Boards function well when Directors work as a team. When they have common objectives and a shared vision, are driven by a sense of commitment to attaining those objectives and actualizing the vision, Directors add immeasurable value to the Board and the Company. An effective Board is one composed of individuals who can leverage their individual experience to contribute in meaningful ways, ask the right questions, demand for relevant information and make the best possible decisions. Decisions are inevitably reached by consensus and effort is made to carry everybody along.
However, although it is desirable to allow all Directors to have a say on all matters and encourage consensus, the Board will sometimes have to take decisions even in the face of dissent. Insisting on unanimity will delay decision making and ultimately stifle dissent. Directors should be free to vote against a motion if they have cogent reasons for not going along with the popular view without causing any discomfiture on the Board.
Collegiality (cooperative interaction among colleagues) is NOT the same as congeniality (the quality of being pleasant, good-natured, hospitable and friendly). Congeniality is a decent attribute – people are nice to each other and compliant. However, good-naturedness and “compliant” behavior does not necessarily yield increased creativity or productivity. Collegiality on the other hand is more than being friendly as it connotes getting work done in an effective way as a team by identifying opportunities for improvement and solving problems together. Collegiality is often a catalyst for difficult conversations, contention and even conflict to take place. Ultimately, collegiality is essential for impactful work to transpire (Congeniality vs. Collegiality: Cultivating Communal Culture in Education, Kathleen Jasper).
As Sydney Finkelstein and Ann C. Mooney (2003) stated in an article published in Academy of Management, the number one goal for Directors is to “engage in constructive conflict,”—meaning that Directors should express their diverse views. When this happens the exchange of ideas “help the Board better understand issues surrounding the decision context and synthesize multiple points of view into a decision that is often superior to any individual perspective.” Diversity isn’t just about skin color, gender, nationality or ethnicity. It is about selecting directors who will promote diverse ideas and have the courage to express those ideas to generate rich and constructive dialogue. When collegiality is confused with congeniality, the quality and effectiveness of the Board is compromised.
The Board of Directors is not a social club with the sole purpose of meeting interesting people and making business contacts – aka networking. The convivial atmosphere that pervades a “chummy” Board does not encourage conscientious Directors to raise tough questions or air dissenting views. Discussions on such Boards tend to be shallow and superficial, which inevitably lead to flawed decisions that are not in the best interest of the company. The real work on an overly congenial Board is left to the CEO and Executive Management with the potential for them to take excessive risk or abuse their power for personal gain.
The Board of Enron would certainly have made a difference in the Enron story if it had questioned the several opaque transactions and off-the-book SPEs Management was creating as would have the Board of WorldCom if it had halted Management’s questionable accounting practices and personal loans.
However, whilst “constructive conflict” is encouraged, it should be noted that it has the potential to pitch one Director’s views against another’s, and may be taken personally. When personal and emotional considerations gain prominence, constructive conflict spirals into destructive conflict, degrading group decision-making and interfering with the Board’s ability to perform its key roles. Directors can have strong views, and when they are not balanced with a degree of tolerance and open-mindedness, they can disrupt how the Board works together. Destructive conflict personalizes a dispute by making it less about solving a common problem and more about the individuals involved.
Ensuring that conflicts remain constructive is the responsibility of individual Directors with the Chairman playing a key role in this regard.
An effective Board should be comfortable with debate, honest in expressing individual views, prepared to give and receive constructive feedback and be able to take decisions. All Directors are expected to participate equally to enable the Board derive the full benefit of the diversity of skills and experience and demonstrate mutual respect for one another. If a board is to truly fulfil its mission—to monitor performance, advise the CEO, and provide connections with a broader world—it must become a robust team—one whose members know how to ferret out the truth, challenge one another, and even have a good fight now and then.” Jeffery Sonnenfied, Yale School of Management.
