02 October 2017 by Henry Ker
Governance professionals must do more to bring those outside the boardroom into the conversation, says Henry Ker.
‘If everybody is thinking and behaving in exactly the same way, it’s utterly pointless.’
This is the view of one of the board members interviewed by Andrew Kakabadse for ICSA’s research on conflict and tension in the boardroom. It is also one echoed by Pavita Cooper of the CMI in our lead interview this month, as she discusses the problems facing organisations with a lack of diversity.
‘Those cultures have become cults,’ she says. ‘Everyone thinks the same, acts the same, they do not welcome any difference from the outside, and those businesses are often at risk.’
If everyone is drinking the Kool-Aid, no-one is offering constructive challenge. Instead, organisations should be looking for, as Cooper says, ‘multiple approaches, ways of thinking, and perspectives ... to get better balance. You get better outcomes around governance, risk and running the business.’
Complementing this debate is the new guidance by ICSA and the Investment Association, ‘The Stakeholder Voice in Board Decision Making’. The research was completed at the behest of the government and it looks at ways in which companies can effectively get the views of their stakeholders into the boardroom.
Chris Cummings, CEO of the Investment Association, says of the guidance: ‘Investors want companies to take decisions which will generate the best long-term value to their shareholders. To make such decisions, boards need to hear and take account of the views of the shareholders.’
While shareholders have traditional avenues of communication, groups such as workers have often been shut out. There has now been a shift in attitude. As the guidance says, ‘stakeholder engagement will strengthen the business and promote its long-term success to the benefit of stakeholders and shareholders alike’.
Boards must actively search for that valuable variety of viewpoints that can create healthy tension and improve decision making. Improving the diversity of the board and senior management, and welcoming in the views of stakeholders are both essential to this – and to ensuring success for the organisation.
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