Board Reform: The Unpredictable Factor of Personal Interactions

board communications4As I get older, I try and convince myself I am getting wiser.  But I know that is not right.  Maybe a better way to say it is I am better at guessing.  Some like to call that educated guessing.  Talk about an oxymoron.

I can never understand why companies don’t pay more attention to board governance.  There is the usual rush around a corporate board or committee meeting.  Everyone scrambles to make sure the agenda is correct, the information is submitted and the event goes off without a hitch.

Lawyers, consistent with their control freak nature, try and map out the entire board meeting: what will be discussed and what will not be discussed.  Legal advisors to the board try and guide everyone through the thicket, pretending that some of the counseling is legally required.

Lawyers have a funny role when advising a board.  They urge caution and are not supposed to let the board veer off into some unchartered areas where board members should not be acting.  Call it defensive board governance.

In this age of corporate governance vigilance, lawyers can sometimes unreasonably restrain corporate board dynamics.  It is hard to predict in advance how well a board will perform, how the board members will interact, and whether the board will work cooperatively.

One important measure is an intangible factor – how will the board members “get along”?  Will their personalities mesh?board2

There is no question that a board that gets along will perform better.  Why?  Board members are people and there is the old human condition – we enjoy working together with people we like.

Warren Buffet was quoted as saying “I only do business with people I like.”  That is a good principle.  Life is short and we do not want to spend our time with people we dislike.

The same goes for corporate boards.  They have important work to do together.  Collaboration is an important performance characteristic.  The more board members get along, the better.

Is it possible to predict whether a new board nominee will get along with other board members?  Is it a reasonable issue to consider?

Of course it is.  Call it matchmaking in the corporate governance world, but we all assess people in every part of our daily lives.

boardinfo6When we enjoy people, we engage and work with them.  Board interactions are no different.  Board members who like each other, engage on issues, discuss issues and bring the board to better decisions.  When a board respects each other, they work well together.

This intangible factor is hard to predict, and even harder to regulate.  Nonetheless, it is something that needs to be considered when seeking to improve board performance.

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