Thursday, December 5, 2013

A Decisive Board

A Decisive Board is cogitative, proactive, and supportive.

Corporate Boards are there to oversee business strategy, ensure reasonable governance, and hold the senior executive team accountable for execution. However, in doing so, it is unreasonable to assume board members will always agree on subjects; diverse thoughts and opinions are critical in effective governance; on the other side, when boards make collective decisions, all board members are expected to support them, that said, there are many tough decisions boards need to make, but how to build a decisive and differentiated Board?

Do ‘homework’ before sitting at the big table: Normally, one sends information regarding a board decision prior to the meeting. Given "solicitations" prior to the board meeting, it could be debatable whether boards fail in their job if there is a split decision at the board meeting instead of a unanimous decision. The key point is to well prepare crucial issues and collect feedback even before the meeting start, and better to invest the time up front to address concerns and achieve a workable agreement from the outset. In an ideal Board world, the culture should be to listen, consider, adjust, listen some more before acting. If a decision is too complex, if a clear outcome is uncertain, try not to be the winner of close votes on important issues. You will conceivably spend much time, energy and focus wrangling the dissenters as the process unfolds. But try to make the harder right decision, without too many regrets for the long term.

Board Room “Acid Test”: “Will the dissenting members actively support the group decision”? If everyone thinks the same, you do not need board governance. Having different views and opinions does not mean lack of teamwork. It is how the differences are conducted that is the real test of the board. As a board member, you have to be assured and assure that the best idea always wins, and believe “from spirited and strategic debates come to reach cogitative and wise decisions." Independent thinking is critical for governance effectiveness. To dissent on votes spurs discussions on the topic at hand, and get more Board members to actively participate. However, there are studies that show independence of thought declines with length of tenure, as most of the board members are motivated to go along in order to maintain peer relationships. The key for a decisive board is to ensure all decisions are justified intellectually and emotionally.

Board membership requires careful stewardship, thought, and deliberation: Individual Board members will express their concerns, questions, issues, or disagreements early in the process. Those individual concerns should be addressed and accommodated by the Board. Most Board decisions are not so "bi-nary" as to demand a yes/no or up/down decision, but rather an airing of the issues and adjusting the terms to meet objections. One can disagree with fellow Board members but have always supported the decisions of the majority. 

Decision style is part of Board culture, a truly decisive board is democratic, cogitative, and proactive, bring different opinions and diversified viewpoints, but with the capability to make collective and wise decisions that get supported by all.


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