How do boards support themselves in a constantly shifting landscape?
Author:
IECL
Published:
13/12/2021
The board of directors is the most impactful team in an organisation.
It has the ability to exert more influence than any other team, it is better networked than any other team and holds more responsibility than any other team. The board deals with more complexity than any other team and has to engage in fast critical decision making; yet current research and literature rarely considers the board through the lens of the team.
This article explores boardroom performance and how it can be developed through the lens of teams and team coaching. We will cover whether the board really needs to view themselves as a team, the relationship between boardroom performance and team coaching as well as an exploration of Hawkins’ Five Disciplines of Systemic Team Coaching, as they relate to the collective of a board of directors.
For the purposes of this exploration let’s first define what we mean by team.
Katzenbach and Smith (2009) is still one of the most commonly used definitions of team;
‘A small number of people with complementary skills, who are committed to a common purpose, performance goals and approach, for which they hold themselves mutually accountable’
One of the key points here when thinking about boards is the concept of mutual accountability.
Peter Hawkins (2017) gives us a strong reference point for team performance which aligns perfectly with the requirement of the board to create value for the company, management, shareholders and relevant broader stakeholder groups.
‘A team’s performance can only be truly understood through its capacity to create value for all its stakeholders.’
Porter and Kramer (2011) advocate that board focus needs to shift from creating ‘shareholder value’ to creating ‘shared value’. Enabling the collective to realise outcomes that are more than the sum of its parts is a key tenant of team coaching.
We know the board is a collective; does it really need to be a team?
There is much agreement that effective board functioning is based on both individual and collective performance. The Australian Institute of Company Directors (AICD) advocate seven key performance indicators they believe are critical for board effectiveness.
They are:
Committed directors leading with a common purpose who can harness their collective skills.
Respectful relationships and behaviours among directors and with key stakeholders.
Awareness of individual impact in a decision-making group.
Collective understanding and decision making which is more than the sum of individual knowledge.
Ability to perceive and work with difference and bias.
Open to feedback and evaluation of board processes.
Clarity of role – director as distinct from an executive
When we compare this list to twenty-five years of research into the key indicators of high performing teams, we discover that the elements for team effectiveness and board effectiveness are almost identical.
David Clutterbuck (in Coaching the Team at Work, 2019) sums up the key indicators for high performing teams as:-Cross referencing these two lists we arrive easily at five critical common indicators for performance that creates a strong case for exploring boardroom performance through the lens of team coaching approaches.
They are:
Purpose
Decision making ability
Relational intelligence
Attending to learning and process
Leadership and role clarity
There is a growing body of evidence that explains the effectiveness of how team coaching approaches contribute to high performing organisational teams, by working with teams on these five elements. There is also another body of evidence that shows boards need to attend to gaps in skills and behaviours while working more purposefully on effective boardroom dynamics.
Based on this evidence the time would seem right for the most impactful and influential team in an organisation to engage in team coaching approaches to enhance their own collective performance.
According to recent research by EY in their paper ‘Is the board of the future being held back by the past?’ (2021) Australian boards are already under pressure to become better able to handle an increasingly uncertain future. The research advocates that boards need to turn their attention to having more strategic conversations which generate actionable insights that lead to effective critical decision making as well as developing their soft skills and understanding of behavioural sciences.
The correlation between these recommendations and the five critical common indicators of performance is clear, so let’s open up the door of the boardroom and take a closer look at how high performance can be achieved.
Team coaching and boardroom performance
Trust in boardroom performance has remained at an all-time low over an extended period. The Edelman Trust Barometer 2021 results rate trust in boards at 36%. This rate fell from 45% in 2016 and has remained low ever since. Royal Commissions and resulting regulation are bringing the boardroom into our lounge room regularly through the evening news. General societal awareness of boardroom impact is growing, and people are not happy. The layers of complexity are increasing for the team that is the board as they deal with societal demands and expectations as well as attending to governance and shareholder obligations. The key question here is; how are boards changing how they are supporting themselves to deal with this demanding, shifting landscape?
It is a requirement for all ASX boards to regularly review their performance. (Recommendation 1.6, AXS Corporate Governance Council, Principles and Recommendations 4th Ed.)
This often happens through a formal boardroom evaluation process. The impact of such processes is often to attend to the more objective wins such as attending to systems and the structure of resourcing items. Whilst this is important, the real performance levers in a system are more subjective. The board is a living team system that exists over a period of time in relationship to its wider stakeholder systems. Whilst an evaluation activity can provide a great starting point or the impetus for change, the only way to realise more of the potential of any team or collective system is to engage in ongoing work that addresses performance and process markers simultaneously.
Board evaluations by their nature are self-evaluated, relying on the players themselves to identify and highlight team deficiencies. Without an outside and objective view and a deep understanding of high-performing teams, it is very difficult for boards to accurately identify gaps.
The deep work required of boards resides in the five key indicators of board/team performance;
Purpose
Decision making ability
Relational intelligence
Attending to learning and process
Leadership and role clarity.
This takes time, attention, persistence and expert partnership.
One model often used to analyse board function is the Tricker Model (1984)
Tricker gives us direction on the roles of the board and covers point five of our five critical performance indicators; leadership and role clarity.
This leaves four other critical indicators needing attention.
Purpose
Decision making ability
Relational intelligence
Attending to learning and process
To address the remaining four we will look at an application of Peter Hawkins’ Five Disciplines of Team Effectiveness into the boardroom environment. This model is more commonly known as “the 5 Cs” (Hawkins 2017).
Application of a team coaching framework
Hawkins’ 5 Cs framework sits at the heart of effective, systemic team performance and it proposes that for optimum collective effectiveness:
‘teams need to have mastered all five disciplines and that systemic team coaches and team leaders need to be able to coach teams both within each discipline and on the connections between these disciplines’
(Hawkins and Turner 2020)
The five disciplines are as they relate to our five critical elements:
Commissioning – Clarity of purpose from the stakeholder perspective, WHY this collective exists. PURPOSE.
Clarifying – Clarity of what is to be collectively achieved and how it will be measured, what the collective needs to do. ROLE CLARITY & DECISION MAKING ABILITY.
Co-Creating – Well developed, generative, dynamic ways of working; how the work is to be done together. DECISION MAKING ABILITY & RELATIONAL INTELLIGENCE.
Connecting – Stakeholder relationship and engagement, ability to represent the whole when engaging as an individual, who the collective exists to serve. RELATIONAL INTELLIGENCE.
Core Learning – Capacity for individual and collective learning over time, ability to reflect, learn and integrate. ATTENDING to LEARNING & PROCESS
It is important to note that this framework attends to what is internal to the collective, for example boardroom dynamics as well as what is external to the collective for example dynamic between the board as a whole and its wider contexts.
Let’s look at how each quadrant of the model is applicable to boards.
Commissioning
Here we are exploring how well the board can articulate why it exists as a collective, who it exists to serve and the specifics of the collective outcomes it needs to achieve. This is more than just good governance. This area is becoming more and more contested – owners/shareholders vs wider stakeholders; corporate role in society; the obligations on boards to deliver corporate value well beyond profit, etc.
Board profiles rarely show themselves as a team with a collective purpose. They are documented on websites as a set of individual profiles with individual merit and no commentary on what is present that is more than the sum of the individual knowledge.
Board purpose is different to the organisation’s values, mission and vision. If the board is ‘a series of individual talking heads’ (Hawkins 2018) then it is not a high performing team system. It is important for each individual board member to be able to articulate board purpose both when the board is together and when they are apart.
Key question: What does this collective bring that is greater than the sum of its individual knowledge bases?
Clarifying
Here we are exploring what is to be collectively achieved, roles and resources required to achieve this, and how it will be measured. It is about what the collective needs to do,
Board size is a consideration here, as are core skills and behaviours. The larger the board the greater the potential for factions in the system. Bain & Co suggest that seven people in a decision-making group is optimum (Blenko, Mankins and Rogers 2010). It is also important to acknowledge that seven may not be enough to cover all skill sets needed. If more than seven are necessary this becomes a consideration for effective boardroom dynamics.
Another example of what may need to be challenged here sits in the current industry debate about CEO experience being the primary skillset of a Non-Executive Director. A high-performing board with an enquiring collective mind will be looking to challenge stereotyped skill sets, increase diversity and look to what roles are actually needed to perform.
Once roles are clear the focus then moves to how the roles are integrated in line with collective purpose; how each Director sees their role as an individual contributor and as a team member needs to be explored. Decision making processes need to be agreed. AICD advocate that quality decision making is at the heart of all good governance and it’s also one of the five critical performance indicators identified earlier in this article. Standards of behaviour, productive disagreement, disrupting thinking, developing a learning mindset for both the individual and the board as a whole so new thinking can emerge, are all factors in team clarification, to enable more of the potential of the whole team system to synthesis and emerge.
Key question: How do we see each other’s role in creating collective outputs?
Co-Creating
Here we are exploring how to develop generative and dynamic ways of working through relationship; how the work is to be done together.
Due to the independent nature of boards, decisions are often made with imperfect information. This requires the board to develop discerning collective judgement for optimum boardroom performance.
Boardroom dynamics are in focus in this stage. The work is on how boards create the environment where feedback/feed-forward is welcome, where both helpful and unhelpful behaviours that are lurking in the system can become visible and be worked on safely. Managing bias, assumption and personal preferences is critical as well as developing the ability to look at how the board behaves when their decision-making processes work/don’t work.
Personal agendas and preferences cannot dominate here, the focus must be on collective behavioural and relational effectiveness. This aligns with the fiduciary duty of a board director to act in the interests of the company they govern, rather than from a place of self-interest. While independence of mind is valued, how this independent thinking is integrated into the performance of the whole is the focus. It is therefore important to bring awareness to how the system of the board is behaving rather than to specific individuals within the system.
‘What distinguishes exemplary boards is that they are robust, effective social systems.’ Sonnenfeld (2002)
Key question: What alliances/fissures exist in the collective?
Connecting
Here we are exploring how to develop the relational intelligence of the collective with their external stakeholders. We’re becoming clear on who the collective exists to serve and then exploring how they relate and engage with these groups.
In this stage we are interested in how stakeholder voices and needs are brought into the boardroom. Is there a formal data gathering process? How is feedback given to this group? Stakeholder mapping may be relevant and needs to include the ‘non-human’ stakeholder groups, for example those sitting in the sphere of environmental and social governance.
As mentioned earlier in this piece, the world order is changing and requires a more sophisticated, forward-looking approach from today’s board. When connecting with groups external to the board it is important that individuals are able to represent the whole.
‘A team’s performance can only be truly understood through its capacity to create value for all its’ stakeholders.’
Hawkins (2017)
Key Question: Who are our stakeholders and how are they defining value?
Core learning
Here we are exploring capacity for individual and collective learning over time as a result of being part of the collective. It is about the developing ability to reflect, learn and integrate behavioural and process awareness, both individually and together as a team. Developing collective capacity to learn together requires each person to take responsibility for both developing themselves and each other. This enables collectives to quickly adapt to new and challenging circumstances.
Boards need to become aware of their collective learning styles and how they operate together with the action learning cycle of thinking, planning, acting and reviewing.
Ultimately the role of the team coach is to help the collective, ‘become a self-sustaining learning team that will continue to learn and develop from its own rich experience well after the external team coach has finished working with them.’ Hawkins (2017)
Key Question: What is the board’s ability to learn and adapt together?
In closing…
We have explored boardroom performance through the lens of Team Coaching approaches. We have looked at whether the board really needs to view themselves as a team, the relationship between boardroom performance and team coaching, along with an exploration of Hawkins’ Five
Disciplines of Systemic Team Coaching.
As we move forward, we look to a world where boardroom doors are opened to team coaching approaches resulting in powerful performance partnerships for the most impactful teams in organisations.
‘Team Coaching is a way of working with a whole team as a living system in relationship to its wider organizational and stakeholder ecosystem.’
Hawkins and Turner (2020)
References:
Blenko, M., Mankins, M. and Rogers, P. (2010). Effective decision making and the rule of 7. Bain and Company.
Clutterbuck, D. (2020). Coaching the team at work. Nicholas Brealey Publishing.
Hawkins, P. (2017). Leadership Team Coaching, Developing collective transformational leadership. Kogan Page.
Hawkins, P. (2018). Leadership Team Coaching in Practice. Case studies on developing high-performing teams. Kogan Page.
Hawkins, P., Turner, E. (2020). Systemic Coaching. Delivering value beyond the individual. Routledge
Sonnenfeld, J A. (2002). What Makes Great Boards Great. Harvard Business Review.
EY. (2021). Is the board of the future being held back by the past?
www.ey.com/en_au/board-matters/board-of-the-future.