By Alexandra Cain AICD
Chairs have a difficult role. They must encourage debate and dissent around the boardroom table, without it getting personal. That’s tough when there are often strong and even fiery personalities in the room.
At the other end of the spectrum, it’s also up to the chair to prevent a situation where board members all end up thinking the same way, a phenomenon known as groupthink.
However it’s not just the chair’s role to maintain effective discussions. It’s also up to individual directors to contribute meaningfully, allow others to express their views and apply critical thinking to the business and its future.
Elizabeth Bryan AM FAICD, who is chair of the Virgin Australia Group and insurer IAG, and who stepped down as a director of Westpac in December 2016 after 10 years, says the chair should be across a number of important group dynamics.
“Groupthink is really a matter of board composition. You need to have people on the board who think deeply about things and who come at the world from different perspectives.
“Then, on top of that, those people need to be able to articulate their views in a way other people can understand. That in itself is a skill. It doesn’t work if you have people who are not experienced as directors or who for other reasons are not prepared to speak out in the board meeting,” she adds.
Robert Gordon from boardroom consultancy organisation Board Accord says maximising diversity of thinking around the table is paramount. “Particularly, gender, national and demographic diversity. Research consistently suggests a board that has greater diversity, from younger tech-savvy participants to women, will contribute to a board culture that is less inclined to groupthink.”
Bryan says the chair also has a responsibility to make sure there’s a collegial atmosphere, and that people respect and trust each other so they are prepared to talk.
“You have to make sure there are opportunities for people to talk. You have to run meetings in a way that makes people feel their views are genuinely being sought, that their colleagues on the board are actually interested in what they have to say and that there are opportunities to express those views. All of those things must come together.”
Alborz Fallah just sold his vehicle information company CarAdvice for $35 million to the Nine Network. His board directed the business through a massive growth phase.
He says CarAdvice had a very tight and well-managed board, even when the business was only a five-person company. “It’s very important for start-ups to have a good board. It’s easy to think it’s unnecessary because you’re in the growth phase. But having experienced people look at your business every month makes sure you’re on the right track from their perspective.
“They also give you a lot of advice you didn’t even know you needed because start-up founders are not experienced in business or boards. So, it’s very valuable to have a board, whatever financial cost that is to the business. If you have the right people on the board, it is 100 per cent a worthwhile return on investment.”
Fallah says a chair’s role is to encourage other people to speak up. “We’ve had good and bad chairs. Good chairs give the directors, plus other people that report to the board, equal opportunity to present their case without feeling they’re going to say something that may upset somebody.”
He says if the chair doesn’t understand their role, it becomes a challenge for different personalities on the board to properly share their point of view. “The chair’s role is to encourage debate and to avoid groupthink. We have had issues with groupthink and it doesn’t help anybody.”
When it comes to balancing different personalities, Fallah says the secret is to give every person equal time to speak on every agenda item.
“Going through an agenda item, the strong personalities will start talking and never stop because they feel like their point of view is important or even more important. That doesn’t mean their point of view is wrong. It’s just that a director without much of an alpha personality might feel they need to get their point across quicker so there’s time for other people to speak.
“It’s the chair’s role to allocate a certain amount of time on each issue per person. They should leave time at the end of the meeting to explore issues that were not fully covered in more detail. It’s difficult to be on a board if you don’t have a strong personality, particularly when there are lots of other people that do. A good chair can see through that and allow input from all directors equally,” he adds.
Angie Paskevicius FAICD, non-executive chair at Interchange WA, says avoiding groupthink is not always straightforward. “The best way to prevent groupthink is to make sure you’ve got a diverse group of people around the table so you’ve got different thoughts and ideas. That ensures better decision-making and more robust discussions. You can support that by having a board diversity policy and looking at your board’s skill mix. You don’t want all the same people around the table.”
Paskevicius says balancing different and perhaps conflicting personalities requires the chair to have a good understanding of the personalities around the table. “You need reasonable emotional intelligence so you can get a sense of when things are working and when they’re not. Be an active listener and be comfortable and confident in managing board dynamics.”
She says it’s also important not to make assumptions and question and check what people say. “Part of that is having good judgement and knowing when to probe. Some of that goes back to the board selection process. It’s not just about directors’ skill sets, it’s also about fit. So as a chair you need to look at the group dynamics around the table when bringing someone new in because it will change the dynamics.”
Paskevicius says the chair should be clear with directors about their expectations. “You expect everyone to be a contributing member. Everyone has their bad days, but if it’s a pattern with a certain director, then you need to have that one-to-one conversation.”
Ryan Ebert MAICD is 26 years old, a business owner and a director on the board of his own business PHW Group. He also sits on the board of a large hospitality venue. He recently resigned from a board due to its lack of diversity and poor productivity when it came to discussions and other insights.
He agrees the role of the chair is to create an environment of collaboration and unity across the board. “There has to be openness and respect. Without that environment and culture it’s difficult for the chair to allow a healthy debate of differing opinions.”
Bryan says encouraging the quieter board members is about giving them the opportunity to articulate and contribute their views. “If you have board members who are thoughtful and who do have views, you make space and interest to encourage them to contribute. It’s just courtesy and if the board is genuinely interested in their views, in that atmosphere people will speak up.”
Bryan says it’s also the job of the chair to balance the strong personalities in the room. “You can get talkative personalities. You can get people who like to talk a lot and don’t have much to say. There are all sorts of people and the chair has to control the meeting and the interactions, set standards and the way people interact with each other. A good chair can do that. If you have a chair who can’t do that it’s very hard to achieve a balanced policy discussion.”
Bryan says these skills come with experience and directors have an opportunity to learn from boards that don’t work and poor chairs. “You build up insight that way. But every chair has a different style. You tend to develop a style that suits your personality and the way you like to be treated. You continue to learn and improve and develop insights about how to do things.”
Fallah’s advice to be a better boardroom contributor is to start talking to employees who are not on the board. “You need to have read and understood all the agenda items, but most importantly, talk to staff. If it’s not a massive company, it’s not that hard to do and it connects you with the business. You get a rough idea of the real world of the company, rather than just reading about it in board papers.
“That doesn’t mean you undermine the CEO. A good CEO would always encourage board members to interact with senior management and potentially employees who are less senior in the business. A CEO’s job is to improve the return on investment. So, if a board member thinks that they could be of assistance in that way, I don’t think the CEO should step in the way.”
Paskevicius notes the quieter directors are often the most profound. “Just because they’re quiet doesn’t mean they’re not listening. As the chair you have to be really aware and seek opinions from each and every director. If someone is not contributing it’s up to you to ask them about their thoughts on a topic or if they have anything to add.”
She says chairs also have the opportunity to give directors specific feedback when having one-to-one conversations. “If someone is particularly quiet and that’s an ongoing issue, you can get a sense in those one-to-one conversations if they need a bit more support. For instance they may not really understand the financials as well as they should. So you can offer some support, either from yourself or from the treasurer.”
To be a good contributor in the boardroom requires a depth of knowledge and experience. It’s not just a matter of being in the room. It’s absolutely essential to contribute at a high enough level that attracts the attention of your colleagues.
“Being a director should build on a lifetime of experience of knowing and understanding companies and how groups of people work together. You must also have a deep understanding of the global and social economic environment in which the business operates,” says Bryan.
This is essential because there can be serious consequences for a business if the boardroom develops groupthink, rather than engaging in valuable, contrasting and opposing viewpoints, which are an essential feature of a functional boardroom.
New directors must be aware of the potential for groupthink to stymie discussion. But there is no silver bullet for new directors to build up their experience, which can only come with time. Says Bryan: “You do rely on your colleagues to carry you for a while until you build up experience. If you come to a board out of a deeply experienced background and you understand the role, then it’s much easier to make the transition.”
Fallah says it’s important to have at least two experienced directors on every board, to make sure proceedings operate smoothly. “If you only have younger people on the board you might be missing out on vital advice. I was on my business’s board when I was in my early 20s. We had some extremely experienced board members and I learned a lot from them. But I was still able to share my opinions.
“I don’t believe experience in the traditional sense is an absolute requirement on a board. Chairs would do well to encourage people that haven’t been on a board before to become directors because inexperienced people still have value to add,” he says.
Paskevicius says it’s important to read the board papers thoroughly before the meeting. “It’s surprising how often that doesn’t happen. Ask any questions you need to clarify the information in the board papers in advance of the meeting. On the board I chair we often have questions on notice for someone who can’t come along or people can put questions on notice to the CEO and get a bit more clarification.”
She says during the meeting, be present and actively listen to what others are saying. “You can tell if people switch off. It’s the role of the chair to draw those people back in. Most importantly, if you don’t actually understand something, ask. Be willing to challenge issues and ideas and ask critical questions. It’s not about drilling down to management areas, but asking questions so you can understand.”
Paskevicius’s other advice for budding directors is to take feedback from the chair. “I often catch up with new directors one-to-one and check how they’re going.” She says it’s really important for newer directors to get to know the other directors. “It’s important to understand them. Not just around the boardroom table, but outside the boardroom when the board has more informal gatherings.
“Make sure you learn about the business and read the board policies and procedures, particularly the code of conduct. It might take a couple of board meetings until you feel sufficiently confident to ask more critical questions. If you’re not confident enough to ask in the whole board meeting then certainly talk to the chair or some of the other directors afterwards.”
Ebert says his board works towards having many agenda items resolved before directors are seated around the boardroom table. “Our goal is to achieve the outcomes we have set at the previous meeting before the next meeting and we often catch up informally before full board meetings.”
But he acknowledges there are times when directors need to take a step back. “Contribute when you know you have the skillset. Build relationships with other directors, executives and people who work in the business so you can learn about areas you might not necessarily know much about. That allows you to contribute in a more healthy way to the boardroom discussion.”
As for the best way to manage a non-performing chair, it’s really the responsibility of the board as a whole. “Some chairs don’t like debate, or at least about certain subjects. I have a different view and I like the board to acknowledge the full range of issues it has to deal with,” says Bryan.
“If directors talk and worry something through, then eventually they will find their way. If you park an issue and don’t talk about it, then it will always sit there,” she adds.
Fallah says frank conversations are required to manage a dysfunctional board. “We had a chair that would run the meeting for up to six hours for no good reason. After a while we decided this wasn’t going to work. We had a very robust discussion and worked with him to make the meetings better. He realised he wasn’t doing what we wanted him to do, so we worked out a way so he could leave of his own accord so we could have a different chair.”
While debate and dissent is essential, Fallah says it’s also beneficial for a company to have a harmonious board and for directors to transition from the board peacefully. “It might take a bit longer to replace people, but a director’s purpose is to serve the shareholders. So directors need to be honest and have a good conversation with each other if things aren’t working at the board level and seek a way to change and improve that.”
The challenge is for directors to forgo their ego and any sense of shame they may have when they realise they are not right for a board. Says Hallah: “Once you get over those two things it’s a simple concept to raise issues at board level and solve them.”
Ebert says in his view, boards are being disrupted right now. “Look at boards 10, 20 or 30 years ago. It used to be the same people in the same room all with the same background. Without diversity on your board, you’re already one step back because you need people who think differently. I think very differently as a business owner in healthcare to our chair that sits on the board with an accounting to marketing background. And that difference helps the business.”
He says one of the roles of the chair should be to help other directors’ professional development. “It’s unfair to put somebody on a board and not develop them because that just leads to them sitting in the corner being quiet, developing a groupthink mindset.”
Both directors and chairs are responsible for creating an environment where debate and discussion is accepted. This is especially the case in an era where the community is looking at privilege, whose voices are being heard and there’s a move to give people without a voice more power.
More diverse boardrooms will make the chair’s job more challenging, but hopefully will also improve business outcomes. Whatever the case, more pluralistic boardrooms mean that now, more than ever, the onus is on both directors and chairs to make a meaningful contribution to boardroom discussions. This means it’s essential for all directors to develop outstanding communication and negotiation skills for their own and the business’s benefit.