Is it considered a sport in your organization to criticize the deficiency of your board or any of its members? I have experienced it first hand by both management and board members. When a board director misbehaves, the consequences for the board director and the entity can be swift, severe and long-term. Misconduct by directors can be intentional or unintentional. Often it is hard to tell the difference.
Dysfunctional Board
A dysfunctional board of directors could cause numerous headaches for your organization. A dysfunctional board of directors fails to make decisions that are in the best interest of the organization. Its dysfunction often moves outside of the boardroom, causing negative publicity. Knowing the signs of dysfunctional directors will help you fix the board before more significant problems occur.
Organizations live or die by the people who run them. The product or service is almost insignificant compared to the influence of humans — good and bad. That includes the board of directors. Choosing excellent board members requires that you take great care. A bad board of directors can bring a company down.
Directors have a fiduciary duty to oversee all facets of the organization’s operations. Board policies and procedures are designed to protect board directors from potential problems. Directors need to be sure that there is compliance with the policies and procedures, including the board's compliance with its policies. Oversight must also mean taking more than a cursory look at financial reports, the CEO’s report, committee reports and other documents. Board directors need to understand these reports, ask questions, and challenge the information provided. It needs to be an evidence-based discussion.
Bad Behaviours By Board Director
Whether a board director demonstrates blatant disregard for their responsibilities or they become the victim of an unintentional faux pas, the impact is the same. Their bad behaviours include,
- failing to realize where the power on the board lies
- not understanding the board’s purpose and function
- failing to develop respect for one another based on common interest in working for the good of the organization
- being on the different page when it comes to the future of the organization and its initiatives
- ‘rubber-stamping’ all of the CEO’s plans
- not investing the time with the CEO to gain their trust and understand what they are trying to do
- avoiding the hard questions
- giving in to groupthink
- rarely speaking or offering any opinions on decisions
- dominating the meetings
- not coming to meetings prepared
- not understanding the social dynamic and culture of the board, and trying to advance a position before understanding what the group dynamic is
- allowing personal interests to get in the way of decisions
- “playing within the rules,” even when it is unethical to do so
- letting their ego control their behaviours
- using meetings as a venue for personal attacks
- arguing with one another or failing to discuss the most important matters at hand
- not helping in committees or with fundraising efforts
- hiding or withholding critical information
- holding secret meetings
- failing to hold management and fellow board members truly accountable
- not maintaining confidentiality
- not supporting the collective decision of the board
- not knowing what bylaws or policies mean, or why the bylaws and policies are essential
- failing to cultivate diversity and independence on the board —lax board director recruitment
- micromanaging staff rather than leading by planning, strategizing and oversight
As a board director, how many of the above could you be better at?
Boardroom behaviours set a tone across the organization. What directors get away with (and not get away with), and the decisions they make (and don’t make) in the boardroom, influence how employees behave throughout the organization.
While the board may think employees do not see its actions, its impact is felt throughout the organization. Actions in the boardroom send a clear signal to everyone what is OK and what’s not OK to do.
Fragile Ecosystem
Furthermore, businesses do not operate in isolation. Much like a precise, fragile ecosystem, everything is connected. Small decisions – like to encourage someone to buy an unnecessary product, or to pad expenses – have substantial, wide-reaching consequences — “the butterfly effect.”
As board members, we all need to realize that bad behaviour – of any kind, and any degree – has the power to impact the whole community. When a board director does not live up to their duty, everybody loses.
To strengthen your ecosystem, it would help if you asked the questions that are on everybody’s mind, but nobody is asking.
We wield enormous power in the boardroom. This is the reason why people want to get in there, and many people never want to leave. However, with that power comes a great deal of responsibility. Exercise it wisely and consider the compounding effects that your actions and decisions have.
Get Better Directors
You want to strengthen your board and replace a bad board director. Whether your recruiting or conducting an annual review of performance, consider that an excellent director has the understanding, ability, moral courage and the willingness to:
- Act as stewards of the organization both in their role individually and collectively as a member of the board.
- Link with the legal and moral ownership.
- Execute their fiduciary responsibility.
- Think in terms of systems and context — to see and focus on the big picture.
- Advance the values underlying the actions taken in the organization and governs through the broader formulation of these values.
- Value reasonable risk and innovation that furthers the organization.
- Delegate the operational detail to others.
- Deal with the vision and the long-term, rather than the day to day details.
- Participate assertively in deliberation, while respecting the opinions of others.
- Honour board policies and decisions.
- Withhold judgments in the absence of previously stated criteria.
- Commit the time and energy required to serve the board and its committees.
We assist in selecting high performing a board director with the right mix of skills and expertise. Our analytics reliability predicts (85%) the likelihood that an individual will meet or exceed expectations as a director by measuring 85 behaviour traits and compare these traits with those of high performers.
We support the Nominating and Governance Committee to find the right talent by creating a custom Board Skills Matrix and facilitate the assessment process. We also offer the board assessments, and the facilitation of board retreats to get everyone on the same page.
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