Boards are spending a significant amount of time focusing on the technical process related to board procedures and responsibilities, and the control structures of the board.
Whilst these factors are critical and necessary, many boards are beginning to recognise that the character of the individual directors and the culture of the board as a team are just as important.
Moreover, there is a significant difference between the skills of a director and the characteristics (behaviour) that make that director an effective contributor to the board’s performance.
It is the right combination of appropriate and relevant skills and the desirable type of characteristics that will ultimately determine the value of a director’s contribution to the organisation.
Whilst a person’s true character is often revealed under duress, there are definable and measureable characteristics that distinguish high performing directors.
Whilst the control structures that surround a board and the composition and skills of board members are critical to success, the ability to leverage individual talents is determined by the behaviour and characteristics of the directors whom compose the board.
Characteristics refers to the individual directors’ behavioural traits, the sum of which provides the raw ingredients for a higher performing board.
Similarly, the team culture in the boardroom provides the recipe through which to combine those characteristics to the benefit of the board as a whole.
Some directors may exhibit passive characteristics, where their contribution is measured by their attendance at board meetings only.
Other directors may be more proactive and engage in a range of activities beyond mere attendance or compliance requirements, including mentoring management, and opening their contacts or networks of influence for the betterment of the firm.
Directors may be highly independent and not sway or deviate from standards or beliefs when under pressure or bullying by other directors, the CEO or even the chairperson.
Characteristics are very different to director’s skills. For example, there may be a director with 30 years audit or investment banking experience.
However, if he/she does not properly read the board papers or does not have a voice for expressing a constructive opinion at board meetings, that director can become a liability despite his/her obvious skills and experience.
Conversely, despite having a relatively lower level of corporate experience, some directors may be excellent communicators and ambassadors of the firm, which can enhance their overall contribution.
Some directors may be more financially literate, while others have great strategic insights, and some may have critical but infrequently required bear market or credit crunch skills.
Having the right compliance and composition is of little value if individual directors are not prepared to step up to new challenges and be counted when and where it makes a difference to the performance of the organisation, and in the execution of its strategic plan.
Director skills remain critically important, but it is the combination of skills and characteristics (behaviour) that determines the ultimate value and contribution of a director to the board.
Consequently, the skills of a director and their contribution to the board and strategic development of the firm are not the same.
The right combination of character and skills of individual directors can have a profound impact on the effectiveness of the board, if managed successfully by the chairperson.
Whilst some directors may baulk at a conversation about indiviudal characteristics, absence of such a discussion is an obvious precursor to serious organisational issues.
Whilst a person’s true character is often revealed under duress, there are characteristics that distinguish high performing directors. These include:
• They are thought of by other directors as open, honest and ethical in all their business dealings and command the trust and respect of their peers.
• They are engaged and prepared in their dealings with the board.
• They are advocates and ambassadors of the organisation, provided it is aligned with the board strategy and protocol.
• They are open and generous with their contacts and networks of influence.
• They are respectful and thoughtful of other directors and management, especially in allowing other directors a voice for opinion on issues that vary from their own.
• They are independently minded, yet pragmatic with an enduring desire and ability to learn about the business.
Many of the compliance and process issues concerning board performance can be obtained from online or paper based questionnaires.
However, the behaviour of individual directors can only be genuinely revealed by conservation and personal interviews with the person in question, his/her peers and other relevant stakeholders (such as senior management).
Moreover, the calibre of the people asking the questions is important, as it is critical to know who and what to ask and undertake such discussion in a consistent and impartial manner.
This allows structure and substance to guide the discussion and not personality or persuasion.