Can You Hear Me Now?

Corporate boards function only as well as their members communicate with one another—and indeed, many recent scandals were enabled by reticent boards. To get a clearer picture of how board dynamics inhibit members from sharing information and speaking up, I observed two consecutive board meetings at each of five public U.S. companies and conducted individual interviews with their directors. Two important impediments to boardroom communication became obvious. First, although a board meeting is commonly seen as a meeting of one group, in reality it involves two groups: directors and managers. The directors I observed spent only about 15% of their in-meeting interaction time communicating with one another and the rest in exchanges with managers. Thus their ways of communicating and learning other directors’ viewpoints were indirect and often quite subtle. Second, directors play a difficult dual role: They are both cops and advisers, monitoring management’s behavior and ensuring compliance while also counseling and directing management on strategy. They must tread carefully as they move between the two functions and must cooperate with one another in doing so. Because any director’s contribution could be seen by others as stepping too far into one role, this cop-adviser dynamic makes open communication strained. I observed directors subtly criticizing one another for comments that threatened the balance between roles, or even failing to speak up in order to avoid conflict. Communication in the Boardroom Obstacles The board is not one group but two: directors and managers. Directors play a strained dual role: cops and advisers. Solutions Executive sessions enable directors to meet without managers. Active in-meeting leaders encourage frankness and resolve conflicts. These two impediments often led directors to hold substantive conversations outside board meetings, where open discussion felt easier, safer, and more efficient. Though sometimes productive, these off-line conversations also bore important risks. They left some directors out of the loop and turned others into nexuses of information, which distorted communication. In some cases they replaced directors’ in-meeting interactions altogether, with the result that management never got to hear directors discuss anything at all. Two of the boards I studied kept in-meeting discussions alive and meaningful through two tactics: executive sessions and active in-meeting leadership. Boards are required to hold executive sessions that exclude management. However, these sessions are often treated as an afterthought—left to the end of a meeting, when the directors are eager to head out, or run without structure or clear purpose. Yet given that management’s presence inhibits board communications, these sessions ought to have great weight. The two high-functioning boards held regularly scheduled executive sessions led by the chairman or lead director. The sessions followed an agenda that included time for raising new issues. The boards also developed a formal process for taking their concerns to the CEO. This approach signaled the importance of executive sessions to the work of the board, and directors took them seriously. The sessions helped create cohesion among directors, which translated into better communication during full board meetings. Active in-meeting leadership went beyond traditional administrative tasks to enabling communication and getting the board to work as a group. Leaders on the high-functioning boards set up discussions to clarify what role the board would play and summarized them to clarify what role it had played. They called on directors to articulate concerns they knew were on their minds, thus giving the directors both the opportunity and permission to express criticism and dissenting views. Some leaders periodically polled all the directors so that each was required to weigh in on topics outside his or her own expertise, which gave all of them a deeper understanding of the various perspectives and of how they might tap previously hidden knowledge. And finally, these active leaders brought discussions to a resolution even when conflict was involved, allowing the board to feel unthreatened by the prospect of conflict in future discussions.

Can You Hear Me Now?

Summary.

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