In the UK, as elsewhere, a failure in board communication can lead to a major corporate crisis. This is what happened at online retailer Sports Direct in March 2015, as reported in the press, when Sports Direct’s chairman, Keith Hellawell, admitted that non-executive directors were unaware of a plan to put part of the group into administration until the day before it happened. UK Institute of Directors’ Head of Corporate Governance Roger Barker said that Sports Direct’s board had become ‘dysfunctional’ through poor board communication.
As the UK Institute points out in a report, when it comes to leading a business, it’s easy to get bogged down in the daily grind of paperwork, board meetings and constant scrutiny. More than ever before, leaders are adopting an ‘always on’ approach to running and developing their companies thanks to technological advancements in connectivity. This puts great pressure on boardroom leaders to maintain good communication. Here are some of the types of best practices to be adopted:
1. Maintain good boardroom dynamics
Tensions can arise on a board for many reasons: personal antipathies, conflicting visions for the company, conflicting ambitions, etc. To maintain a good boardroom dynamic despite tensions, the chairperson must set the tone for a solid culture of board communication and exchange of ideas, as the UK Institute of Directors points out in a report. “There is less likely to be serious conflict on a board where there is a good culture. While the chair may lead this, all board members have a responsibility for creating an inclusive culture that enables contribution with respect. An effective board champions debate, diversity, thoughtful challenge and dissent,” the report notes.
2. Recognise the importance of good decision-making
Tensions do tend to arise among directors when a decision must be made, as another Institute of Directors’ report points out. “Board tension inevitably arises when tough decisions are being made. Conflict and unresolved tension can come from a decision-making process where board members feel, sometimes on reflection, that they have not been provided with ‘full and transparent information,’ or when they have not been able to fully contribute to the discussion. Concerns which are either not heard, or not listened to, often plant the seeds of future conflict.”
As one director cited in the report puts it: “If you have a series of these things and they all get brushed under the carpet, then the board will become dysfunctional because it says ‘what’s the point in raising these things, nobody ever listens, nobody ever wants to get to the bottom of things?” The solution: acceptance of the value of ‘constructive criticism,’ ‘challenging fundamental assumptions’ and ‘holding executives to account.’ These are the fundamental responsibilities of a well-performing board. Ultimately, boards seem to feel the best decisions are reached when concerns are fully aired and multiple, sometimes conflicting, perspectives are offered. Adequate opportunity needs to be given to scrutinise papers, challenge proposals and ask necessary questions.
3. Recognise that good dispute resolution procedures are critical
It is inevitable that disputes will arise among board members. Resolving them in a constructive way is a critical skill for the chairman and other board leaders, as the Institute points out: “Many disputes can be resolved informally by the affected parties negotiating an acceptable solution or outcome. Sometimes internal mediation may be required. The mediator may be the chair, an independent director or someone from within the organisation who is impartial and has excellent conflict resolution skills. For serious matters, it is more appropriate for these meetings to be held in private, rather than as formal board meetings. The occurrence of these meetings and the associated process should be transparent and not secretive. An external mediator may be necessary in some circumstances, for example, if the chair is the source of conflict or an independent view is needed.”
4. Manage board diversity in the boardroom
Clearly, diversity is essential to boards, so that a good selection of skills is made available. But diversity can lead to tension, as board members from different national and corporate cultures may have difficulty finding common ground, as a study by the Institute for Chartered Secretaries and Administrators (ICSA) shows. “What emerges from diversity is a much more rounded company, one with a mixture of different perspectives and challenges. It becomes more balanced in its decision-making. It considers a wider range of views so it becomes a healthier place for decisions to be taken. Diversity creates healthy tension, particularly in terms of thinking, skills and experience. This translates into an ability to improve decision making and provoke robust debate using challenge and insight, without conflict. It creates constructive tension between the board members, even between the chairman, senior independent director and CEO – one comes from the sector, one is from finance, and the other is from a big industrial business, but not in the sector. They come at things from different backgrounds, so there is a useful exchange.”
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5. Bring board members together outside the boardroom
The ICSA study also emphasises the importance of bringing board members together in informal environments, outside the boardroom, as a means to improve board communication and to reduce tension. “It is important for board members to have the opportunity to communicate informally, making use of briefing calls, breakfasts or dinners and pre-meetings. This is critical and gives NEDs [non-executive directors] the space to talk freely in the absence of executive directors. Directors need to understand and learn about the people they work with: Why they’re there, what their skills are, what their background is and what interests them. Spending personal time helps [them] to understand each other.”
Diligent Messenger makes boardroom communications more efficient and secure
Diligent Messenger mitigates the risk of breaches, leaks and misdirected messages with a secure board communication tool that’s quick to install and easy to learn. Moving confidential board communications out of personal and corporate email systems is easier than ever. Diligent Messenger integrates with virtual board meeting software, like Diligent Boards, to enable secure messaging and real-time collaboration.
It operates just like the popular text and email tools directors use every day, reducing the temptation of workarounds. The platform’s intuitive features are informed by Diligent’s work with 145,000+ executives worldwide.
Diligent Messenger delivers the functions security-conscious users seek while on the go, including:
- Auto-sync of groups, contacts and messages across devices
- Email controls
- Blocks against email forwarding and ‘copy and paste,’ plus a special feature for message retraction
- Pre-set groups
- Pre-set groups and contacts (to eliminate an email address “oops!”)
- Message notifications
- Notifications for when messages are sent, delivered and read, with additional notifications for unread messages or announcements across boards
Want to see how Diligent can enhance your boardroom experience? Schedule a demo now and we’d be glad to help!
Take Control of Security
Take control of who sees, sends and saves what. As with Diligent’s board meeting software, administrators will be able to customise settings to meet governance and regulatory requirements. For Diligent Messenger, this includes:
- Log-in authentication and access that can be adjusted with the click of a button or the swipe of a screen
- Message retention, for preserving what’s required (and purging the rest)
- Searchable archive, for message archival that saves what’s needed and makes it easily searchable
Board Portal Buyer’s Guide
With the right Board Portal software, a board can improve corporate governance and efficiency while collaborating in a secure environment. With lots of board portal vendors to choose from, the whitepaper contains the most important questions to ask during your search, divided into five essential categories.
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