Why good boards fail: part 3

Many board members have discreetly told me over the last few months that they are disgruntled with corporate governance speeches, events, elective codes, new rules and the constant complexities of ensuring their boards and organisations comply.

A board chairman told me recently: “It’s too much, too fast, and I spend too much time worrying about these complex corporate governance issues.” He added: “Can’t this be boiled down into some simple practical practices and principles that could be easily implemented by our board as a first step?”

This was the driving force behind compiling this series of reasons why good boards fail – a pragmatic attempt to answer the board chairman’s request by distilling 10 simple boardroom principles for easy implementation.

Based on personal boardroom and client experiences over the years, the failure to implement these principles is the main cause as to why good boards fail.

We have previously examined the importance of having a ‘board mix’ with an appropriate variety of skills, competencies and characteristics; and why board members need to have access to the right information, at the right time, and at the right level of detail.

This month, we look at another key aspect: understanding the nuances of  your organisation.

Principle 3: Not knowing ‘the rules’

Every corporation is unique. Understanding the corporation’s constitution, the ‘formal’ and ‘informal’ rules and the board and organisational policies, procedures and protocols takes time.

I have yet to serve on two boards that are similar – every board and every corporation is substantially unique.

Attempting to follow practices and procedures you know from previous board experiences may not fit the culture and environment of the next board you sit on.

In a one-on-one interview with a new board director of an industrial/construction corporation, the leader described how he had historically taken the habit of walking around prior to board meetings; informal chats, a quick coffee with the CFO, a couple of phrases exchanged with the COO, a brief conversation with receptionists. When he attempted this in a new, culturally different organisation, he was finally taken aside by a fellow board member who explained the cultural implications and the negative perception that his ‘constant spying’ was having on the executive.

This was resolved by scheduling formal appointments over coffee, and once the trust had been established, he received complaints from the individuals who he may have missed having coffee with at subsequent board meetings. He did, however, learn a substantial amount about the organisation and its internal ‘rules’ and workings, which hopefully made him a better board member.

Jan Bladen is managing partner of Governance Creed