Tuesday, August 19, 2014

Rooting Out Boardroom Dysfunction

Board leaders “can anticipate at least one major crisis during their tenures,” predict the co-authors of the excellent book, Boards That Lead: When to Take Charge, When to Partner, and When to Stay Out of the Way, by Ram Charan, Dennis Carey and Michael Useem.

Can you prepare for your next crisis? Yes. The first step is to “Root Out Dysfunction,” which is also the title of the fourth chapter. The authors explain:

 “In our experience, as many as half of Fortune 500 companies have one or two dysfunctional directors.” They identify three types:
     • “Some see themselves as the smartest person in the room.
     • Others seek recognition.
     • Others are frustrated would-be CEOs.”

They add, “Whatever their personal motives, they tend to micromanage or take boardroom discussions down dark alleys. We have seen a director interrupt the first five minutes of a CEO’s boardroom presentation and sour the mood of both board and management for the remainder of the day. The result is to impair, even negate, a board’s capacity to lead the firm. As in any group, a dysfunctional member can sabotage the entire team.”

The book cites a study of board members in Australia which summarized dysfunctional directors into these colorful categories:

  • Nonstop talkers: board members who “sought to demonstrate their exceptional knowledge”
  • Hobbyhorse jockeys: directors who are “overly focused on the one topic they knew well”
  • Hand-grenade throwers: board colleagues who “were contentious and obstructive”
  • Captives of compliance: this group “stressed rules over judgment”
  • Egocentrics: the “self-referential” types on your board
  • In over their heads: those directors who “simply did not understand their firms challenges”

Charan, Carey and Useem add, “That such excesses emerge in even the bluest of the blue-chip boardrooms is not surprising. Directors bring the same array of human foibles to the boardroom as do people to any room, though one would expect that the oddest of the oddballs would have been screened out.  What is more surprising is that so few steps are taken to limit the damage.”

So what should Christ-centered boards do when dysfunction is alive and well? First, read this chapter. It’s excellent. Next, ask your board chair to address the issue with the offender in a one-on-one conversation. According to corporate coach Marshall Goldsmith, every leader has blind spots and it’s possible your dysfunctional board member has never been graced with frank feedback.

"Love should always make us tell the truth.
Then we will grow in every way
and be more like Christ, the head."
(Eph. 4:15, CEV)

QUESTION: The authors suggest that “a boardroom norm on acceptable discussion and personal behavior can be of special value here, guiding directors on where their leadership ends and management begins.” Do you have a boardroom norm that every board member has affirmed?

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