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In a New Era for Boards, Culture Is Key

(SpencerStuart, 2018)  A healthy board culture is increasingly recognized as an important element of board performance. But unlike other areas of board governance — composition, risk, succession and strategic planning or financial reporting, for example — board culture is less clearly defined and understood.

Two related forces have made the topic of board culture more urgent for many boards: growing stakeholder scrutiny on board performance and increasing board diversity.

With less implicit understanding among directors about how the board should behave, it’s more important than ever to define and manage a board culture.

In practice, we observe a wide range of working styles and dynamics in the boardroom, yet in our experience, board cultures tend to be more heavily weighted in one of four main culture styles:

  • Inquisitive: These boards value the exchange of ideas and the exploration of alternatives.
  • Decisive: These boards are focused on measurable results, driving a focused agenda and outcome-oriented decisions.
  • Collaborative: These boards value consensus and having a greater purpose.
  • Disciplined: These boards emphasize consistency and managing risks and prioritize planning and adherence to protocols.

None of these styles is objectively better or worse than any other. The culture of a board should align with the business strategy and broader business environment and the requirements for working effectively with management. For example, companies in very dynamic industries, when strategy must be reviewed and reinvented frequently, may benefit from a board culture that is more inquisitive and flexible, where directors question assumptions and value the exchange of ideas. When managing risk is a top priority, boards may need to be more disciplined about monitoring results and performance, and following established protocols to ensure the accuracy of disclosures.

Once the board has identified a target culture, directors can ask the following questions to help shift the board culture.

  • Do we have the right people in the boardroom?
  • Are we structuring our discussions and assignments to focus on the right issues and activities?
  • Do board and committee leaders model the desired board culture?
  • Do we as individual directors consider how we are contributing to the culture?

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