How to reach consensus in the boardroom

Monday, 18 April 2016


    Behind closed doors the chair is required to convene and lead all board meetings and achieve consensus among directors. Three leading directors provide their advice and tactics for decision-making around the board table.

    In the boardroom the chair is primus inter pares. Legally, he or she holds no more power as a chair than any other director at the board table.

    Behind closed doors the chair is required to convene and lead all board meetings and more to the point, achieve consensus among the board’s directors. Their differing views, while of great benefit to the quality of discussions had around the board table, can sometimes cause an impasse to decision-making.

    In addition to this, chairs have an extensive list of responsibilities. They are expected to “lead from the top” and to maintain the ethics and standards of the boardroom and the organisation as a whole. They are also tasked with leading the board and the organisation through difficult, unpredictable moments and crises, taking charge of the corporate agenda, maintaining a good relationship with the CEO and acting as the face of the organisation.

    Recently, the AICD asked three of Australia’s leading directors about the challenges facing today’s boardrooms, and to share their advice and tactics on achieving consensus.

    Graham Bradley AM FAICD

    Non-executive chair, Stockland Corporation, EnergyAustralia Holdings and HSBC Bank Australia

    “In 20 years as a director on a public company board, I only remember once where a vote was taken to reach a decision,” begins Bradley, a professional company director and fellow of the Australian Institute of Company Directors. “In other words, an agreement has always been met by the directors of the company in an organic way.”

    Bradley cites boardroom collegiality, mutual respect, good communication and treating each director’s opinion as valid, as critical drivers of consensus when trying to reach a decision.

    Bradley is a fervent believer in the chair’s primary role as listener. “If the chairman imposes his or her view to a specific question or the general direction of the organisation first up, it tends to shut the conversation down pretty quickly,” says Bradley.

    “Open up the space, insist or create an opportunity for each and every single director to contribute their opinions and views and ensure they are respected before trying to summarise and bring all the arguments together. In that process you get much better decisions made.”

    The chair should always speak last.

    Christine Hawkins FAICD

    Managing Director, Cinnabar International Former Chair of Wheat Quality Australia

    “In my experience, sometimes reaching consensus around the board table has proved near impossible,” Hawkins says. “People don’t really appreciate that it can take a long time – sometimes years.”

    Hawkins, who was a featured panellist at the 2016 Australian Governance Summit, spoke at length about the government’s difficulty in achieving consensus and establishing long-term forward-looking strategy for the nation.

    When asked to share her thoughts about achieving consensus around the board table, Hawkins drew parallels between company boards and the government.

    According to Hawkins, challenges arise for boards when there is a lack of understanding of the common strategic purpose of the board or company.

    “To achieve consensus amongst directors,” she says, “complex issues need to be explained and correct and timely information needs to be readily available to inform decision-making. The board’s agenda ultimately is the ‘value to the shareholder’. That’s the bottom line and all decisions made should be to serve that purpose.”

    If you think a board of eight to 10 people can take two years to make a decision, how much hope does the government have?

    The Hon John Brumby

    Chair, Fred Hollows Foundation and Motor Trades Association of Australia Superannuation Fund

    As the former Premier of Victoria (2007 – 2010), the Hon John Brumby convened and chaired meetings of the Cabinet. Now, in his work as a non-executive director and chair of various organisations, Brumby uses these skills to facilitate discussions and reach a consensus in the boardroom.

    He explains that a thoughtfully formed board that runs like a well-oiled machine is critical to agreeing on important decisions and challenging issues.

    “Overwhelmingly, for the boards that I sit on and that I chair, we have introduced more women in recent years. Diversity will give you differing perspectives, new ideas and generally better outcomes.

    “Generally, having quality people with a good, varied skill-set whose individual and collective performance is independently reviewed will result in positive outcomes, mutual respect and a consensus being reached,” he adds.

    We all know that boards and the work that they do is important. What is also very important is diversity around the board table.

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