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Culture is the building block of group behavior. It is the body of accumulated beliefs, assumptions, attitudes, values and experiences of a board’s directors that collectively manifest in decorum, protocol, norms and the concentration of power. Culture functions as an ever-present rudder that sorts issues and priorities, and can exert profound influence on individual behavior. It can provide lift as well as cause drag on board effectiveness and satisfaction.
Patrick R. Dailey
Colloquially, culture is “how we do things around here.”
Elements of Board Culture
The five factors of board culture are presented below. Each factor represents the specific dimensions of culture, which further explain the cultural anatomy of a board. This model resulted from in-depth interviews conducted with directors and chairs of the boards of public and private companies. The five factors of board culture are:
Trust. Culture conveys both the standards for trust and the penalties for breaches. While rarely discussed, trust is always top of mind. Without trust, a board will never mature beyond individual contributors brought together by a powerful chairman. Without trust, a board often deconstructs into a procedural body that fails to innovate, guide or serve shareholders particularly well.
Purpose. An objective unifies directors in the common pursuit of a long-term vision. Clear purpose leaves no doubt regarding a board’s fiduciary responsibilities; conflicting interests and uncertainties that could confound board focus are removed.
Work. Decisions are the work products of boards. Culture largely dictates the way work gets divvied up, leadership style, decision processes and attention to certain external influencers.
Vigilance. Culture conveys how deep directors must dig, how alert they must be and how rigorous their inspection must be. Contemporary directors must live comfortably with discomfort. Effective boards embrace discomfort as a raison d’être. Ineffective boards deny or insulate themselves from discomfort, or succumb to negativism and chronic suspicion.
Engagement. Being fully engaged joins directors in collaborative service. Culture conveys the unwritten code required for directors to fully contribute in the center of the board coalition versus being marginalized on its periphery.
Problems with Culture
The board culture model is used as a diagnostic tool to enable a board to pinpoint the focus and strength of board health and emerging dysfunction. The four general categories of dysfunction are:
Too strong cultures. Strong cultures are canonized in operating organizations. Strength refers to the intensity, sanctity and depth that group members honor and abide by norms, values and rules. But there is a dark side to board cultures that are too strong. Directors should note their own boardroom dynamics to detect cultures that are too strong. These include:
- Reduced capacity for innovative thinking: change is difficult to muster.
- Sanctions against those challenging the status quo: probative inquiry is unappreciated.
- Over-reliance upon a charismatic leader: participative decision making fails to materialize.
- Evangelical belief in the organization’s practices and destiny: external threats are disbelieved and discounted.
Weak cultures. Uncertainty is at the core of any group with a weak culture. Weak board cultures often meander along with no clear purpose or direction, which incubates cliques and conflicted interests among directors. Political finger pointing is practiced; self-protective actions abound. This leads to demoralizing missteps and fatiguing resets. These are confused, often distrustful environments where a clique may hijack the board for self-interested pursuits. Weak boards do make decisions, but these often result from deferral to strong-arm influencers on the board or external influencers.
Disconnected cultures. These cultures preach but fail to practice. Demonstrated behavior and decisions are inconsistent with the stated values, philosophy and mission. As a result of this disconnect, these cultures fail to set a clear tone; they have little moral authority. Directors may be oblivious to the inconsistency or deny its impact or relevance to other stakeholder groups. Boards earning this reputation are viewed suspiciously. Director reputations can be tarnished.
Stale cultures. Curiosity and learning flatten out over time for any group, boards included. Status quo creeps in, and the board slips into autopilot. Over-reliance on long-standing lessons of experience, overconfidence and complacency can unconsciously render a board blind to threats or opportunities, and rather mechanical in its inquiry and vigilance. Challenges and pushbacks are few. Collectively, the board may continue to offer valuable historical perspective and wisdom, but the ability of directors as sentinels and change leaders will diminish. When the board goes stale, its field of vision narrows, alertness moderates and zeal diminishes. Enterprise risk elevates.
Boards Need Periodic Renewal Even healthy boards periodically need to rediscover their strengths, address deficiencies and reinvigorate their spirit. To renew, boards must learn. And contemporary boards simply must learn more and learn faster. The essential ingredients for renewal include:
Catalytic leadership. The chair is most often the catalyst for self-examination. The chair may tactfully nudge the board toward comfort and confidence with self-examination.
Discovery. Confidential director surveys supplemented by in-depth interviews with an independent board advisor represent a constructive approach for board self-examination. Boards can learn the strengths and deficiencies of their unique culture through the lens of the culture model.
Candid discussion. Facilitator-led discussion among directors gets matters on the table—both capabilities to be reinforced and those in need of corrective action.
Change agenda. Consequently, boards find consensus on the matters they wish to tackle. Intensity emerges around a change agenda. Behavior change can begin. Persistent attention to new behaviors, norms and practices will advance the cultural change agenda and allow change to stick.
A progressive chair can lead the board through self-evaluation and renewal—but renewal does not last forever. Over time, the astute chair must again nudge the board to repeat the process.
Building the Board You Need
Every chairman can aspire to build a strong coalition of talented and committed directors. Likewise, directors can expect to be part of an effective and collegial body. The board culture model provides a catalogue of standard, descriptive language to use in understanding the elements of board dynamics—visible or cloaked. Diagnostic surveys and interviews can be used to reveal what works and what does not work for your board. From diagnostic work, a change agenda takes shape, which makes your board more functional and fulfilling.
Astute board chairs together with engaged directors dedicate time to build and sustain healthy boards. Ultimately, they guide sustainable businesses and high-performing leadership teams while fulfilling their fiduciary responsibilities. They regulate their own behavior and remain future-focused, alert and relevant. These boards are always vigilant in pursuing the following objectives:
Agendas and priorities are aligned. Directors pursue a common vision. Competing agendas among directors have been resolved—analytically and emotionally. The board has collective purpose.
Consensual decision making. Directors adhere to disciplined processes and demonstrate informed decision making. The board listens broadly and intently to input, yet attempts by external influencers to lobby or sway board decisions are repudiated.
Full engagement. Directors show up ready to listen and collaborate. The chair sets a tone of collaboration, which translates into director engagement, thorough deliberation and timely action.
Proactive monitoring of risk and opportunity. Directors operate with eyes wide open. The culture sets the norms for proactive awareness of emerging opportunities or threats. Ethical standards exist and are practiced.
Genuine trust and reliance. Directors rely upon fellow directors. Candor stimulates interpersonal risk taking and fosters both prudence and innovation. With concerns about director liability and personal reputation ever present, trust is the foundational element of healthy culture.
Patrick R. Dailey, PhD, is a partner in Board Quest, LLC, a board of directors consultancy, and serves on the board of the NACD Atlanta chapter. He can be reached at pdailey@boardquest.com.