The Power of Board Dynamics and Effectiveness: What You Need to Know
Board Dynamics and Effectiveness:
Board dynamics is a term used to describe the interactions and relationships among the board of directors’ members.
The Unwritten Rules of the Boardroom
The boardroom can be a place of great power and influence. Board members can make or break companies with their behavior, attitudes, and any negative cough comments.
They are the ones who advise strategic direction to management and make the decisions that can determine whether a company succeeds or fails.
Regarding board dynamics, specific unwritten rules should be followed to ensure that the board functions effectively and efficiently.
The following are some of the unwritten rules of the boardroom:
- Board members should respect one another’s opinions and viewpoints. It sounds simple; however, when board members bring in their vast egos, its a mess for boardroom dynamics and healthy discussion, and different viewpoints
- Board members should always be willing to compromise to reach a consensus.
- Board members should avoid personal attacks on management executives in the boardroom.
Board dynamics can significantly impact the success or failure of the boardroom culture and the company’s executives. This blog post will discuss what you need to know about board dynamics and how to improve your Board’s performance.
WHAT ARE BOARD DYNAMICS IN A WORLD AFTER COVID?
However, board dynamics are always crucial with COVID disrupting Supply Chains, Food shortages, global travel, and the rise of hybrid work environments. Therefore, board members have to balance new expectations with Stakeholders, which is termed Stakeholders Capitalism.
It’s engaging and meeting the expectations of all stakeholders for the companies, not just the shareholders but also the regulators, customers, suppliers, vendors, and communities one operates in.
- They are being more accommodating to different hybrid meetings. It’s hard to read the body language of a board member over a zoom meeting.
- The Chair and Lead Independent Director must ensure everyone participates in the discussion, not just nod yes.
Before COVID, in-person boardroom meetings would allow one to analyze body behavior, crossed legs vs. open arms, and the Lead Director would easily read anxiety on rogue comments. Now it’s more important in a virtual boardroom.
Board dynamics is the term used to describe the interactions and relationships among the members of a board of directors. Board dynamics can significantly impact the company culture, boardroom sensibility, and strategic success or failure of a company.
Many factors can affect board dynamics, including:
– The size of the Board
– The composition of the Board
– The level of experience of the board members
– The Board’s culture
– The Board’s governance structure
All of these factors can impact the way the board members interact with each other and make decisions. Improving board dynamics can be challenging, but it is essential to consider these factors to strengthen your Board’s performance.
Board Meetings: How to Drive Effective Board Dynamics
Board meetings are one of the most important aspects of board dynamics. Board meetings are where decisions are made, and board members can voice their opinions. Board meetings should be well-organized and focus on the most critical issues to the company. The structure of a board agenda may either facilitate strategic discussion or stifle it.
There are a few things you can do to drive effective board dynamics at your next meeting:
- Make sure the plan is clear and concise
- Encourage open discussion
- Be prepared to answer tough questions
- Be respectful of differing opinions
Board dynamics are essential to the success of any company. By understanding what board dynamics are and how to improve them, you can ensure that your company is on the path to success. Board meetings are a crucial part of board dynamics, and by following these tips, you can ensure that your board meetings are effective. By following these tips, you can ensure that your board meetings are productive and effective.
Board Dynamics around the Board Table
Betsy Atkins has served on multiple major boards; NASDAQ, Wynn Las Vegas, Volvo Car Group, and a personal acquaintance. In her book, Be Board Ready: The Secrets to Landing a Board Seat and Being a Great Director (Paraphrased below, in Chapter 8, Board Refreshment, page # 72).
Betsy told how she worked as a Lead director alongside a very rogue director who was brilliant, had great ideas, but was also highly disruptive and caused considerable collateral damage. The board dynamics were shut down each time. For example, instead of allowing the meeting to occur as planned, we would intentionally have an executive assaulted during the presentation.
In her book, Dr. Dambisa Moyo, who is serving on the Board of directors of 3M, Chevron, and Barclays, “How Boards Work And How They Can Work Better in a Chaotic World”
Moyo claims that corporations need boards that are more transparent, better informed, more diverse, and more actively engaged in charting the company’s strategic direction. Her book offers a road map for how boards may navigate businesses through tomorrow’s problems and ensure they thrive to benefit their workers, shareholders, and society.
According to the Institute of Directors of New Zeland Board and management dynamics in action
The following are some of the essential lessons boards can learn.
- Both directors and chairpersons must be mindful of the impact individuals and their actions have on the debate and discussion that precedes decision-making.
- Chairs need to be aware of their board members’ personalities. They should look for where some directors might want to take things and be prepared to guide the conversation back on track if necessary.
- Individual directors, like team leaders, must keep their own counsel and contribute objectively and constructively, mainly when management is present. Having enthusiasm is good, but you must also use good judgment.
- The difference between a strategy and a technique is that the latter is often short-term, while the former considers long-term possibilities. Even some board members are confused by this distinction.
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- Board Chairs, whether new or experienced, must never forget that everyone in the boardroom has a personality and is very accomplished. However, to make good decisions for the group, we must have healthy discussions and come to a unanimous agreement.
- Litigation Lawyers, ESG – Shareholder activists, and stock analysts review board meeting minutes with great interest to understand the board dynamics and search for any discord among the directors. So they can file litigation and activist campaigns against the directors for wrong strategic decisions.
- To prove that one board member had recommended a different strategic direction for the company. Thus boards are liable for compensation to the shareholders and stakeholders.
- The Lead Director should have separate individual talks before the boardroom meeting to sense the mood of the individual rogue director and provide more time for healthy discussion before making a decision.
- Provide more time to talk on the boardroom agenda just among directors before letting management in the boardroom for their respective presentations
- Answer any concerns before the board meetings questions and provide more information to balance a healthy debate vs. breaking boardroom dynamics.
Thank you for reading! Board Dynamics can be a tricky topic, but we hope this was helpful. Do you have any tips for improving board dynamics? Could you share them with us in the comments? What other factors do you think are essential for Board Dynamics? Let us know in the comments below!
If you have questions about Board Dynamics or anything else, don’t hesitate to contact us; we would be happy to help!