Part 3: Introducing Ten Steps to Become a High Performing Board
1. Board Dynamics
In my previous article in Issue 11 of Housing Executive magazine, I wrote that in my experience, board members rarely discuss what is their own “why”, i.e. their purpose as a board. How can a board aspire to be high performing if the directors don’t know what they are there to do?
According to governance expert Professor Bob Tricker:
“Corporate governance [the board’s purpose] describes the way trust is shown, power exercised, and accountability achieved in corporate entities, for the benefit of their shareholders or members, other stakeholders, and society.”
In Ten Steps to Become a High Performing Board©, my starting point is to consider three foundational steps which impact on the dynamics of a housing provider board, what makes it tick and how it can meet Tricker’s definition of purpose:
Step 1: UNDERSTANDING – the purpose and role of non-executive directors on boards
I have written previously that being a NED is like squinting through the peephole to someone else’s house. NEDs can only see what is presented within their limited field of vision. There is a high level of expectation on NEDs to hold accountable the executives and support them by bringing a broad range of skills in strategy, visioning and business development.
Nowadays the Regulator of Social Housing expects boards to share the load of scrutinising the performance and impact of housing providers, referred to as “co-regulation”. Boards share responsibility for upholding regulatory standards and protecting the interests of residents.
The role of NEDs is to bring an alternative perspective to that of the executive directors, which is not to say that this needs to be a contrarian perspective. Ideally, NEDs aim for balance which ensures that different views are discussed and debated in the boardroom.
Step 2: PRIORITISING – succession, selection and diversity in the boardroom
Not only can NEDs feel like perpetual outsiders with only a partial view of what happens in the organisation, often they feel excluded from the conversation taking place inside the boardroom itself. This is because boards routinely recruit people who are characterised as a good cultural fit or, putting it another way, “people like us”. As a result, the option to draw upon the widest pool of suitable candidates can be missed.
Why is diversity so important in the boardroom? And how can a board set a strategy to achieve it?
Boards are by nature diverse, adaptive systems and Chairs should always keep in mind which combination of skills, competencies and experiences are needed on their boards.
The board’s succession plan needs to be tied closely with the organisation’s strategy. Succession planning and selection of new NEDs are the life blood of a housing provider’s board.
Step 3: REALISING –
the importance of the Chair/Chief Executive dynamic
According to Tricker, the relationship between the Chair and Chief Executive is one of the most crucial, most sensitive and most subtle in any enterprise and needs to be in balance at all times.
What does this balanced relationship
Imagine the organisation as a seesaw in a children’s playground. On either side, closest to the fulcrum, sit the Chair and Chief Executive. The fulcrum represents the conduit through which the organisation’s stewardship and management roles interact and they hold the key for ensuring that the organisation’s governance is appropriately balanced.
Getting the Chair/Chief Executive relationship right is also key to a successful leadership dynamic at the apex of the organisation. Each of them has a responsibility to set the right tone, which includes civility and respect coupled with an openness and willingness to debate and challenge, otherwise relationships between executives and the board can become toxic and start to fragment.
In Part 4 of Exploring Governance, I will introduce you to the next three of the Ten Steps to Become a High Performing Board which are all about board values.
Do join me next time.
David Levenson – The High Performing Boardroom Coach©