This story is based on Nichelle-Maynard-Elliott’s appearance on the Executive Session podcast.
Every board has a culture, but what defines that culture? Is it the way they conduct board meetings? Is it the way the directors talk to each other? Is it how they react when matters within their company get rough? Perhaps it is a combination of those things and more.
A healthy boardroom culture is critical to the ultimate success of a group of directors. Success in this context is not defined by simply generating shareholder return, but about setting the tone for how decisions are made, how conflicts are resolved, how diverse opinions are handled and how effectively the board can govern the organization. A strong, healthy culture fosters trust, transparency, mutual respect and open communication, all of which are essential for sound decision-making and strategic oversight.
According to Nichelle Maynard-Elliott, director and compensation committee chair of Xerox and director of Lucid Motors, “While shorter-term or transactional success is possible and achievable despite a poor boardroom culture, this kind of success is typically fragile and unsustainable. There have been plenty of examples that show, over time, a toxic or dysfunctional culture often leads to poor decisions, groupthink, the silencing of voices with important perspectives or even ethical lapses.”
Identifying a boardroom culture in need of improvement is the first step. Implementing necessary improvements to that culture is next, and it’s easier said than done. “Change starts with awareness,” says Maynard-Elliott. “The board must be willing to openly acknowledge dysfunction, whether it’s conformism, poor communication or toxic behavior, and then commit to change. Then, it’s important to set clear cultural values and behavioral expectations. The board should define what a healthy culture looks like for them, including values such as integrity, openness, respect and accountability. These can be codified in a board charter or a code of conduct. Then, if things are really problematic, it might be important to introduce external consultants or consider refreshing board composition.”
Maynard-Elliott says sometimes the cultural problems in a boardroom sprout from entrenched dynamics or dominant personalities. Introducing new members with fresh perspectives, emotional intelligence and collaborative mindsets can shift the tone and balance without drawing a line in the sand. Just as important as keeping perspectives fresh is keeping the process regularly reviewed. Maintenance is equally important as improvement when it comes to boardroom culture, as it must be nurtured until it thrives. “What’s critical here is cultivating those interpersonal relationships with group activities outside of the boardroom. Directors need to understand that the ‘dinner before’ or the ‘breakfast before’ or the ‘lunch during’ are just as important as the actual meeting times where management is presenting. Those relationships help to foster the trust, atmosphere and culture that you need to function well,” says Maynard-Elliott. “It’s also good to provide ongoing training and development. Board members should receive training, not just on governance and finance, but also on interpersonal dynamics, unconscious bias and effective decision-making. Real cultural change often requires skill building.”
Maynard-Elliott says overcoming poor chair leadership is a critical component of cultivating and maintaining a good boardroom culture. “I work with great board chairs who value high performance board culture. If your chair is managing the dynamics in the boardroom and gives everyone an opportunity to speak and exchange ideas, that’s a good thing. If the chair is not paying attention to those things, that’s typically a sign that there will be challenges or director disinterest in investing time and effort to build the board culture.”
Sometimes, people are too busy in their day-to-day work to invest time into developing interpersonal relationships and that presents a challenge. Other times, there can be dominant personalities, power imbalance, ineffective communication, lack of diversity of thought experience or just general situations where the directors are not interacting well together. “Having a strong board chair can alleviate some of those challenges,” says Maynard-Elliott. “If you’re a board member who’s not the chair and you sense that there are issues with the culture, speak to your chair, because maybe there’s an oversight, and with some guidance they might be able to navigate the changes in the board and relationships among the people.” “When the chair checks in with board members beyond just the annual evaluations, it signifies a strong boardroom culture. I’ve seen CEOs step up in this regard as well. Between meetings, they check in with their board members so they have a sense of what the dynamic is and what the culture is among the folks that are trying to work together. Then set expectations upfront. Let people know that this is an environment where different voices and dissenting opinions are going to be respected and observed, and a culture of trust and honesty is going to be created.”
