Realising your board’s diversity of thought - Independence

Introduction

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 (see below)
4. Effectiveness: Undertaking productive board decision-making
5. Recruitment: Bringing on new board members to support your board’s diversity of thought

Chairs we interviewed

Janine Smith CFInstD MNZM

“There is an expectation that everyone participates. I don't have directors that don't speak. Even if they're not experts, I expect them to have a view on a topic, because that helps us to make sure that we make better decisions. Having only one or two people speak doesn't really help that decision-making process which is our role as a board.”

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.

Abby Foote CFInstD

“I'm a big believer in the power of people bringing their view, not having shared it with others beforehand because of the risk of a moderating of views that can come just from talking to others.”  

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

“I will only express my views towards the end of the discussion, after making sure everyone's included.” 

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.

Ngaio Merrick CMInstD

“What I'm really careful with, particularly with any CEO who is coherent and articulate, is not to persuade the fertile question, but to leave it completely open. So the supporting data has to be minimal, as opposed to ‘Here are 18 pages justifying why I think what I do, do you agree?’ It's got to be a fertile question that really does challenge the way that we think.” 

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 3. Independence: Achieving independent thought and expression

Including independent opinions that are often both diverse and contrasting is fundamental to the success of boards seeking to realise their diversity of thought.

Each board member should strive to form an independent view by seeking additional information and insight through their sources, applying their individual problem-solving preferences and seeing things in the context of their personal experiences and beliefs. Then they should convey their view to the rest of the board without moderation or modification. In this way, the board has the opportunity to consider the member’s genuine independent thinking, whether it is aligned to or divergent from the views of other board members. After the board member has conveyed their perspective and heard the independent perspectives of others, they are entirely free to change their mind.

Creating an environment that supports independent thinking

Abby strongly believes that boards should create an environment that recognises the value of the diversity of the viewpoints, so people don't feel that they've got to suppress their views or moderate them under influence from others.

“I'm a big believer in the power of people bringing their view, not having shared it with others beforehand, because of the risk of a moderating of views that can come just from talking to others.”  

Ngaio sees ‘fertile questions’ as especially worthy of independent and open thinking by boards. These are the complex or big-picture questions with no particular boundaries – for example: “Should our organisation exist? Are we still necessary?”

To include the independent views of all board members and to encourage robust discussion, Ngaio recommends allowing adequate time for consideration, perhaps a few weeks prior to the meeting. She also says it’s important for the chair to give thoughtful consideration to how they provide information to the board.

“What I'm really careful with, particularly with any CEO who is coherent and articulate, is not to persuade the fertile question, but to leave it completely open. So the supporting data has to be minimal, as opposed to: ‘Here are 18 pages justifying why I think what I do, do you agree?’ It's got to be a fertile question that really does challenge the way that we think.” 

As the leader of the board, the chair is in a position with potential to influence how willing others are to share their true views. Frazer reflects that his upbringing shaped his approach to addressing this. His father, a Presbyterian minister, taught him that the leader’s role in group decision-making is to help everyone come to the right decision, not necessarily to reveal your personal view.  

“I see my job as being to facilitate well-informed, clever and wise decision-making. And there are times I need to steer it depending on what the particular issue is.” 

Following her extensive experience in executive and governance roles as well as with consultancy supporting boards, Janine reports that during meetings she is conscious of whether board members are sharing their true independent thinking, although she has not often been concerned that they are holding back. However, sometimes board members can make contributions that are less helpful. 

“There have been people that might want to rock the boat [for the sake of it], but the board culture is strong enough, so you don't have to have the chair addressing it all the time; the rest of the board will actually moderate that.” 

Encouraging independent thinking when making complex decisions

Independent thinking is critical when boards are facing important complex decisions. Ngaio shares the following useful techniques to bring out board members’ independent thinking in such situations.  

• A blind ballot:  

“In some of my committees I ask members to close their eyes and raise hands for A, B or C, so that I can get a feel for the room without having everybody see what everybody else said. Getting people to commit before they say it out loud is the essence behind that.” 

• Writing down the number: 

“One of the really common questions in our startup world is - at what price would we sell? If the founders are thinking the price is $100 million, and the board are thinking it is $10 million, you're actually misaligned. So quite regularly I will ask people to write down on a piece of paper without showing anybody the number that is in their head, and then we will turn our pieces of paper over.”  

• Playing devil’s advocate to challenge the consensus with an extreme alternative: 

“I might say, ‘So you think we should go down to Dunedin and run it down there and that's absolutely the best place to be. Well I was actually thinking Whangārei, and the reason I think Whangārei is this, so is anybody in the middle?’ and that will often bring out the voices such as, ‘We thought Hamilton, but I didn’t want to say it because you were so set on Dunedin’. So providing an opposing view is necessary. Sometimes people have said, ‘I was thinking Whangārei too’ so then we really are a long way apart. When we are a long way apart, that's when as a chair I start celebrating: fantastic we have a robust decision on our hands, so because we've started here, when we get to a single place we will have had to go through a robust process.”  

Actions for your board

• Board members should strive to develop an independent view and share it in the boardroom
• Chairs and CEOs should be especially careful not to unduly influence board members’ independent thinking
• Your whole board has a role in supporting board members to share their independent thinking
• When your board is facing an important complex decision, use a disclosure technique that allows each board member to share their unmoderated and unmodified view prior to open discussion.

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.