Robust Debate is Good
The Institute of Directors promotes excellence in corporate governance. Its comprehensive reference guide for members is the Four Pillars of Governance Best Practice. In a very useful chapter on Conflict on the Board, it welcomes conflict in the context of robust respectful debate, so that the meeting becomes a forum for airing divergent views towards generating the best decision. Included are tips for keeping disagreement contained to the issue, rather than it spilling over into people relationships and the effective functioning of the board.
For example:
- Put effort into developing collegial relationships and respect before the advent of conflict
- Good chairmanship
- Work to remove politics and factions
- Speak about the issue, not the person
- Clarify what is resolved (not what is not)
- Clarify the path to resolution
The chapter then dwells on the dangers of groupthink, where proposals are insufficiently critiqued, alternatives ignored and contingency plans neglected in the rush to consensus.
In the IOD’s recent National Conference, our Vice President, Michael Stiassny (speaking as an individual), spoke about poor governance practice being a contributing factor in finance company failures. In particular, he identified a lack of robust debate in evaluating management’s proposals and in subsequent board decisionmaking as being causal. He argued strongly for a tougher boardroom culture – a departure from the Kiwi psyche which prizes a “we’re all mates” consensus. For directors to shrink from a full and frank discussion of a knotty problem or complex issue could not be in the best interests of the company. In the boardroom, difficult decisions had to be evaluated rigorously and debated forcefully. Directors without the courage to speak thus and perhaps to confront a majority view did not discharge their fiduciary duty to their shareholders. And as to jeopardising inter-personal relationships and board collegiality, “So long as people can sit down afterwards and have a cup of tea, the discussion should be able to go anywhere in the boardroom”.
For more on the Stiassny address, please visit……………..
https://www.iod.org.nz/News/IoDnewsandarticles/tabid/63/itemId/280/moduleId/1012/Toughen-updirectors-told.aspx
All our organizations face very difficult calls. As directors, we serve our shareholders best by robustly evaluating and debating the issues, the alternatives and the risks with our fellow board members, towards the best decision. Perhaps many of us should “toughen up”.