While it is generally assumed that Boards exist to add value, they can be value-adding, value-neutral or value-destroying. There are several reasons which could make Boards value-destroying. Some of these are
- Lack of trust – When Board members do not trust one another, there is no free and frank discussion in the boardroom. This hampers the decision-making process.
- Hidden agendas – If some of the Board members have hidden agendas, which do not promote the interest of the company, it leads to lack of productive Board meetings
- Lack of proper processes – If Board meetings are only tick the box items, with no flow of information for Board members to discuss and deliberate on, the Board will not function effectively.
- Non-attendance and non-participation of Board members – If Board members do not attend meetings or participate therein, the discussions would be lopsided.
- Lack of effective leadership – If free and frank discussions are not promoted in the boardroom, Directors would not be able to contribute effectively.
- Disregard to confidentiality – Information that is presented to the Board is confidential. The same should not be leaked.
- Lack of mutual respect or proper order – If conversations between Board members are not civilised and respectful, it would prevent the proper functioning of a Board. Hostility in the boardroom would go against the grain of meaningful discussion.
- Monopoly in discussions – One or two members monopolising the discussions.
Some of the steps that can be taken to overcome a dysfunctional Board are
- Board review – The Board must do a deep dive into an analysis of its functioning. This would help identify the pain points, and actionables to improve those.
- Induction of new members – If required, the Board should consider inducting new Directors.
- Setting Board processes right – Setting of agenda, and information flow to the Board members should be reviewed, in order for the Board to improve its functioning.
- Review of committee meetings – The Board should review the functioning of each committee, so that their functioning effectively can help the Board to function effectively.
- Leadership – The Chair of the Board should ensure that free and frank discussions are promoted, and that there is mutual trust and respect in the boardroom. Also, there should not be disproportionate airtime for one or two members.
Boards are tasked with setting the strategy for companies. It is very important that there is role clarity for the Board, and each of the Directors, so that Boards are value-adding, and not value-destroying.