Realising your board’s diversity of thought - Effectiveness

Part 4. Effectiveness: Undertaking productive board decision-making

A recent study of New Zealand boards revealed substantial differences in relation to their diversity of thought. They varied widely not just in their potential for diverse thinking but also in the extent to which their culture supports the realisation of their diversity of thought.

Following on from those findings, the chairs from four boards with high-performing cultures in that study were interviewed to learn about the practices boards can use to develop a culture that enables diversity of thought.

As these boards demonstrated their positive cultural performance through the DOT Scorecard® – an insider’s 360-style evaluation – the selection of interviewees has an objective basis, in contrast to the more typical selection method of relying on a board’s profile and external perception of its performance.

For this reason, these interviews present a unique opportunity to gain insights into boards where diversity of thought is measurably at work. The interviews have been collated into five articles:

1. Inclusion: Building an inclusive board culture
2. Psychological safety: Ensuring all of your board members can make an authentic contribution
3. Independence: Achieving independent thought and expression
4. Effectiveness: Undertaking productive board decision-making (see below)
5. Recruitment: Bringing on new board members to support your board’s diversity of thought 

Chairs we interviewed

Abby Foote CFInstD

“You've got to go slow enough that all of the views come out. Because if you don’t, you end up revisiting topics because there are concerns that remain unexpressed or not sufficiently articulated.”  

Abby is chair Z Energy, independent director Freightways, and independent director Sandford. She has previously been a director TVNZ, director Museum of NZ Te Papa Tongarewa, director Livestock Improvement Corporation, director Local Government Funding Agency, director BNZ Life Insurance, director Diligent Corporation, and director Transpower.

Frazer Barton

“You can get bogged down in long discussions and the meeting takes too long. But then when it's something important and it's a good vibrant discussion and we're making progress, I will sit back and let the debate happen. So, I think it's keeping a finger on the pulse – it’s not an easy balance to strike.” 

Frazer is currently South Island vice president NZ Law Society, council member, chair of Appeals Board, chair of Health & Safety and Ethics Compliance Committee University of Otago, and a partner at Anderson Lloyd. He was previously chair of Anderson Lloyd Partnership, and served as chair of Presbyterian Support Otago.

Janine Smith CFInstD MNZM

“I believe that if the discussion is free flowing then there's nothing worse than stopping when you haven’t reached a decision, or someone's just come out of left field. Even with the best intentions in the world and an agenda that has timeframes associated with it, sometimes it just doesn’t work that way.” 

Janine is chair REANNZ, and executive director and principal of The Boardroom Practice. Previously she was chair AsureQuality, director Steel and Tube, director Kensington Swann, director The Warehouse Group, deputy chair Kordia, BNZ, deputy chair Airways, executive director Arnott’s NZ.

Ngaio Merrick CMInstD

“If we make decisions based on assumptions and we haven't challenged those assumptions, then I'm not sure that decisions are robust enough, so quite regularly we go back and ask people to give a different perspective.”

Ngaio is chair KiwiNet, director Reefton Distilling Company, co-founder Nuance Connected Capital, Portfolio and Investment Manager Lewis Holdings. She was previously director Everedge Global, and director Precision Engineering.  

Part 4. Effectiveness: Undertaking productive board decision-making

Boards are ultimately responsible for making decisions that their organisations can execute. Genuinely including diverse perspectives in the process is necessary but not sufficient for effective board decision-making. Bringing together different viewpoints also takes more time and can be emotionally draining for everyone involved. Board discussion is constantly constrained by finite meeting times and frequently packed meeting agendas.

The balance between efficiency and thorough discussion

The chair is tasked with achieving the right balance between ensuring discussion is thorough and having a meeting that is sufficiently productive to make the decisions that need to be made.

The experience of leading a board through complex challenges – such as the ongoing impact of the COVID-19 pandemic – has allowed Abby to reflect on the success factors involved in effective decision-making. She highlights the necessity of underpinning diverse views with a shared set of values and a focus on achieving a strategic direction towards a clear vision. Using this foundation, the board chair can foster an environment where diversity of thought is realised in a productive way.

“Having clarity of vision and the shared values helps you to navigate the different views and see them within a context that is constructive, rather than oppositional. The more that you can do to create an environment where there's a real openness to understanding those views and building on them in order to take you further in the direction that you want to go – the better.”

When shared values are missing, Abby sees this as leading to greater polarisation: people tend to move towards different ends of the spectrum instead of building on those different views to better deliver the shared vision.  

Abby confesses that when she began chairing meetings her natural inclination was towards efficiency, but she has since learned that this is not necessarily helpful and now prioritises thorough discussion. She also recognises the importance of accommodating reflective thinkers who need the discussion to fully activate their thought process. If the discussion moves on too quickly, some may seek to revisit prior items, which risks frustration for everyone. 

“You've got to go slow enough that all of the views come out. Because if you don’t, you end up revisiting topics because there are concerns that remain unexpressed or not sufficiently articulated.” 

She advises considering the agenda and planning out the discussions where different perspectives are likely, difficult conversations may be required or you'll need to spend time teasing out views. Those are the discussions that you need to allow enough time for and avoid moving through too quickly. 

Abby also advises that you can use the ‘board only’ time at the beginning of the meeting to test whether the board agrees with the chair on the agenda and where it wants to spend its time, as well as testing which items might involve different views to work through.  

Ngaio regularly finds that the person who has been the most vocal in support of a decision is also the best at coming up with a contrary perspective. This is because they have often considered the counter-arguments in their own mind. Bringing out these dual perspectives certainly supports a healthier, more robust discussion.  

“We have had decisions where we've been really close to consensus and approval but then we’ve called it as not sufficiently robust. It does make the process longer, but it means that the decisions that you make are things that you can live with for longer. So yes, the process is longer, but you don't end up having to revisit their decisions so probably the process is shorter in the long run.” 

Janine correspondingly believes it is always important to find an appropriate balance between thorough board discussion and efficiency. She is clear with board members, especially those who like structure, that she is very flexible with timing and will not forgo quality discussion. 

“I'm not a very strict timekeeper and do not adhere to having specific times that might be on an agenda. I believe that if the discussion is free flowing then there's nothing worse than stopping the discussion when you haven’t reached a decision, or someone's just come out of left field. Even with the best intentions in the world and an agenda that has timeframes associated with it, sometimes it just doesn’t work that way.” 

Janine acknowledges that board meetings can go on too long but this is rare – generally the chair can get a sense that the discussion is becoming more repetitive and ready for summation. However, given that some board members (reflective thinkers) will at times bring up another point of view when the discussion has otherwise played out, flexibility is essential.  

“Sometimes the best decision-making comes when someone comes out of absolutely left field with something that no one had ever thought of and therefore that takes the conversation down a different tangent. That actually means that you may flow into other time –- but that's okay. You know what’s the board's role? To make the best decisions possible.” 

Techniques for managing the decision-making process

Frazer shares his practical techniques for managing the board decision-making process.  

First, be prepared to limit those who are too vocal to speaking only once. He says that there is always at least one person who's too vocal, who fills the room with the sound of their (usually but not always ‘his’) voice and they drown out everyone else.

“People get worn down – they start to think, ‘Is it that important? I don't really care any more ...’ We all get worn down at times. One discussion example that comes to mind was a very obscure point about a narrow issue. Two people took diametrically opposed views and wouldn’t listen to the others. Everyone else in the room was sick of it, it didn't really matter at all, but the two had to keep on slugging it out. You end up with the person who's speaking loudly on and on, trying to bear down on everyone else in the room. It's not necessarily the best-informed opinion, whereas the person who's reluctant to express their view might in fact have a much better view.” 

Second, you need to actively empower and facilitate the discussion towards actually achieving a decision. Frazer acknowledges that this is tough. You might have five people coming up with five different things: “Is the best way forward one of the five? a combination of these? or a separate sixth option?” 

Further key aspects to actively manage include: 

• Setting the agenda with an effective order of discussion, with the important matters discussed early in the meeting when everyone has a good level of energy
• Allocating time effectively across different matters – people will inherently keep on talking unless they are reined-in
• Rising above the operational detail – avoiding the tendency for people to focus on the often-easier operational aspects than wrestling with the bigger-picture strategy  
• Being conscious of people’s energy and attention in real time – if people are exhausted, they will not make the best decisions, so be prepared to move less critical items to a future meeting or to deal with them in a different way

“You can get bogged down in long discussions and the meeting takes too long. So you’d go from one hour to four or five hours – when the correct answer is two-and-a-half hours, and that's the chair’s job to try to balance that. So, there are times you need to shut something down. But then when it's something important and it's a good vibrant discussion and we're making progress, I will sit back and let the debate happen. So, I think it's keeping a finger on the pulse – it’s not an easy balance to strike.” 

While board software is great from environmental and efficiency perspectives, Frazer identifies some practical limitations. 

“If you've got someone chairing a meeting and moving through very efficiently, it can go so fast that you can't find your own notes on points for discussion fast enough. Then you're on the next subject. I think it has to be that balance between moving too efficiently and adequate discussion. You can find the meeting is over in an hour and no one said anything [of substance].” 

Drawing out the underlying concern

Abby shares her experience that directors will at times have a concern about a matter the board is considering. However, their concern is difficult to articulate, perhaps because their thinking is not fully formed or it has an emotional component. The concern is even less likely to be articulated when a board member feels that it is not shared by the rest of the board, even when the board environment is quite inclusive.

“The way that manifests can be asking a lot of questions. And sometimes, asking questions doesn't necessarily help, because the management team can respond to the question without having actually addressed the underlying concern.  So the trick here is to try to identify where people are asking questions to satisfy an underlying concern which they haven't quite articulated successfully – sometimes even to themselves.” 

Abby acknowledges that this can be an uncomfortable process for the director, especially when it involves an emotional component, as people don’t necessarily acknowledge that ‘feelings’ are appropriate within a board environment. But if you fail to give legitimacy to the underlying concern, the director will continue to raise questions, plus you’ve missed the opportunity to understand exactly what was driving it and whether it was something that the board should be alert to. 

This is not an issue that Abby believes should be addressed with the director away from the meeting. Instead she feels that the whole board should explore the concern as a way for them all to try to understand, as well as help the director to express their concern, who might then build on their thinking through the contribution of others.

“As a board we agree that we’re going to focus on what our concerns are, rather than asking questions. Then we encourage the management team to figure out ways they might address concerns as opposed to just answer questions. In some respects, I would say it's not about treating concerns as a problem, it's more about seeing them as is a way of really interrogating the challenge to get to the nub of what will make the best solution.”

Getting the most from management–board interaction

The interaction between management and the board is critical to board effectiveness, as Janine explains.  

“We're there to create and preserve shareholder or stakeholder value. So, to achieve sustained value we're all in the same boat, we’ve just got different roles.

“If people understand why they're supposed to be there and what it’s all about – you know the context, then you're much more likely to get people to respond and know that that's what they need to be doing and therefore for management to want to involve the board as opposed to feeling the board’s getting into management, and that's part of the chair’s role as well.” 

Janine also shares some key success factors in a good board–management relationship.

First, management needs to understand the board’s role: 

“There can be an assumption that we all know what a board does and actually we don’t.” 

Second, management needs to believe that the board adds value: 

“I still see organisations where management think boards are a waste of time – particularly if the board hasn't done a great job. If management has closed minds in terms of what the board's going to offer, then they’re never going to see the value a board can add.” 

Third, the role of the CEO is also critical as their attitude influences management’s attitude towards the board.

Finally, it is important to be conscious of any disconnect between the extent of diverse thinking of the board and management. If the board holds more diverse perspectives than management, it can be frustrating:  

“With one organisation at times we had been pushing management and questioning deeply and being somewhat frustrated by their narrower thinking. Then we decided to try to understand how diversity of thought might work with the organisation’s board and management. We saw a significant difference in results between the diversity of thought around the board table and that of management. It was a bit of an ‘aha’ moment – understanding from a board perspective as to why we were getting frustrated at times because management just simply didn’t have that diverse thinking within their team to be able to capture what the board thoughts and focus was.” 

Fortunately, any such diversity of thought disconnect can be readily addressed through the dual evaluation of both the board and the management team.

Actions for your board:

• Have a shared set of values and a clear vision to support constructive discussion
• Allow sufficient time for everyone to form their view and be heard, otherwise you risk a longer process through revisiting decisions
• Consider the most important decisions early on in the agenda when focus and energy are highest
• Proactively limit over-contributors
• Be open to board members sharing concerns instead of always asking questions, which may not capture what they are really looking for
• Take time to ensure that management understands and supports the board’s role.

Download Realising your board's diversity of thought series as a PDF.

About the author

Lloyd Mander CMInstD leads DOT Scorecard, a consultancy that works with boards, executive teams and other teams to understand potential for wide-ranging diversity of thought and develop the decision-making culture that is required to realise diverse thinking.

He represents the Canterbury Branch on the IoD’s National Council and has held governance roles associated with the health, housing, transport, and entrepreneurship. Lloyd was previously a co-founder and the Managing Director of a regional healthcare provider.