I believe I was very lucky that few of the Boards of Directors I was a part of were really dysfunctional. Having said that a dysfunctional board of directors has the ability to cause multiple headaches for your business or organization. In the penultimate discussion on Boards Lets look at why Boards go bad.
Not only will a dysfunctional board of directors often fail to make decisions that are in the best interest of the business, its dysfunction has the potential to move outside the confines of the boardroom, causing negative publicity. Knowing the signs of a dysfunctional board of directors will help you fix the board before larger problems occur. Such symptoms of dysfunction can also be applied to an organisations management team equally.
Here are the top ten signs…
Lack of Confidentiality
Much of what the board of directors discusses should be kept within the Board of Directors. When board members do not keep this information confidential, problems often ensue. Members of the board may think they are simply sharing the information with management or close friends, but it could be misconstrued and released to the company workforce or stockholders, causing undue stress, or shared with competing organizations. Leaking information is a sign of dysfunction within a board.
Ensure what happens in the Board stays confidential by ensuring all members agree what is to be shared, how its to be shared and why its shared. Should Board members not agree to this, then they must leave the Board.
Board members need to be aligned when it comes to the future of an organization and its initiatives. If board members have conflicting agendas related to the direction of the organization, it will be hard for the board to make decisions. In addition to being aligned, board members must also be aligned with the head of the organization. Conflicting agendas are another sign of dysfunction within an organization’s board of directors.
The Board should agree a strategy and all members agree to this. Members can disagree when there is a discussion, but should drop this disagreement once a plan has been created. Should members not sign up to this it is a prime reason for their departure.
Lack of Order
Meetings involving the board of directors should function in an orderly manner. If board members quickly jump from topic to topic, argue with one another or fail to discuss the most important matters at hand, the board is dysfunctional. Board meetings should contain a designated leader and an agenda to make them productive.
The agenda should be created and circulated well in advance both with the information to be discussed and a time frame for discussion. Members should be encouraged to work within these guidelines or let the Chairman or CEO know beforehand if there needs to be a deviation or extra time. Should members prove to be disorderly then there time with your should be short.
Lack of Respect
Occasionally board members experience a lack of respect for the CEO of a company and vice versa. This often happens when board members have been in place for a long time and a new CEO (that they may not have supported) enters the company. All parties must develop respect for one another based on their common interest in working for the good of the organization in order to keep the board from becoming dysfunctional. A lack of respect between new and older board members or factions is a sign that there might be dysfunctionality within the board.
A Chairman or CEO needs to be able to informally raise these issues with Board members noting any behaviours that could be seen as disrespectful and gaining agreement that such behaviours should cease.
A meeting of the board of directors can become a hostile environment, particularly when board members do not get along with one another. This type of environment stifles productivity and prevents board members from sharing constructive opinions openly. A meeting may become a venue for personal attacks rather than for focusing on coming to business decisions or providing constructive discourse.
Again, informal feedback to the offending members needs to be given and if not acted upon the members should leave the Board.
While some information the board discusses should remain confidential, organizations should become concerned if a board of directors regularly holds secret meetings or meet on an unofficial basis. Not only may some board members be left out of these meetings, but decisions could be made without the input of crucial members of the organization, or with unethical motives.
Personal and Political Agendas
Board members should not allow personal and political agendas to cloud their decision-making. If board members continually propose moves that would benefit them personally or take a political stance, the image of the company could be compromised. Personal and political agendas also lead to more disagreements among board members, and they are indicative of a dysfunctional board.
Again, raise the issue with offending members and seek to cease this activity.
Lack of Trust
Employees in an organization must trust the board of directors in order for it to be functional. If the majority of employees do not trust members of the board, the advice and decisions the board makes may be ignored or may lead to high turnover rates within the company, among other things.
In the end the Chairman and CEO need to decide what needs to give way- the Board or the employees.
Members of a board of directors should work as a team to make decisions to benefit the organization. The board’s ability to make the best decision is compromised when one or two board members are allowed to dominate the meetings. This may involve harassment of other board members, talking loudly to dominate the conversation or immediately shooting down any dissenting opinions. When certain members dominate meetings, you’re looking at a dysfunctional situation.
Counselling or direct feedback needs to be used to address any dominating personalities. If this is the Chairman or the CEO then the Board may need to decide that they may need to leave for the benefit of the business as a whole.
Some board members sit on a board only for the prestige of the position. These members may attend meetings but rarely speak or offer any opinions on decisions. Those who refuse to participate in the conversation may be as damaging as members who control the conversation and take up space that could be filled by members who work to advance the organization. Too many nonparticipants around a board table spells “dysfunctional.”
Regular assessment of Board performance and honest and open feedback can address all of these issues. But unless a Chairman or CEO can spot dysfunction coming into a Board they are unable to act.
Do you have any other symptoms of dysfunction within a Board or a management team?