Corporate Board Member asked psychologist Constance R. Dierickx, a senior consultant with RHR International, how to build the most effective board under any circumstance.
Corporate Board Member: Can a board maximize its effectiveness without scrapping current board members?
Constance Dierickx: Oh, absolutely. We always start with the assumption that board members are experienced, talented, and successful people and they bring a lot to the party. If there is something in the dynamics among the group that is getting in the way, the first thing we want to think about is, are the board processes clear and does the board support that? The first place to go when there’s a problem on the board is not to see who’s got a personality issue—that’s the last place to go. You want to keep talented people on your board, if you can. If you look at issues of alignment and clarity first and those don’t fix the problem, you can always get rid of the guy, but you might actually keep someone on your board that’s good. People bring us in often because they think somebody’s nuts. And the person might be acting nutty but that doesn’t mean he’s nuts.
CBM: What about a board where the directors get along, but the board thinks it can be more effective—what can that board do?
CD: The scenario you painted is ideal. I think they need to come together on a regular basis, perhaps annually, and have a meeting where they spend some time focusing on how to use themselves as a strategic asset of the company. So, in such a meeting they might look at a variety of things like, what is the strategy of the company? Who is the management team and how could the board better advise them? Is there something the board could be doing that it isn’t? Is there something the board is doing that they shouldn’t be? And lastly, how is the board working together and where can they gain even better traction?
Some of these things can be helped by a good board evaluation. In our experience most of the time those evaluations are very cursory and if there’s an outside person involved, a lot of the time that person considers her job done once she’s executed the technical aspect of the review. For us the point of doing the evaluation is a) to check off the regulatory box but b) to say, what can we learn about ourselves from this, how can we do better? That’s really healthy. A good board will do that.
CBM: It does seem that boards sometimes participate in evaluations to check the box.
CD: Exactly. They’ve met the criteria in a technical sense, but may not have really benefited beyond that, and that’s a shame. It’s a missed opportunity and frankly, some of the people who do board evaluations are so unequipped to deal with issues of board dynamics and board functioning that it’s almost laughable.
CBM: For a board member who is reading this and wants to be most effective at her job, what tips can you give her?
CD: Be very inquisitive and ask great questions. You don’t have to be a rocket scientist but you have to be experienced enough and confident enough to ask what might sound like a stupid question. In fact, our research turned up a couple of examples of cases where board members asking what they thought were basic questions caused things to happen in the company that saved them. For example, at one company a board member asked the management team to explain what these derivatives were and the management team said, “Well, um…” They all agreed that if the board and the management team didn’t totally understand what they owned, and they didn’t understand the risks associated with it, then they ought not to own it. [The company] got out of all the investments that we now, in hindsight, say were stupid and risky. That question saved that company at least a billion dollars. That is value.
Constance Dierickx, PhD, is a senior consultant for the Atlanta office of RHR International and has been providing consultation to boards of directors, senior executives, and investors in the United States, Europe, Latin America, and the Middle East, for more than 20 years. Clients range from companies in the Fortune 50, start-ups, privately held companies, and not-for-profit organizations in industries such as manufacturing, restaurant, medical, financial, insurance, and private equity. Dierickx works with executives and directors to improve the effectiveness of their organizations by clarifying strategy, increasing alignment, creating metrics to improve performance, managing CEO and C-level transitions, resolving conflict, and responding to debacles.