Commonsense Governance Principles In Action: Board Leadership

We have come to the fourth week of our series on the Commonsense Principles of Corporate Governance. In the past few weeks we’ve talked about board composition, internal governance, director responsibilities, shareholder rights, and public reporting. More importantly, we’ve discussed the best method of applying these principles within your board – emotional connection. This week we are taking on one of my favorite subjects, board leadership.

Basically, board leadership is responsible for making sure all of the other principles are being carried out properly.

The lead independent chair guides the board’s self-assessments, compensation, succession planning, meeting agendas, shareholder communication, and more. These are crucial elements of the board and must be handled by a leader who understands the importance of emotional connection. The governance structure that the board develops can only be held up if the leadership is maintaining a connected board and a safe environment.

When the board is under stress, it is important that they are able to lean on each other and trust that they can speak freely – this is accomplished when there is a strong leader at the helm.

For example, Mike Gallagher, lead independent director for Allergan was instrumental in  helping board members to stay calm and united by soothing fellow directors’ emotions. He used empathy when board members were concerned. He reminded board members of the company’s values when they had to make tough decisions. Gallagher took on the key roles of a leader as a facilitator, expert, morale builder, and integrator. When the board is emotionally balanced, the leader is able to make the right decisions in respect to self-assessments, succession planning, agendas, and everything else. So how does a board leader take steps to make their board stronger and more emotionally balanced? Great lead independent directors and CEOs are A.R.E. – Accessible, Responsive, and Engaged. When a board member is experiencing stress or anxiety, they look to the people around them and ask “Are you there for me?”. When the answer is “no” or “uncertain”, they shut down and start a negative cycle that is damaging to the board function. One of the ways to ensure that answer is “yes” is by staying accessible, responsive, and engaged with every director.

Being accessible means staying open to everyone’s ideas even when you do not agree.

Great leaders eliminate dismissing statements like “that’s absurd” or “you’re out of your mind” from their vocabulary. Instead, they use statements, such as “I see where you’re coming from, but I disagree with you.” You must become judgement free. This doesn’t mean you can’t disagree with people – as long as you are respectful and have facts to back up your statements, you can disagree about everything.

The key is to remember that everyone cares about the company as much as you do. No one is trying to sabotage your board meetings or your company – every director wants to see success. Staying accessible and open minded will create emotional safety and help you get better results.

To be responsive, board leaders need to be available to their board members.

That means answering every email and call. Even if you don’t have an answer right away, you can say something like “I saw your message, let me think about it and I will get back to you as soon as possible”. This prevents directors from feeling abandoned or isolated. I had a board member who would not respond to the CEO’s emails and that negatively impacted the CEO performance. Being responsive sends a message that you care about the company and you are there when the CEO or your fellow board members need you. Responsive also includes being empathic to other’s concerns and worries. Having the ability to understand someone’s emotional stress pulls them closer and creates emotional safety and makes them feel like they can count on you to help with whatever challenge they are experiencing.

Finally, being emotionally engaged in conversations makes a huge difference when establishing a safe environment for board members.

Practice active listening and ask questions to make sure you fully understand the point they are trying to get across. Reflect what is being said back to them to create safety and collaborative interaction. For example, you could say “I’m hearing that you are worried because we don’t have a strong cyber security plan, is that right?”. Naming the feeling helps people identify with their emotions and calm the brain to stay open and receptive to ideas and on track in solving a problem rather than getting caught up in a negative interactional cycle.

By staying accessible, responsive, and engaged (A.R.E.), board leaders can guide their boards to success.

Implementing these principles will pull the rest of the governance together – you can have the best governance set up in your board, and if when you  have a strong leader it makes it even better. For more information on board leadership, please contact us at [email protected].

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