and safely was frustrated in your formative years then you will have taken a decision to deal with that frustration in a manner that was appropriate at that time. However they also tell us that humans have a tendency to extend formative years decisions into adult life. Even those people who experienced little or no frustration in having their needs reasonably met in their formative years suffer when they encounter those that did or when they experience significant stress in later life. The productive negotiation of needs as between members of boards and teams is key to success. Why would your board not pay attention to creating an environment in which members’ needs can be negotiated productively, even if this involves painful confrontation of personal issues?

Step 5: Reveal hidden potential through small changes

Experts also tell us that no one escapes emotional pain. Everyone carries one outstanding emotional painful experience. By outstanding I mean more than all other painful experiences. We compensate for these in different ways but these strategies invariably hide our potential. If this is true, it means that your board’s hidden potential is more than the sum of the hidden potential of you and each of your colleagues. The route to revealing the hidden potential of each director is for each to negotiate small changes in behaviour with each other. In aggregate the sum of the small changes is greater that each in terms of their impact on board effectiveness and conduct. Conduct is observed behaviour over time. Why would your board not seek to reveal the hidden potential of each member over time?

Step 6: Share your personal purpose, strategy and behaviour plan

You and your board colleagues each have, or should have, a personal purpose or objective at work, a strategy to achieve it and a personal behaviour plan to implement that strategy. Some do this process intuitively; others plan it whilst others drift. The more these issues are shared openly between board members, the more likely it is that business purpose, and strategy and behaviour will be successful.

 Step 7: Make personal and business purpose interdependent

The tension between the personal purpose of each of your board members and the purpose of the business negatively impacts performance and the development of long-term capability. It follows that these are interdependent and if so it further follows that it is worthwhile paying attention to the interdependence of personal and organisational purpose. It also follows that not doing so increases organisational risk and reduces opportunities.

I use three well-known emotional intelligence tools to help directors implement these steps:

Tool 1: Feel/Need/Do?

Regarding specific issues or behaviour or exchanges at board meetings what do you feel?; what do you need in relation to that feeling?; what are you going to do to meet that need?

Tool 2: Are you selling or buying?

In almost every board interaction you are either selling or buying. Know which and know how.

Tool 3: Are you in Parent, Adult or Child mode?

In almost every boardroom interaction you and your colleagues will, at various times, be in Parent, Adult or Child mode. Do you know which you frequently occupy and when? Do you know how to get yourself and your colleagues into Adult-Adult mode?

The steps and tools above together constitute The Fenton Model® which is a registered trademark of Ciarán Fenton Limited.

Ciarán Fenton

October 2017

Fear culture: why every director should read ‘The Fear Culture’ chapter in Shredded

shout

If your organisation uses any form of a “rank and yank” performance management system you should read ‘The fear culture’ chapter in Ian Fraser’s Shredded – Inside RBS, The Bank that Broke Britain.

Fraser provides directors with excellent arguments as to why your board should close down these systems.

First, he quotes American management thinker W. Edwards Deming who said that these performance management programmes result in “conflict, demoralisation, lower productivity, lower quality [and] suppression of innovation”.

Who on your board would push back on you if you quoted this?

Second, he cites Phil Taylor, Professor of Work and Employment Studies at the University of Strathclyde, who wrote Performance Management and The New Workplace Tyranny (2013). He says, “an argument can be made that these performance management practices are not merely unjustifiable on the grounds of welfare, decency, dignity and well-being, but they may also be utterly counterproductive…”

Try quoting that your next board meeting and see how you get on.

Third, he quotes Ron Kerr and Sarah Robinson, both Business and Management lecturers who said, “Within RBS itself, Goodwin’s domination was maintained by economic violence. RBS’s internal culture has been characterised as a culture of fear”.

Fraser writes that Kerr and Robinson “argue that the leadership culture at RBS was quasi-feudal, in that exploiting people’s economic dependence and destroying their economic power lay at its heart”.

Imagine quoting that at your next board meeting. Surely a slam-dunk argument for your board to say ‘you’re right, we’ll scrap our performance management system tomorrow.’

Of course not. You and I know that the proponents of these systems on your board are in no doubt about the arguments against them.

As early as 1991 Deming and others were arguing against them. But as Ian Fraser notes: “…this did not stop rank and yank programmes being adopted in the UK across both public and private sectors”.

In my own work facilitating boards and ‘off-sites’ I have heard senior leaders challenge these programmes only to be told that ‘we must have some form of measurement’.

It’s as if a totally discredited system is better than none, in their minds. A zero-sum-game. They cannot imagine, as many companies who have ditched these vile programmes can, that trust is all you need to ‘performance manage’ anyone.

But what if there’s no trust? Surely, your board will argue, we need a system to manage people who don’t ‘behave’?

Your answer to this is that the board doesn’t need a system, it needs to up its leadership game to help people be what they can and should be.

Yeah right, you say. It won’t happen in my organisation. And you’re right, unless you and the people in your organisation who agree with you get together and lobby for change.

It’s not about speaking truth to power, a phrase I’ve never liked. It implies that the powerful never speak the truth and those who want to speak the truth are invariably weak.

You are powerful. You are a director. Just do it.

Business or personal strategy: which dominates your board?

What is it with our obsession with strategy? We are respectful of words like profit and loss but somehow treat strategy differently.

After 15 years consulting and nearly 20 years in corporate life, it is the word which stands out for me as the most abused because it appears to mean wholly different things to different people.

Conversations, which tend to be liberally peppered with it, bear this out: “I’m hiring someone to do the day to day stuff, so that I can concentrate on strategic stuff” or “We have just hired an awesome Head of Strategy” or “Frankly, and strictly between you and me, the problem with Joe Bloggs is that he’s not very strategic”.

Worse is when strategy is confused with purpose and execution as in “we intend to be the best in the world by hiring good people”.

Being the best in the world, if you mean it, is a business objective and is not a strategy. Hiring good people is as basic a leadership behaviour as breathing. Strategy, it ain’t.

But why the confusion? Strategy means how your board achieves its purpose. That’s it.

It should be decided once and, while it may change, it should stay fixed for a reasonable period to allow for its implementation.

Therefore there should be no need to use the word strategy in any context other than “since our agreed strategy is X then we are doing y or we should do z”. Or not, if those actions are not congruent with your strategy.

For example, Ryanair’s objective was, it appears, to be the best and most profitable no frills airline in the world – or words to that effect.

Its strategy appears to have been to train the market  to expect nothing but a safe and cheap flight. Its execution behaviour – love it or loath it – was to do everything to lower market expectations of airline service which had been raised over a generation which believed  flying was for a certain “class” of person. Ryanair broke that myth.

Proof that its poor treatment of customers was “strategic” is the manner in which it reacted almost overnight to the introduction of a business class product by rival Easyjet. Suddenly, Ryanair became user friendly, introduced its own business class product and sales went up by c 20%.

That’s a story of a simple purpose, sophisticated strategy and clean execution behaviour in action. There was no confusion whatsoever about the meaning of those words. The results bear this out.

The problem on many boards however is that there isn’t a shared business purpose nor, in addition, are the directors upfront about their personal purpose.

If your business purpose is not shared by your colleagues on your board and if your and their personal purpose is also not clear then it’s not surprising that your business strategy will be weak, at best.

Some clients “push back” on this by saying that “our purpose is to make money, everything else is strategy”. To which I reply “it’s no wonder you all have a different spin on strategy since making money is, again, as essential as breathing. It is a collateral benefit, not a purpose.”

The reason purpose and strategy are problematic is because they are difficult to get right. It is a truly challenging task in complex markets to get your purpose statement right and then to follow through with choosing the right strategy to implement it.

But, and perhaps surprisingly, this can be made much easier if your directors are upfront about their personal purposes.

After all, the purpose of any organisation is inter dependent with the purposes of each of the people working in it and, particularly, with the members of its board.

Initially I find this a hard sell. Directors  find it  difficult to accept that they constitute the business. They speak of the business in the abstract, as if it were a third party. But it isn’t.

It is the sum of their individual purposes brought to bear on a market need. But often the personal purpose of one or two individuals can dominate or skew business objectives and therefore strategy.

Once I get a board to address the matter of their shared business purpose in the light of their personal objectives, I find that business purpose and strategy can be reframed much more cogently.

Your CEO is key to the success of this reframing process. If he or she is willing to share their personal purpose and strategy honestly and openly they will be a catalyst for the others to do the same. This is called leadership.

There are three steps to harmonising business and personal strategy on your board:

First ask each director to articulate their personal financial and fulfilment needs and objectives and how these fit with their understanding of business purpose and strategy.

Second, in the light of these shared insights your board should work on the precise wording of business objectives and which all directors are happy to sign.

In my experiences this process can be difficult and can surface deep and painful disagreements. But it’s worth the pain because future disagreements will be more easily resolved by reference back to agreed objectives.

Finally when, and only when, there is absolute shared clarity on business purpose and one that fits with the articulated personal objectives of each director, can you move on to addressing strategy.

Then, often to everyone’s pleasant surprise, agreeing a good and robust strategy becomes relatively straight forward. Are you surprised?

www.ciaranfenton.com

Why business plans should include director behaviour forecasts

It’s the holiday season, and operating board directors like everyone else are setting their Out of Office email modes to On. But while they may be demob happy, many are not happy at work at all. Not one bit.

Typically the cause of their ennui is the dominant poor behaviour of other directors, as they see it, towards them on their operating boards. It often keeps them awake at night. It makes some even weep. Over the years I’ve identified three broad categories.

First, there is bullying behaviour. It can be conscious or unconscious, but the effect is the same: other people suffer. And usually, that means the business suffers because the business is a collection of people.

Second, is passive aggression. This too can be conscious or unconscious but has the same impact as bullying does on people and the business.

The third is hubris. You can be neither a bully nor passive aggressive to exhibit hubristic behaviour. Exponents chief behavioural trait is that they appear to listen to you but not a word you are saying is getting through. They are often very nice people, and for whom the glass is always not just half full, but overflowing.

Very little upsets them. But, as one client put it, “they are capable of extreme levels of unconscious cruelty” towards others. The impact on the business can be disastrous.

While we are all capable of each and all of the behaviour listed, my focus is on the impact of those whose dominant response is just one of the above and is extreme.

So, even if only half of what I say is true regarding the impact on the business, why don’t operating boards try to predict director behaviour in their business plans? Surely it would make commercial sense to do so?

The answer is partly that the bullies, passive aggressors and hubristics (sic) sign off the business plans and partly because there is no business planning language to cover off this nebulous issue.

I propose that the solution to the second part of this problem is to have a section under the SWOT heading in the business plan that addresses poor conduct i.e. poor director behaviour over time is a top risk.

This solution may help to solve the first part of the problem because any Threat in the SWOT section of a business plan is a risk and there is precedent for including mitigation of risks in business plans as a matter of good practice.

So is this not an opportunity for business planners to put in place, at the outset, processes and governance structures that at least reduce the impact of the risky behaviour?

And of course, business planners can avoid the thorny issue of naming the behaviour in the business plan. All they have to do is to name the potential risk attached to it.

For example, one risk is the failure by any director to call out their concerns on any issue at operating board meetings which could lead to significant risks to the business.

Therefore the business plan should include processes to mitigate that conduct risk. I propose the appointment by rotation at each operating board meeting of a Devil’s Advocate whose sole purpose at that meeting, and with the full permission of the other directors, is to spot and call out conduct risk by drawing attention to behaviour at that meeting which could give rise to such a risk.

Now that step would require courage – a behaviour which is the greatest mitigator of all risk events in business. And courage thrives where directors “have each other’s backs”.

So, as you set your email to OOO for your summer break can you honestly say that your colleagues have your back or, indeed, you have theirs? What can you do to improve that mutual support when you return? What might stop you?

Perhaps you might feel better if you gave these questions some thought on the beach. At worst you might be able to make small changes that could make a big difference.

Happy holidays. Happy returns.