Boardroom Culture versus Best Practice
It’s nearing the end of the year and many executives and board members are considering their achievements and insights for the year. I want to share with you one insight I have learned this year on boardroom culture versus best practice.
I am often asked; what are governance and strategy best practices and should we implement them?
It is straightforward for me to lecture boardrooms on best practice. What is hard is coming into your board and seeing what is ‘normal’ for your board, yet is not best practice, and identifying whether it is a cultural trait that enhances the board’s ability to make good decisions, or restricts it.
When we think of best practice, we think of academically researched, industry benchmarked, and high profile case studies that promise success. It assumes that there is one ultimate practice better than the rest.
Best practice presents a conundrum, however.
On one hand, best practice promises a tried and tested recipe for business success. Comparing ourselves to metrics and others in our industry can result in increased growth.
On the other hand, and quite the opposite to best practice, achieving success through competitive advantage requires businesses to implement activities which are rare, and difficult to imitate.
Boardroom culture is one of those aspects that could be a competitive advantage.
Organisations and clubs that have made better decisions than others, taken advantage of opportunities quicker, or have a better workplace culture may not exhibit best practice across the spectrum of governance.
Leaders are unwilling to risk shifting a successful cultural formula, so the tendency is to select like for like leaders, especially in the boardroom.
The push in board succession planning is to increase diversity. Increasing diversity may challenge your boardroom culture.
Agreed; some boards need to embrace change because they aren’t making good decisions.
Other boards who have a long successful partnership could unpack their success factors and identify where their competitive advantage lay before embarking on a diversity program. Part of the program could be recognising where a new perspective would add extra competitive power to collective decision making, so succession planning becomes less about age, sex and skin colour, and more about skills, experience and knowledge.
The most effective board succession programs are those that are tailored to the organisation and fit the culture, practices, and overall strategic vision.
Part of studying that fit, though, is measuring your culture with best practice, which is not an easy thing to do. We’re looking at ‘The way things we do things around here’, and ‘This is the way we’ve always done it’, and comparing it to best practice so we can decide on whether it’s a keeper, or something that may require transformation.