Overcoming Challenges in the Boardroom

By Tracy Houston and Cindy Knutson | July 08, 2008
Many ethanol projects, companies, service providers and other stakeholders along the supply chain are driven by individuals and small groups. A board of directors commonly oversees operations. With today's market environment, boards must remain proactive and committed to the industry.

The role of the board includes oversight, direction, implication, anticipation, synthesis of information, probing and robust conversation, just to name a few. The end result from the actions of this collective body is to ensure successful growth, viability and the legacy of the organization.

When a chairperson walks into the boardroom and takes her or his seat at the head of the board table, the unique role of a leader among equals begins. First-rate chairmen/leaders stimulate an energy and atmosphere that invites the directors to step up and participate in robust discussions. With that come many challenges.

The first challenge of the chairman/leader is to stir a readiness for participation from all directors and trigger internal reminders of their role and responsibilities to the board and organization. The way in which the chairperson creates the climate of the boardroom can shape the effectiveness of the meeting. We have seen chairmen do this well and seen that effect mirrored in the high quality of the discussions, decisions and questions asked during the meeting. We have also seen a chairperson do this poorly and it too receives the same poor reflection to the detriment of not only the quality of the meeting output, but the un-energized effect that it can have on the organization. The chairperson sets the tone for the "tone at the top"—a phrase coined by the Institute of Internal Auditors.

Being chairman of the board of a growing and successful organization is more demanding today than it was 10 or 15 years ago. Today's boards have more diversity of people, viewpoints and experiences. Organizations today are challenged with more variables, market and economic conditions that can change overnight, compressing reaction time for both board and management. Most experts predict that the competitive environment will get even tougher in the future. Competing and succeeding in this environment requires a board chairperson to accelerate his or her ability to grasp complex issues quickly and completely and requires him or her to obtain information from different sources to stay informed from different viewpoints. Many boards are working in environments that include comprehensive environmental issues, audit and regulatory concerns, increased homeland security issues, higher CEO turnover and multiple perspectives that range from local to global.

Balancing Priorities, Relationships
Another chairman challenge is the judicious balance between full board discussion and committee work. Committees are charged with the "leg work" of the board, but the chairman needs to check-in with the committee chair to make certain that full board issues are brought back to the board. A role of the board chairperson is to help the board overcome reluctance to create committees and to define key issues or topics that need a committee. For example, a board may find itself needing to establish a committee to review the recommendations of management on new technology issues or purchases. The full board can be a committee. However, this practice can bog down the board, take valuable time and often does not dig into the issues as thoroughly as a small committee can. It is vital to a board's effectiveness to ensure that board members not relinquish their education on compensation, audit, nominating committee and finance because "it is the committee's responsibility." The full board can struggle with discussion and recommendations brought to them from the committee if this knowledge and education is ignored. The board chair can be instrumental in ensuring that this does not occur.

A third challenge facing any leader and the boardroom is not an exception. It is the relationships and interactions that occur in the boardroom between board members. While relationships can be like weather, if it is persistent it engulfs us, and we get used to them in such a way that we don't see how it is not impacting our behavior in ways that impede or slow down effectiveness. The longer a board has worked together, the more of a board culture, atmosphere and generally accepted ways of operating is created. This can give the illusion that everything is business as usual when in fact the boardroom is a constantly changing interplay of viewpoints, personalities, organizational issues, marketplace changes, economic impacts and experience, among others. Each board meeting brings its own dynamics that the board chair needs to recognize, adapt to and adjust facilitation techniques to ensure an effective meeting. The more a board chair is aware of his or her own personal leadership style and can adjust his or her response, the more opportunity exists for successfully channeling the meeting dynamics.

Establishing protocols for resolving conflict is important for the board and the chair to implement when difficult situations arise. It is important for board chairs to frame difficult issues and topics in a way that will allow other interpersonally talented board members to step in and diffuse emotionally charged comments or lead the discussion toward a neutral ground for a more objective view. Conflict can create opportunity for candid, open discussion that elevates a board to a higher level of dialogue. Astute board chairs can use the energy of these situations to broaden views, expose new ideas or identify new concerns that need to be addressed before proceeding with a decision or a vote.

Switching Roles, Board Additions
A fourth challenge happens when a chairman must move in and out of the role of being a chairman and into the role of director. Moving between the two roles must be carefully chosen and executed. It is not often that a chairman can remove the leadership hat and ask the board's permission to speak as a director without undue influence to the situation.

At times this happens without intentional thought. A chairperson must be constantly aware of his or her role and influential position during vigorous discussion. The chair should encourage constructive contention while also participating in the debate.

If you are a board chairperson you realize that any upstanding board will include evaluating the chairperson in its board evaluation or peer evaluation process. To reduce the anxiety that this can bring the board should consider the following guidelines:

• Select a designated time and place to meet

• Create the questions together to ensure consistency and agreement

• Make time for dialogue and discussion with the chairperson to ensure full understanding and input.

A final challenge is welcoming new members to the board. This can be one of the most enjoyable aspects of a chairperson's role while being one of the most important duties. We have been in boardrooms where the chairperson did not introduce new and old members to each other and help them know something about each other. At their best, the chairperson should be active with the board to identify orientation programs internal and external to the organization that can help accelerate a new board member's knowledge and contribution. The chairperson can identify existing board members with different skills, experience and knowledge that can act as mentors for the new board member. The chairperson as leader can ensure a smooth introduction and acceptance of the new board member and shape positive dynamics and board chemistry to continue even with a new personality coming into the boardroom.

Tracy E. Houston is a senior consultant in governance with Summit Point Consulting.
Reach her at tracy.houston@summitpointconsulting.com or (303) 721-3219. Cindy Knutson is the vice president of organizational effectiveness for Summit Point Consulting. Reach her at cindy.knutson@summitpointconsulting.com or (303) 721-3277.