Boardroom Basics from Enlight Research – Follow the Leader
Firestorm is pleased to share the first part of a multi-part series on Boardroom Basics for Board Leadership from Enlight Research. Enlight Research is the trusted source for independent financial and corporate governance information.
Leadership matters, especially in the boardroom. In their book, The Director’s Manual, Peter Browning and William Sparks suggest that leadership style is the most important factor in determining a board’s success. They contend that companies with leaders who value and foster the council provided by their board members consistently outperform their peers, while companies with leaders who domineer and dismiss the advice of their boards tend to underperform in the market.
Browning and Sparks suggest that leadership in any of the four key board positions—chair, non-executive chair, lead director, and presiding director—can impact board performance and culture. They identify the leadership style of a CEO as the single largest barometer of board dynamics, but also insist that non-executive directors can exert significant influence, as well. Accordingly, they have identified four unique leadership styles and their effect on board dynamics, which are described below.
Affirmers are individuals who are primarily motivated by a need for affiliation, approval, and acceptance. They put harmony, continuity, and political correctness above all else, and will go out of their way to avoid conflict. This results in what the authors call a dramatic board culture, where the need for constant agreement results in tabling critical decisions for later discussion—which often never occurs. A dramatic board culture ultimately results in very little tangible progress, leaving board members feeling exasperated with the lack of action around key issues.
Asserters are leaders who have a high desire for power and a low tolerance for dissension. They are often seen as bullies, and actively suppress any viewpoints that differ from their own. This results in a “follow the leader” attitude from board members that can easily descend into groupthink. Browning and Sparks suggest that this results in a dependent and submissive board culture, which often stifles open communication when it is needed most. This is especially dangerous in times of stress and increased scrutiny (such as pending litigation or an activist pursuit).
Achievers are those who have a high need for accomplishment, and who strive for absolute perfection, often resulting in the micromanagement of fellow directors. Browning and Sparks suggest that achievers are often bogged down in detail, and so consumed with executing low-level tasks they often neglect their strategic level responsibilities. This results in a detached board culture, which manifests itself in both physical and psychological disengagement. The authors view a detached board as the most destructive culture a board can possess.
Self-Actualized leaders combine often contradictory traits, but package them in a way that empowers and supports others. Self-actualized leaders default to candor, enjoy spontaneity and novelty, and value and trust the opinions of others. They humbly exercise their influence, and often seek to share power with their peers. The authors indicate that self-actualized leaders are strategic and conceptual; they accept uncertainty and ambiguity as a fact of life. Boards who are led by a self-actualized leader have a dynamic culture—the most effective culture for boards to possess.
Clearly, leadership has a profound impact on board culture, but there are many other factors that contribute to their overall effectiveness. In the next post in this series, we’ll explore the complexities around communication in the boardroom, and the need for clear, concise dialogue between directors and management.