Board Room Antics

People who have never sat in the Board Room often have a reverence for Directors.  Some in organisations even fear their Board.  

I have never understood why they should fear the Board any more than anyone else and, in fact, consider this to be unhealthy for an organisation.  It just leads to staff withholding feelings and views from Directors.  There needs to be good communication throughout an organisation for it to work effectively.  Directors should know what is going on “at the coal face” to be able to make informed decisions.  

This is something that I will talk about more in future blogs.  In the meantime, let me dispel a few myths about Directors for those who have never been in a Board room and who might think that they are special beings.  No, at the end of the day, they are all human beings, just like you and me, with strengths and weaknesses and prejudices and influences on their thinking.  Directors, like everyone else, make mistakes.  

However genuine Directors are as people and however keen to make good decisions and lead the company, or charity, well, they can still be distracted and/or lose focus.  Let me give you some examples!

I have seen Directors fall asleep in a Board meeting a number of times.  You could say that this is a serious lack of concentration!  When they have done so, the Board concerned, although finding it quietly amusing, has done nothing about it.  Instead the meeting has carried on as normal and the person concerned has eventually woken up, looked around sheepishly and probably believed that nobody noticed!  

What should really have happened is that the Chairman should have called for a five-minute comfort break and the Director concerned been woken up.  All Directors need to be alert so that they can take part in all decisions made.  But this has not been allowed to happen probably purely because the rest of the Board do not want to embarrass the person concerned. 

In addition, a Director is paid for his work on the Board.  He should therefore ensure that he is fit for the meeting.  If he does feel sleepy, he should call for a comfort break.  It may just be that other Directors are feeling the same.  People can often feel drowsy at early afternoon meetings after, say, a heavier than normal lunch.

One of my contracts was when I went in to support the Company Secretary of an international company group for a while after they had a management buy-out with the support of private equity investment.  The Company Secretary concerned was not trained or experienced in this area of work and I was therefore engaged to set up the necessary processes and to cover the company secretarial and company legal work from behind the scenes. 

It was the Company Secretary who attended the board meetings – I did not do so.  Half the Board was made up of Executive Directors.  I am not sure how much respect they had for their Non-Executive Director colleagues.  My doubt was because, before each meeting, they would have a couple of wagers on which they would put money. 

The first wager was how long it would take for one of the Non-Executive Directors to fall asleep.  The second was how long it would take for the Chairman to shout at the Company Secretary – the Chairman frequently got frustrated with the Company Secretary due to that person’s lack of experience as a Company Secretary.

So, was this unprofessional behaviour on the part of the Executive Directors or was it just a bit of fun?  I have thought about this since and think that, in reality, this could have indicated a problem regarding the relationship between the Executive Directors and the NEDs.  Would this have had an effect on the ability of the Board to make good decisions?  Should consideration as to the suitability of the NED who constantly fell asleep have been considered?  What I do know is that, ultimately, this management buy-out failed with the company group being sold at a loss to a competitor.

Some Directors will sometimes behave in unexpected ways if decisions in the Board Room do not go their way.  A not for profit company of which I was Company Secretary had a Board that passionately believed in what it was doing.  One of the Directors was a successful, well-respected woman in her own right.  However, when the vote in Board meetings did not go her way, she often ended up in tears.  When this happened, the Board would take a short break to allow the Director concerned to recover herself, gathering round to comfort and listen to her.  Her tears would, as a result, often end in the Board eventually agreeing to vote in the direction she wanted.  Was this a good way to make decisions?  Sometimes they were good decisions but not always!

Some Directors, instead of getting upset, get angry.  Such behaviour can be disruptive.  However, it does not have to be so.  A company secretarial colleague of mine told me of one meeting where a Director lost his temper and then stormed out of the room.  This particular time, the Chairman did nothing and the meeting carried on, without the missing Director, as if nothing had happened.  After about half an hour the Director concerned re-entered the meeting and sat down again.  Nobody said anything to him and nobody challenged him.    So, the Director learnt that he could achieve nothing by this approach.  Instead he should have challenged constructively, putting his argument across without yelling and, most importantly, staying in the meeting.  Maybe the Board would then  have been more likely to listen to and respect his view.

So, what have I learnt from my experiences of the Board room?  I have learnt that Directors are fallible human beings and that the Board room can be an unpredictable place.  However, Directors are the people who take ultimate responsibility for running a company.  It is a huge job and I have a huge respect for them. 

There are some Directors who behave as if they are always right, even when they are not, and who could be described by some as arrogant.  Directors have to be positive and result driven and I believe that many newer Directors think that, to be accepted into a role on the Board, they have to look and behave as if they know everything . 

They have to be leaders but, at the same time, the ones who I have always respected most are those who listen to others and admit when they have got it wrong, the more “human” Directors.  They are also the ones who realise that it is humans who work in the company and who are their customers.   Directors who recognise this will be able to run an effective and agile business and, in the current market place, all business have to be agile to survive and thrive.  I will be writing about this in my next blog.

So, finally, let me finish with a further update on my dog, Jack.  Jack, like some Directors, can also be unpredictable at times.  Like any Spaniel, he will keep going even when he is “dog-tired” rather than taking a break.  He will get angry if his ball is not thrown immediately, barking vociferously at my husband – I am sure that he must be swearing at him.  He will certainly think that his idea of chasing ducks on a pond is the better option to obediently staying by his master’s side.  But, despite that, he fulfils his job well – making it compulsory for us to take healthy walks, cuddling up to us if he feels we need companionship, and loving us unquestionably.  Like Directors, he may get some things wrong but, overall, like most Boards I have worked with, he has met the terms of his contract!

Board Room Relationships

Balanced relationships in the Board Room are so important for the effective functioning of the Board and, in turn, for the effective functioning of the Company. 

This has generally been recognised through the various codes of governance that have been written and adopted over the years.  Governance comes from the top, the Board, and flows down through the organisation.  The Board takes ultimate responsibility and therefore needs to know that there is some form of control, that is governance.

As part of good governance, perhaps the most important part of it, there is a lot of guidance on how a Board should be structured, and how it should operate, to help ensure that the Company is being run effectively.

However, how many companies adopt a “tick box” approach to governance without putting their heart into the meaning behind it?  I fear that there are too many.

The Executive team, led by the Chief Executive, should keep the Board properly informed.  The NEDs should constructively challenge the work of the Executive and the Chair should facilitate the decision making process of the Board to get the view of the Board as a whole.

Let’s look, in particular, at the role of the Chair and his/her relationship with the Chief Executive.  The Chair should be an Independent NED.  The Chief Executive reports to and has a working relationship with the Chair, but this relationship should not be too close as the Chair should oversee the work of the Chief Executive on behalf of the Board.

This relationship sometimes becomes more of a friendship.  This is fine so long as the Chief Executive is doing an effective job.  However, I had an issue when working for a Charity.  The Chief Executive concerned was not as competent as she could have been and was not being honest with the Board about issues she had around the running of the charity.  If she had been honest, I know that the Board would have given her the necessary support but, instead, possibly due to a lack of confidence, she chose to hide these issues from the Board.

The Board became suspicious that they were not being told everything.  They started to ask questions about what was going on.  The Chair, rather than taking up these questions on behalf of the Board, decided to protect the Chief Executive.

I was asked by the Board, as an independent Company Secretary, to review the situation.  At this point, the Chair decided to turn against me in an effort to protect the Chief Executive.  As a result, I resigned.  The Board then asked both the Chief Executive and the Chair to step down from their respective roles. 

If the Chair had been carrying out her role correctly, this would not have happened.  Instead, the Chief Executive would have been called to account a lot sooner, could very possibly have kept her job with the right support, and there would have been less damage to the charity. 

There should be a good balance of power between the three parts of the Board, the Executive, the NEDs and the Chair.  How often, however, do you find a Chair that has such a powerful influence, the Board just tends to fall in line with what he/she wants? 

I was the Company Secretary of one Board where all the Directors were very anxious to give the Chair the right answers.  The Chair would ask the opinion of each Director in turn on a matter to be decided and each Director, especially the NEDs, would try his or her hardest to fathom out what the Chair wanted!  Consequently, the Board always ended up agreeing on what the Chair wanted.

One Board I had the pleasure to work with had an Executive Chairman.  So, rather than separating out the role of Chief Executive from the Chairman, in this case, they were effectively in the hands of one person.  To add to that, this particular Chairman had been in this role for many years and, as a result, had a strong influence.  As a result, not only did he control the business, he also controlled the Board.  There was little challenge from the NEDs.  So, despite having legal responsibility and liability for the company, the Board directors had little influence.

Sometimes, you will find that the power is in the hands of the Chief Executive.  This can often happen with charities, where Trustees are effectively all NEDs with no day-to-day involvement in the business.  They often also have little understanding of how the business of the charity should be run, having stood for a Board position purely because of their passion for the charity’s particular cause. 

Such Trustees have to put their trust in the Chief Executive and this allows the Chief Executive to have an unhealthy influence over the Board.  One Chief Executive who I worked with, if he wanted to get a particular decision, would telephone each Trustee in advance of the meeting to campaign for their support.  He always got the decision he wanted.  Another Chief Executive was asked to propose to the Board possible new Trustees.  Of course, he always suggested people who would support his views. 

It is hardly surprising that situations such as the Kids Company can arise.  It is so important that new Trustees are trained and supported in the right way!  The Company Secretary, if allowed to work independently from the Chief Executive, instead reporting to the Chair, can help to ensure that this happens.

The Board room can be a very interesting and a very challenging environment.  However, it can also be fun.  In my next blog, I will talk about some of the more amusing situations that I have come across in the Board room.

So, to conclude, let me give you an update on our dog, Jack, who I introduced at the end of my last blog.  I have talked about there needing to be a balance in relationships in the Board room.  Our relationships with our dogs is not meant to be on the same basis.  The dog is supposed to do what his owner tells him, the human is his master. 

Jack does not seem to understand that, believing that it should be a balanced relationship, balanced in his favour.  Recently, despite my husband’s instructions not to do so, Jack decided to jump into a lake at a park near where we live.   My husband yelled at Jack from the bank in absolute frustration while Jack spent 20 minutes fruitlessly chasing the ducks.  Every time Jack got near, the ducks just took off and landed in the water behind him swimming off in the opposite direction!  So much for obedience training!