How to strengthen boardroom culture

How to strengthen boardroom culture: a corporate governance training guide on ensuring things work well around the boardroom table.

Your board culture is an essential component in driving effective corporate governance. Keeping board directors and committee members satisfied in their roles creates a positive environment that normalises and encourages contributions from diverse perspectives, accelerating the organisation toward success. 

A healthy board culture should allow open communication with trust, accountability, and inclusion. Traditionally, boards have depended on senior management to drive organisational culture, but it’s become increasingly important for directors and members to be more proactive.

A strong board culture provides a bulwark against various corporate governance challenges. These may include harsh organisational scrutiny from stakeholder activism and the rapidly changing compliance demands across industries. We offer a guided approach to help you create a healthy board culture that stays resilient against the most uncertain circumstances.

Your board should set measurable targets for gauging board culture health. For example, consider conducting a poll or survey regarding directors’ thoughts on the current and desired state. 

A strong culture should feature on your board’s agenda, guiding measurable steps toward the ideal environment. Doing so helps you identify the pain points individual directors and members experience and how you can improve collaborations and conversations. Consider the following points to shape this foundation:

• Review the number of members on your board. Many corporate boards have nine members or another odd number to avoid voting ties in decision-making.
• Ensure every board member serves on a committee. Committees should delegate a person to take notes and record meeting details for greater accountability across the board. 
• Monitor interpersonal dynamics between board members, the CEO, and senior management. The success of these relationships determines a healthy balance of organisational influence and power in meeting stakeholder interests and advancing company goals. 
• Check for carefully outlined policies that include ethics and proactive measures against conflicts of interest. 

If necessary, decide on a board model as a reliable framework to optimise your culture. Experts have identified four main board models depending on the interactions, business strategy, industry, and dynamics between members. Your board’s culture model could also transition in response to company priorities. For instance, a board might opt for a more decisive model for outcome-oriented discussions and practices during operational crises and mitigations.

Although board culture creation is a combined effort, you want to set a general direction. Assigning specific culture-related roles and responsibilities to board members creates a sense of accountability and simplifies goal/progression tracking. 

You should routinely evaluate boardroom compositions to maintain diverse and inclusive membership. Also, note the difference between diverse and inclusive boards. Diverse boards feature members from various backgrounds, but inclusive practices ensure that each member and director can represent their respective communities. 

A healthy board culture should apply a clear direction and sharp focus. Your board should designate time-keepers and secretaries to ensure that board meetings stay within schedule and are relevant. Board chairs are critical in maintaining the conversation flow and guiding discussions through finances, compliance, and other critical areas of corporate governance.

As soon as possible, implement a reliable and measurable approach to assessing director and committee member performance. Boards should maintain ethical and fair evaluation practices to drive decisions through mutual understanding. 

An effective board culture routinely assesses board composition to ensure that members and directors possess a strategic combination of experience, stellar conduct, and skills that add value to the organisation. Transparent discussions give every contributor a say when deciding on new board members and member rotations. 

Board members and directors should also address appropriate behaviours and systematic role structures. On a broader level, check for healthy group dynamics where each individual can contribute to the corporate governance process. 

Your organisation might consider appointing an external evaluation lead to maintain an impartial performance review. Neutral third-party professionals hired from consulting firms can offer detailed feedback on board health and independent member/director appraisals. This feedback provides relevant follow-up strategies that drive board performance.

Major organisational events like mergers and acquisitions can rattle the foundations of your board culture and corporate governance procedures. Because of that, you want to assess board dynamics once your organisation has run through the pivotal moments. 

Review the sentiments of board directors and members to identify and address interpersonal shifts that could influence future decisions and policies. CEO succession is an important event that requires careful planning and warrants a board culture review. Members and directors should consider the incoming CEO’s input on corporate values and culture. Doing so gives your board a clearer idea of the strategies to apply in line with the CEO’s risk tolerance and perspective while managing stakeholder demands.

A thriving board culture allows every member and director to contribute uniquely, furthering organisational excellence. These positive board settings embrace the diversity of skills and thought. With a strong board culture, you generate effective corporate governance policies through a dynamic understanding of industry trends, demands, and risks. 

Healthy board culture should also spread beyond, influencing every employee, partner, supplier, and investor. These dynamics promote trust and consistency, propelling the organisation as a leading name in its sector.

How to strengthen boardroom culture