Boards of deflectors

Is rigorous debate high enough on the boardroom agenda?

Is rigorous debate high enough on the boardroom agenda? Quite the opposite.
Boards of deflectorsMost corporate boards seem either disinterested in constructive conflict or content with being cordial though dysfunctional. Stuart Crainer and Des Dearlove argue that such behaviour not only creates weak boards, it also spawns flaccid companies.

Remember the first time you ventured into a boardroom? It may have been empty, but chances are the memory is burnt into your corporate soul. The table: polished to perfection. The interior design: straight from central casting. The art: venerable oils of corporate elders or bold abstract splashes.

“My memory from my first board meeting as a director was how well reality corresponded with my expectations,” says Jan Lapidoth, a board member of the airline SAS in the 1990s. “I decided my role was to ask intelligent questions rather than make authoritarian statements. What I found around the table were old timers with different ideas. They played their game and enjoyed listening to their own voices. Worst of all, they did not like team play. They were almost all CEOs from other companies, used to being surrounded by heel-clicking associates. It didn’t take long before I became one of them and behaved as they did. The board represented superior strategic thinking, the VPs didn’t understand much, and when things didn’t work, it was their fault.”

Lapidoth’s experience is not unusual. We asked a company vice president to speak off-the-record for his memories of interacting with the board. “What I got from the board was the corporate equivalent of friendly fire. After every board meeting, the CEO used to call us VPs to a short meeting to be grilled by the board members on any proposal we had submitted. What became obvious then was that we and the board were playing on opposing teams. We, the division heads, had spent days preparing lengthy documents to be sent out at least 10 days before the board meeting to give the directors time to read and think. Did they? They stuffed the documents in their briefcases, all 200 pages or so, and leafed through them in the taxi to the meeting. They extracted, at random, a paper, formulated a trick question and entered the meeting room ready to fire. After all, board work is a power game.”

Silence of the rams

The real corporate power game is not played out around water coolers, on the factory floor, or in front of the media. Real power is not witnessed at sales conferences or even at executive retreats. Real power is exercised in the world’s boardrooms. In an idealized board, it is here that the corporate rams would square up to each other in earnest. It is here that business legends should be made and destroyed, where profit-boosting strategies are hatched, where great and not-so-great decisions transpire.

The perfect boardroom would echo with the clash of corporate rams – young and old – butting up against each other in ritualized combat. Sadly, that is not the reality (and probably never was). Yet, a fundamental role of boards is to encourage debate and resolve conflict. The best boardrooms thrive on argument. The legendary General Motors CEO Alfred P. Sloan knew this. On one occasion, after a brief boardroom debate, Sloan famously said: “So I take it we are now in complete agreement?” His fellow board members nodded. “Well, then I propose we come back and discuss this when we no longer agree.”

But these days, board members are more likely to cosy up to one another than engage in constructive debate. In place of raised voices, there is the quiet hum of a box-ticking machine on autopilot, desperately trying to avoid controversy of any kind. The fashion is for leaders who don’t rock the boat. What’s critically needed are more leaders able to generate creative conflict.

The new rules on boards introduced by the US Congress and its Sarbanes-Oxley Act are partly to blame; they risk undermining the effective functioning of the political process. Sarbanes-Oxley introduces protocols determining the behaviour of board members. The temptation for board members anxiously eying their growing responsibilities is to concentrate on the administrative process and spend less time on discussion and thinking. It is difficult to engage in robust dialogue if you are busy checking boxes – just doing due diligence while fearing interrogation by some federal agent.

“There is a worrying lack of vigorous debate in many boardrooms,” concludes Professor Andrew Kakabadse, a visiting scholar at the Thunderbird Management School in Arizona, the H. Smith Richardson Fellow at the Center for Creative Leadership, and Director of the Severstal Global Boards and Governance Research Programme at the Cranfield School of Management in the UK.

Kakabadse has carried out extensive research, involving surveys and in-depth interviews with board members in more than 12,000 organizations in 17 countries. His findings make uncomfortable reading for board members.

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