Diverge to Converge: Managing Board-Level Discord

To learn more about the purpose and creation of a board check out our blog ‘Fit for Purpose: Successful Board Composition.’

Once an organization’s board is established the CEO needs to consider upfront how to manage conflicts between board members; the organization; and even how external stakeholders view the performance of the company. It’s human nature that conflict may arise over the course of business, what matters is how much this is proactively managed. Many CEOs budget a good portion of their time to manage relationships between them and the board. According to the Harvard Business Review this time allocation can average over 40 hours per quarter.

What If Conflict Arises?

It is important to recognize that dissent between board members is not unusual and can be a positive thing if managed professionally. Disagreement does not necessarily equate to division, and indeed presenting different perspectives and opinions is vital to a board effectively discharging its duty. Boards must strike a fine line and provide balance between dissent and collaboration.  

The first attempt to resolve the situation should be between the conflicted directors. Once that approach has been exhausted then the board chair should step in to resolve the situation. From there, the board chair and the board should seek other measures to correct the situation as disfunction in the board room constrains the board’s ability to deliver value, so timely resolution is crucial. Where relationship conflict results in an inability for the board to make good decisions then the board becomes damaged, and honest discussion about membership probably needs to take place before that conflict leads to a fractured board. That situation can be avoided through the adoption of a board framework and culture that embraces disagreement and defines a clear path to reconciliation.

Three types of board dysfunction

There are three common types of board dysfunction: relationship-based, task-based, and culture based. Relationship-based speaks to the individual, despite the best attempts a board member does not gel with fellow directors. Tasked-based speaks to the structural challenges that may result in dysfunction such as policies and procedures and culture are the norms of the board.

With the relationship-based issue, ideally a conversation with the board director in question alerts the individual to the challenges with their behavior and they self-correct, otherwise the need for a more drastic response may be required. For the tasked based challenge, a review of the tools and resources guiding the boards efforts may be a good option as it offers the opportunity to ensure they are still applicable and modify appropriately.

Finally, cultural based challenge, the board may need an independent evaluation of the board to offer feedback and identify issues that may not have been apparent to the board.

It is important to identify the root cause of the dysfunction, so it does not fester, and address it promptly. This is where a strong board chair is critical to correcting this situation, and a key criterion for this person is the ability to excel in having challenging conversations.

Mitigating board level discord

Some ways to mitigate this issue are to have regular reviews both of the functioning of the board as well as individual board members, this feedback can potentially call out symptoms early and allow the board chair greater latitude to correct. The chair and the board can then use this information to determine the appropriate next steps. Another option, either on its own or in conjunction, is to have a board refresher training where the rules of engagement of reviewed and everyone hears the same message. An easy way to incorporate this training is by aligning it with the onboarding of a new director.

It goes without saying that the lynchpin of the board is the board director who should model the desired behavior. In short regular reviews of the board and individual directors will help find ways to continually optimize the board should unearth areas to address. These reviews need not be done simultaneously; indeed, most directors agree that regularity is important and alternating them, assuming on an annual basis. By alternating, it separates the two efforts, because a good review takes time and disconnects the linkages making them more valuable. Ensuring that the foundation, the processes, methods deliver their intended purpose. One example is the board deck, often management (and the board) consider the meeting presenting to the board and consequently deliver voluminous PowerPoint decks – mandating a limit in the number of slides allowed more time for conversation. Another example is to find a way to better pace the committee and board meetings perhaps having the committee meetings online so that they are not piled onto the board meeting schedule allowing time for more quality conversation. A board with a good board culture should always be seeking ways to improve and recognize when it is out of alignment.

Get the balance right and the board and organization can forge ahead with confidence.

Canary & Shield takes a holistic view of risk. One of the key stakeholder groups we evaluate with our clients is the health of their governance and the profile of its board of directors. A core part of our offering is ‘looking around corners’ to see where risk could cause crisis, then working with leadership teams to mitigate those risks.