Serving on a board of directors is incredibly difficult. You have the highest level of obligation to the organization, and yet in many ways you’re furthest from the action. Over my career, I’ve served on boards, both for profit and not-for-profit, and advised many, many more. I’ve also watched many of my partners navigate their way through the same challenge.
In “director school” you’re schooled about your fiduciary duty. You’re required to do your due diligence to the best of your ability with a view to the best interests of the organization. It all sounds straightforward, and really dry. But what does it actually mean? As an individual director, you bring your own skills, biases, personality traits, problem solving abilities and so forth to the table. But the magic is in mixing all the contributions of individual directors, and turning that into a disciplined decision making process.
Boards are different from all the other groups and interests that have a stake in the firm. While all other stakeholders properly advocate for their particular interests and points of view, boards are obligated to abstract from the particulars – even their own particular opinions or area of expertise – and consider the entire organization. When they’re at their best, a properly functioning board can act as the most highly evolved and sophisticated decision making body in the whole organization.
The key for boards to attain this type of status is through constant refining of the most important director skill: Temperament. Here’s an incomplete, unscientific survey of skills and attitudes I’ve had to bolster and develop to improve my temperament as a director.
What don’t I know about the topic at hand? What do others know? Who can we ask?
Not being afraid to ask, and not being afraid of the answer.
Engaging with people without knowing what the end result will be.
Arriving at the right decision in the right way. Avoiding cognitive biases (there are hundreds to watch out for). Not “winning the day” with the point of view you brought to the table.
So many high powered directors and executives are “quick studies” and praised for their decisiveness. But the frequency of flameouts of high profile boards made up of these very types of people suggests that board work requires a different temperament. Being able to hold many different alternative universes in your mind simultaneously, for a period of time, can help prevent those types of flameouts, and result in better decisions.
Corporate governance is very much like parenthood – it seems boring and obvious, until it goes wrong. Let’s all work harder on our temperament, so we can take our organizations to the next level!