The board of a listed dairy company is under pressure. In a run of bad luck, the chair has taken ill, and several directors have resigned. The board’s situation is compounded by production problems and by challenges with both domestic and international regulators. This is the scenario that confronts a group of directors over three days in AICD’s new Boardroom Mastery course.
As the directors around the table respond to competing strategic, governance risk and reputation priorities, an organisational psychologist observes how matters unfold and evaluates how the participants individually and collectively analyse information, determine courses of action and contribute to the dynamics in the room. At times, the psychologist quietly takes a director aside and gives feedback on their approach, the dynamics of the board and discusses ways in which they can moderate their behaviour to better influence the dynamics. The board as a group, likewise, evaluates its performance and shares feedback over the three days.
Designed as an immersive learning simulation to challenge experienced directors to perform under pressure, the course aims to better equip directors for the realpolitik of boardroom work.
As most boards meet at best one to two days a month, their work often cuts directly to the decision-making tasks at hand and directors miss the foundational discipline of team-building that contributes to more effective board function.
Facilitator Prof Geoffrey Kiel FAICD says self-mastery, emotional intelligence, personal and group effectiveness are vital elements of governance that directors need to master. An AICD facilitator with more than 30 years’ experience and the author of a number of books on board performance, Kiel devised the course after observing the destructive effect of dysfunctional behaviours in boardrooms.
“This is the last frontier of developing better governance,” says Kiel. “We know the knowledge you need to have and be able to apply to be an effective director — in law, finance, strategy, risk and such. All those things are very important and you need them.
“In most board situations, the answers aren’t blindingly obvious and there are reasoning subtleties. Ultimately it comes down to the dynamics of the boardroom. The board is often OK, but the problems arise due to some fairly dysfunctional people who exhibit atrocious behaviours in the boardroom. If the dynamics of boards are dysfunctional they can become a negative force in the organisation.”
Kiel says this new course is the only program for directors that concentrates on self-mastery and self-awareness and its contribution to collective leadership. The course material builds on landmark work The Five Dysfunctions of a Team — developed by coach and management consultant Patrick Lencioni, who noticed patterns in behavioural tendencies that contributed to team breakdowns — but provides the all-important director and board lens.
The five board dysfunctions that AICD applies map the Lencioni pyramid (see diagram below). They are:
- Inattention to results
- Avoidance of accountability
- Lack of commitment
- Fear of conflict
- Absence of trust.
Kiel says high performance is related to the level of emotional intelligence (EQ) a person applies. “A person with a high EQ is sensitive to the group, and to how they impact the group.
AICD course details
In 2020, AICD will schedule the three-day Boardroom Mastery course, designed to help directors explore, develop and challenge their thinking and behaviour and its impact on board dynamics and effectiveness. The course challenges experienced directors who have a deep understanding of governance, director roles and boardroom responsibilities, to take their personal performance to the next level.
Participants should have completed the Company Directors Course and have a minimum of three years’ director experience, or alternatively, have equivalent director experience of at least five years. Course dates TBC. Further information here.
“Some of the best managers I’ve come across have very high EQ, but there’s another class who have got to the top through having a dominant personality. They have very little EQ. I count how many times people speak, cut people off and are rude. These directors are often very intelligent with good insights, but dominate the meeting not allowing others to bring their contribution.”
Participants undertake an assessment of personality traits and leadership derailers that contribute to leadership behaviour, risk orientation and director effectiveness, to provide insight into potential strengths and challenges to their leadership and directorship; plus pre- and post-course briefings with the psychologist.
The organisational psychologist on the course, Robert Newman, of Change Focus Group, says the profiling is not designed as a therapy session, but to help directors be more reflective on how they can influence performance under pressure.
The course aims to help directors manage attention, contributions, emotional responses, focus and task and group behaviour. It’s also configured to help them identify power and influence games, structural and perspective biases, decision stages and dynamics, and dysfunctional behaviour patterns. “When you’re at the top of your game, this is an area you need to self-monitor more than ever,” says Newman. “This means being aware of potential derailers — a personality characteristic often most exhibited under periods of stress.
Something that can be a sound part of your personality can become dysfunctional under pressure in a board setting.”
He says few roles train people in the interpersonal dynamics of governance; that it doesn’t matter how smart your board is, but how directors communicate with each other and on joint decisions that is important. “The weakest link may influence how boards make decisions,” he says. “The group may make bad decisions if the consensus moves to the poor decision-maker.”
Newman adds it is vital for directors to develop observational capacity. While the likes of ASIC are asking if we need to have psychologists in the boardrooms of large companies, he says there’s a better question for directors: “Do you believe your board needs to continually evaluate or assess how directors communicate with each other, analyse information and work together to make decisions?” Newman says the answer is yes.
In September, the AICD conducted the second pilot of Boardroom Mastery.* Here’s what some of the participants said:
Jennie Churchill GAICD, non-executive director Tasmanian Land Conservancy: “I’ve been fortunate to be a non-executive director since 2006 and I’m stepping into a chair role at the end of this year and for me, personal development is really important. The psychometric testing in the lead-up to the course was very useful — a tremendous amount of personal time was given by the psychologist, which was insightful and really helpful. I enjoyed the role playing. It’s been a good process of being put into a constantly changing situation and then immediately getting professional feedback and evaluation.”
Ray Dib GAICD, non-executive director NSW Rugby League: “After the Hayne report, I wanted to upskill myself to the standards going forward in governance and reshape my career and how to communicate in a boardroom with other directors. The course has really opened my eyes and my mind to the new landscape of governance. It’s given me an insight into how experienced ASX directors perform on a board. It has also helped me support my colleagues and understand how to come to a consensus as a group.”
Peter Quinn GAICD, managing director Goulburn Valley Water: “I’m in transition from a full-time MD role, which I’ve been in for 10–12 years, so was looking to develop skills in the NED area. I thought this would give me the opportunity of what I could add in terms of value to a new board. My key takeaway is that it has reinforced my motivation to make a contribution at a non-executive level. I loved the element of joining a new team, building relationships in that team and understanding the contribution I could make in helping to harness the collective skills, wisdom and experience of the group to make the best decisions.”
* Narelle Hooper participated in the Boardroom Mastery pilot.