Greens Piece Contestable collegiality

John M Green argues that boardroom collegiality isn’t the prize some treasure.Contestable collegiality

A maxim many Australian board chairmen ascribe to is: “A good board doesn’t vote. It strives for consensus.” This approach is not merely bluster, but so prevalent in practice that some governance gurus praise Australian corporate boards for their collegiality, placing us above US and UK boards on this. Yet, good collegiality can easily turn bad. So enjoy the kudos from the governance experts, but unless your boards practise what I call “contestable collegiality”, don’t get smug about it.

Directors are correct in seeing boardroom collegiality as a useful and thankfully a civilised tool for better decision-making. The problem arises when we mistake collegiality as a goal in itself.

What makes groups tick has been the subject of many studies. A board is, of course, a group and the learnings from group theory can apply to them just as much as other groups.

If you want to get the most out of your own boards, you might agree with James Surowiecki in his book The Wisdom of Crowds that “under the right circumstances, groups are remarkably intelligent, and are often smarter than the smartest people in them”. If so, perhaps you should ask yourself: What are those right circumstances?

Here is a simple thought experiment involving two consensus outcomes. Which will more likely generate the better corporate outcome: the decision all of you have teased out and argued through, or the one everyone has quickly jumped onto by sensing the meeting’s mood, even when some of you have unspoken reservations?

After discussing this issue with other directors and observing boards over many years, I suggest that if the boardroom pressure on a director is to conform, to put harmony and “team” above all else — perhaps via a well-meaning chairman — a board is less likely to elicit the optimum input from each director’s individual skill and experience, and more likely to make sub-optimal decisions.

When collegiality breeds groupthink, why bother having a board at all? In decades past, we used to decry organisational “yes men”, but today we face the risk that collegiality can institutionalise that role under a currently acceptable mask.

William H. Whyte, author of the 1956 classic The Organization Man, coined the term “groupthink” in his 1952 Fortune magazine article, noting how the pursuit of group cohesion can stifle independent thinking. In a 1972 book, Victims of Groupthink, Irving Janis described it as “when the members’ strivings for unanimity override their motivation to realistically appraise alternative courses of action”.

When most of us think of dysfunctional boards, we usually visualise boards in disarray; boards where factionalism, conflict or mutual disrespect poison the air. Many of us still shudder vicariously when we recall infamous examples of riven and leaky boards.

Some of us have reacted to these ugly public instances by placing harmony on a pedestal, or more commonly by seeking to avoid disharmony through valuing team spirit above most all else. Many of us are on a board for our independence, yet groupthink can easily stifle that, becoming as dysfunctional and value-destructive as the dissension it strives to avoid. The key difference is that the problems a hasty consensus suppresses can often take longer to surface.

Some board chairmen tell me they never call a consensus if they feel unspoken reservations are hanging in the room. These are mostly directors speaking from the pain of their personal experience, such as this: “The chairman at the time, the CEO, the other directors… they were all so certain. I didn’t want to rock the boat, so I just went along and kept my concerns to myself. What a mistake.”

Like beauty, collegiality is in the eye of the beholder. Especially if it is a domineering chairman’s or CEO’s eye that everyone else is eye-to-eye with. Or is that aye-to-aye?

If directors worry that their colleagues will think less of them by expressing a contrary view, they are probably insecure about being a boardroom equal. How collegiate is that board in truth?

The default position in boards with contestable collegiality is that a fellow director’s questions or comments spout from genuine concern and should not be lightly dismissed. These are boards whose directors are secure in testing the meeting’s mood, knowing this will not be viewed as tiresome or even worse, divisive.

On important, potentially controversial topics, debate can’t always be entirely harmonious, but it can remain respectful. A boardroom enjoys contestable collegiality when even spirited debate raises neither tempers nor eyebrows.

How do your boards stack up?

John M Green is a company director and writer, and was formerly an investment banker and a lawyer. He was recently appointed a member of the Australian Takeovers Panel