Board dynamics: a guide to evaluating effectiveness

As business confidence grows and organisations develop their post lockdown roadmaps, new group dynamics at the top are emerging. Karen Brice reflects on the shifts that are happening at board and management levels, and why dynamic evaluations can make a real difference.

Dynamic boards: what does effectiveness look like?

Current circumstances have compelled many boards to question what the definition of effectiveness is. They, like their businesses, have adapted to new ways of working in the past year. The growing sense of optimism means attention is now extending beyond achieving a stable business operating model and looking towards the opportunities coming in the next 18-36 months.

So, what have boards learned from this new business mindset? The key learning has to be that they don't necessarily need a boardroom, but they are also thinking again about other areas of performance as well.

In this incredible past year, boards have witnessed:

• new dimensions of democratic leadership
• business agility, pace and innovation
• flatter, more inclusive business culture
• adaptable organisational governance that delivers greater accountability.

Now, they really know just how fast organisational change can happen. They have experienced management teams stretched to the limit yet demonstrating great leadership and radical change. So, the question is how can boards not only keep up but stay ahead of the game?

Boardrooms are being challenged to become open, more progressive places by moving away from the old norm of ‘command and control.’ This approach may still be alive and kicking in the traditionally closed boards, but there is really nothing to fear in two-way access, given the right frameworks.

No one is suggesting compromising the board’s work or questioning members’ roles, rather the call is for a democratised, collaborative way of working, where the board’s purpose is a shared one – understood and committed to by all those present.

Boards need to move away from the old stereotypes of suspicion, internal competition and defensiveness if they are to be mentors in this new world, but it's important to remember that effectiveness often corresponds with four different phases of development: forming; storming; norming, and performing developed by Bruce Tuckman in 1965.

Forming, storming, norming and (high) performing

Phase 1: Forming

Transactional board or management team

• There is a lack of trust and collective commitment; the board feels safest working at a surface level
• Lack of engagement means things get left unsaid, perpetuating risk and lost opportunities
• Hierarchy matters, grandstanding is tolerated and ‘them and us’ exists

Phase 2: Storming

Trust-based board or management team

• Moving beyond matter-of-fact discussions, emerging trust builds insight and value
• NEDs encouraged to approach scrutiny with an open mind, executives to be more open
• Challenge isn’t seen as personal; it’s about getting to the heart of the matter

Phase 3: Norming

Relationship-centric board or management team

• Pace quickens as greater transparency ensures wider discussions that improve the quality of decision-making
• Executives want to get the most from NEDs; NEDs want to provide strategic value
• ‘We’ ceases to be NEDs or executives, now it’s ‘we, the board/management team’

Phase 4: High-performing

Synergistic board or management team

• Ownership of the purpose is shared between board and management with dialogue focused across all four points of the compass - purpose, strategy, culture and results
• Tone from the top aspires to attract and retain key stakeholder groups
• 'Growth' is an achievable ambition; the board champions ESG, diversity and inclusion, succession and wider corporate responsibilities with management - the framework influences the future

Boards and management teams operating at the highest level didn't get there by chance; they made the decision to work together and grow as a team.

So, what should top team evaluations be looking at? To start with, three different levels need three different sets of skills.

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Measuring success: board evaluations

Unfortunately, ensuring board effectiveness is usually not as simple as knowing what you want it to look like. To know how much more effective your board could be, you need to evaluate it with a fresh perspective.

While regulation and corporate governance tie many boards to a cycle of three-year external reviews, looking wider provides an opportunity to explore how far evaluation has come and how this progress can benefit the board.

Acknowledging this opens up new opportunities around how to monitor a growing sense of top team maturity in agile and cost-effective ways. It doesn’t always need to be a full-on board review – they can be expensive and add little value. Instead, dynamic internal evaluation can be very helpful.

To achieve useful self-evaluations it's vital that the top three levels in your organisation have the tools to measure growth and success: as well as governance and leadership, you also need data analytics.

Both boards and management teams should expect to have at their disposal the flexibility to choose what is right for them, rather than be forced into a pre-organised review process.

Fortunately, organisations can now take advantage of breakthroughs in data analytics that provide greater choice and value.

Board evaluation software: using digital tools

As the importance of board evaluation grows, so does the range of survey evaluation software available: from short pulse-style surveys on meeting effectiveness through to a modular approach that best suit budgets and needs. As boards become more dynamic, this is definitely the way forward.

The type of board evaluation software that is right for you depends on what you are looking for; whatever you want your board to look like, there's a digital tool to evaluate it.

Our own Governance Institute recently teamed up with BoardClic, a leading digital board evaluation platform, to develop our own digital tools to evaluate board, CEO and management team effectiveness. We also have a meeting evaluation pulse survey that is helpful for chairs in times of change or tension.

Tailored annual reviews

Our main digital evaluation tool taps into a bank of benchmarking data and our unique database of governance best practice research, to provide real-time feedback alongside industry benchmarks. This survey can be tailored to an organisation's individual requirements and is compliant with the latest UK corporate governance guidance.

So, if you only want an annual review that feeds into the top team performance cycle, or would value a light review that targets governance, skills or the behavioural dynamics, download a sample BoardClic digital board evaluation report.

Immediate results

For more immediate results, Meeting Express is a short, free, two-minute survey tool that provides chairs with instant feedback on what worked well along with identifying any improvable aspects of the meeting and/or leadership styles.

To discuss how to get more from your board and management evaluations with flexibility at the heart, please contact Karen Brice.