Blog : BOARD TALK
|Posted on July 6, 2017 at 6:45 PM|
It isn't just corporate culture that is under renewed scrutiny in the U.K. in the interests of corporate governance and better business practices. Boardrooms hold an important key to that culture, and are themselves a reflection of it in the way in which they function.
A study on conflict and tension in the boardroom has just been released by ICSA: The Governance Institute and Henley Business School to demonstrate how they can be managed to produce better board dynamics. It starts from the premise that disparate opinions can lead to disagreement, which is often uncomfortable - but when properly handled can lead to healthy debate and result in better conclusions. The tension arising from disagreement is "a positive and necessary force for any effective board."
Andrew and Nada Kakabadse are both professors in governance and leadership, now at Henley Business School. I have covered their work for years - going back to 2013 in the Financial Times when Andrew Kakabadse, then at Cranfield University's School of Management, spoke out on non-executive directors as being "of little or no value to the business." This new research was discussed at today's #ICSAConf on corporate governance in London, building on some damning previous findings.
Professor Andrew Kakabadse speaking at Simmons & Simmons London July 5, 2017
“Challenge, scrutiny and robust debate in boardrooms are part of the effective oversight of management and the decision-making process, but can tip into confrontation. Tension and conflict are not only inevitable, but play an essential part in effective boards. It is only by understanding and embracing this process, that the best possible decisions can be reached,” said Simon Osborne, Chief Executive of ICSA: The Governance Institute.
Professor Kakabadse told #ICSACONF16 that in his experience most organisations ignore conflict, and boardrooms find truth hard to face.
The report sees conflict as tension that has escalated to extreme and unresolvable levels. At this point tension can be disruptive and detrimental, changing the nature of board relationships to an extent from which it is hard to recover, it argues.
Tension and conflict are also most likely to emerge during decision making and in particular around organisational purpose and direction.
Therefore for a board to work in the best interests of the organisation the source of conflict and tensions, ie the personal differences and opinions in the boardroom, need to be managed effectively. That is a role that falls to both the Chairman and the Company Secretary. Together they can ensure what the report calls 'managed tension', which delivers best results.
"Robust debate, diverse membership, open dialogue and tackling uncomfortable issues head-on are shown to benefit boards, particularly in decision-making and strategy development" says the report.
When things become personal, it adds, the conversation is best taken outside the boardroom. Informal discussions between board members is seen as a better way for some conflict resolution.
“The chairman, company secretary and senior independent director are perceived as playing the most important roles in managing tension and conflict resolution. Company secretaries in particular play a critical role in conflict resolution, facilitating and maintaining boards’ ability to function,” concludes Professor Andrew Kakabade. (my emphasis).
The critical role of the Company Secretary to 'managed tension' in the boardroom : Professor Andrew Kakabadse Henley Business School speaking at Simmons & Simmons London July 5, 2017
The findings of this research are based on 35 face-to-face interviews with 11 chairmen, 10 CEOs, 7 Company Secretaries, 3 Chief Financial Officers, 3 Non-Executive Directors and 1 General Counsel, said ICSA.
Professor Andrew Kakabadse at #ICSACONF July 5, 2017 London
On a light Thursday evening note - as far as I am aware, there was no discussion on the use of alcohol to help manage tensions at management meetings, a la Sports Direct.
But as ICSA CEO Simon Osborne (@sosborne4) recently commented on Twitter in response to a cartoon last Sunday:
— Simon Osborne (@sosborne4) July 2, 2017
Follow the now-established Sunday tradition of a #CorpGov cartoon on Twitter with a handful of regular players and a lot of international engagement with faithful contributions from regulars spanning the UK to US to Panama : @dinamedland @nminow @barsallocarlos and thank you for reading.