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Why Good Boards go Bad

In today’s uncertain climate, leaders are constantly reminded of the importance of innovating and thinking creatively about how their organisations can maintain competitive edge. Indeed, these are themes that recur in my own blogs and Rialto’s frequent call to action for leaders. Far less talked about – and far less glamorous – is the importance of organising, especially when it comes to ensuring the effectiveness of the top leadership tier.

Many UK boards suffer from a dangerous tendency to allow the ‘important’ to be overtaken by the ‘urgent’. And, typically, this comes down to both a lack of leadership and a lack of organisation.

It is not an exaggeration to say that disorganisation at board level can lead to millions of pounds being lost from the bottom line. It can cause senior leadership teams to get their priorities spectacularly wrong and distract them from pursuing the organisation’s strategic goals. Simply by organising themselves better, a board could elevate itself from the bottom to the top quartile.

One of the major issues that is frequently overlooked is the amount of time that is wasted in board or board committee meetings. We have seen boards spend as much as 75 per cent of the time looking backwards rather than focusing on how they are going to meet their strategic goals in the future.

If senior leaders were to document how they spend each minute of a board meeting they would quite probably be taken aback. It has often crossed my mind how beneficial it would be if someone were to develop an app that gave a running calculation of the hourly rate of everyone in the meeting and how much it was costing the company as the minutes ticked by.

One of the best ways to make a board work more efficiently and therefore improve its effectiveness is to carry out a gap analysis: what is the future perfect and what are the behaviours and changes required of the board to achieve this?

The chief purpose of the board is to make the right decisions to ensure an organisation can deliver on its strategic goals. But there is a raft of factors that can derail this decision-making process including: an overpowering chairperson; confrontational and non-collegiate behaviour; groupthink; lack of motivation on the part of board members; and lack of knowledge as well as disconnection from the rest of the organisation.

It might prove a revelation for a shopfloor employee to discover that a highly-paid board member lacks motivation but if, for example, the average length of time served on a board committee is only two years, will they have the necessary commitment to buy in to a five-year plan let alone a 10-year one? Consequently, they are likely to feel far more motivated towards addressing the urgent over the important.

Similarly, how could a board made up of highly intelligent individuals not have the knowledge required to deliver on key objectives? Sadly, it is sometimes the case that the wrong people are on the board. Some boardrooms can also become little more than ‘status arenas’ rather than places where every minute is used to work out what the organisation should be doing to become a leader in its market or sector.

Identifying and removing the blockers and behavioural traits that make boards go bad is never going to be easy and will be downright painful in most cases. But they are standing in the way of good organisation and board effectiveness and ultimately doing great damage to the bottom line and a disservice to all stakeholders.

Jan Floyd-Douglass and Richard Chiumento

 

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