What Makes a Great Board Member

PART OF A WHOLE

Although what distinguishes an exemplary Board is that are that they are robust, effective social systems, a great company Board is even more so a result of having great Board members.  Directors, therefore, need to be aware of (a) how they can contribute and add value as an individual, and (b) what they must work towards in order to create and sustain a well-functioning Board.

THE ‘RIGHT STUFF’

Successful Board members are no longer defined by what they know, but rather by how they work. Many of the qualities that make an outstanding Board members are acquired over time, through training and experience including characteristics such as;

1-   Continuous Self-improvement exhibited by the Board member always striving to learn as much as possible about the complexity of the businesses they oversee[i],

2-   A strong desire for stewardship demonstrated by the combination of passion for the success of the organisation, and a commitment when serving on committees to be fully prepared for and eager to participate at every meeting[ii],

3-   Wise counsel based on Board members being supportive of colleagues and corporate executives, but willing always to express their own opinion.

In terms of how they manage interrelationships, great Board members develop the capacity to challenge accepted assumptions and beliefs and are intellectually and emotionally strong enough to withstand clashing viewpoints and challenging questions.  Great Board members tend to cope well playing a variety of roles; in some cases dipping deep into the details of a particular business, in others playing the devil’s advocate, in still others serving as the project manager. They are not stereotyped or rigid but instead, use the opportunities to;

1-   play different roles to gain a wider view of the business and the paths to growth available to it, and

2-   transcend their expected roles, expand their perspectives, and challenge innate assumptions.

THE DREAM TEAM CULTURE

Well-functioning, successful Boards build and sustain a virtuous cycle in which one good quality builds on another over time to establish ‘chemistry’ anchored on four characteristics, being;

1-   respect by making sure everyone has the same, reasonably complete information on which to develop their advice to the company,

2-   trust as they actively and transparently share difficult information and challenge one another’s conclusions coherently, and 

3-   candour through an active, spirited, give-and-take that becomes the norm and they learn to adjust their own interpretations in response to intelligent questions.

4-   open dissent that is encouraged by all Board members who always regard dissent as an obligation and treat no subject as undiscussable[iii]

This virtuous cycle of respect, trust, candour and open dissent, commonly breaks when the CEO does not trust Board colleagues enough to pro-actively share complete information, Board members develop back channels to line managers within the company, or self-serving factions develop on the Board.  The Chairman, the CEO, and Board members must promote a climate of respect, trust, and candour by rewarding transparency, sharing difficult information openly, and ensuring that different viewpoints are represented on key Board assignments and activities.  Respect and trust should not imply endless affability or absence of disagreement. Rather, Directors, who are almost without exception, intelligent, accomplished, and comfortable with power should resist any attempt to put them into a group that discourages dissent, or compels conformity.  Board Chairs especially, should support dissenters to make cogent arguments that can make a huge difference to the effectiveness of the Board.

PERFORMANCE EVALUATION

No matter how good a Board is, it is bound to get better if its work is reviewed regularly and intelligently[iv].  At least once a year, the individual Board members should undertake peer reviews of such dimensions as its understanding and development of strategy, the use of their time, the appropriate use of their skills, their knowledge of the company and its industry, their awareness of key personnel, and their general level of preparation.  The collective Board should also conduct a review including, the;

a.     individual directors’ self-assessments highlighting interpersonal styles, individuals’ preparedness and availability, and directors’ initiative,

b.    composition of the Board, specifically, the value and use of various Board members’ skill sets, and links to critical stakeholders

c.     Board’s access to information, and

d.    levels of candour and energy in the Board team, particularly role individual directors play in discussions.

If a Board member will truly fulfil their mission – to monitor performance, advise the CEO, and provide connections with a broader world – they must know how to ferret out the truth, challenge colleagues, and even have a good fight now and then. 

Always remember, to be a great Board member, knowledge isn’t everything.  Mind-set is everything[v].

---

[i] A 2002 survey by the Yale School of Management and the Gallup Organization suggested that fully 25% of CEOs claim that their Board members do not know their business well enough.

[ii] Directors who take their duties and individual accountability seriously, and let their fellow directors know they’re expected to do the same, are the best insurance against a complacent Board.

[iii] According to data compiled by Kathleen Eisenhardt and L.J. Bourgeois, the highest-performing companies have extremely contentious Boards.

[iv] In 2001, the NACD surveyed 200 CEOs serving as outside directors of public firms. Sixty-three percent said those Boards had never been subjected to a performance evaluation. Forty-two percent acknowledged that their own companies had never done a Board evaluation.

[v] Other references: Institute of Directors (New Zealand), Bloomberg, and the Harvard Business Review