The Importance of Boardroom Dynamics

As the name implies, boardroom dynamics is a complex web that encompasses a range of interactions and behaviors. They are, increasingly recognized as an essential component of successful governance. Regulators, behavioural researchers, governance specialists and boards themselves are all increasingly accepting that the subtle aspects of the boardroom’s behaviour in contrast to the structure and boxes to be ticked, make an important difference to the effectiveness of a board.

The process of making decisions by the board can be weakened if board members are urged to favor their personal interests over the wider company and its stakeholders. Spring loading is a challenge that must be addressed by encouraging transparency, accountability and a culture of open communication. Communication channels that are open, robust governance structures, diversity as well as ongoing education and training of board members are proven methods to limit spring loading.

Boards should also engage in robust discussions, and encourage constructive disagreement when making decisions or dealing with controversial topics. This will help prevent groupthink where the board fails not to consider all options and comes to a suboptimal decision for the business. Boards should also use their third-party advisers who are independent and the corporate secretary to enforce structure on discussions, challenge assumptions and play devil’s advocate.