Create a Culture of Candor and Inclusivity

Boards must commit to fostering a culture where all communication is clear and candid, yet respectful. In addition, all voices must be heard – not just the loudest in the group. Practice constructive listening to achieve balance.

Formalizing Board Norms is a Necessary Step

Ensure all board members know what is expected of themselves and other board members, what the board expects of management, and vice versa. These norms should be put in writing and should emphasize preparation and communication.

Address Bad Board Behavior and Trends

… and do it in real time. Don’t wait for an annual board assessment to weed out problematic board issues or members. Consider anonymous surveys to foster honesty, and don’t hesitate to address problems as soon as a meeting is over.

Atlas Webinar Series: Build a Board Culture That Thrives

Webinar Recap: Brenda Lauderback, board chair of Denny’s Corp.; D’Anne Hurd, independent director and senior NACD faculty member; and Stuart R. Levine, independent director and CEO of Stuart Levine & Associates, discuss the importance of cultivating a strong boardroom culture.

A great board is one that accomplishes a lot for the organization it serves. But it doesn’t happen by chance.

Building and cultivating a strong board culture is foundational to success. In fact, doing so can be the difference between a board achieving its mission or falling flat.

But cultivating a great board culture isn’t easy. As boards embrace greater diversity in lived experiences, professional expertise, and background, creating a collaborative boardroom culture that thrives becomes even more challenging.

Boards must overcome these challenges to create an inclusive, collaborative environment. But how?

At our most recent Atlas Leadership Webinar, Brenda Lauderback, board chair of Denny’s Corporation, D’Anne Hurd, an independent director and senior NACD faculty member, and Stuart R. Levine, an independent director and CEO of Stuart Levine & Associates, led an engaging conversation on the top of board culture. The discussion spanned topics including:

Why candor and inclusive culture dynamics improve board effectiveness
The rules and actions necessary to foster positive board culture
How to address dysfunction in the boardroom

This blog will share some of the key takeaways from the webinar.

Candor and Inclusive Culture Dynamics are Key to Board Effectiveness

All too often, dysfunction exists in the boardroom. Perhaps the dynamics in the boardroom don’t allow for all voices to be heard. Or, perhaps there’s an ineffective director or two.

It’s more common than we’d like to think. Stuart shared the following data points from PwC’s 2022 Annual Corporate Directors Survey which prove the prevalence:

Nearly half of directors (48%) think one or more of their fellow directors should be replaced.
About one in five (19%) directors believe two or more of their fellow directors should be replaced.

Boards have a serious obligation to all stakeholders. As such, they must focus on creating a culture of candor and inclusivity. Such a culture drives performance.

“The performance that goes on around the [board] table is critical to the culture,” said Stuart.

Boards must commit to fostering a culture where all communication is clear and candid, yet respectful. In addition, all voices must be heard – not just the loudest in the group. “We need to listen to each other constructively and we engage in the right conversations,” said Stuart.

It’s not easy. According to D’Anne, “Candid and inclusive culture can sometimes be at odds.” Striking the right balance requires strong listening skills.

D’Anne recounted an experience she had witnessing a high-performing board have a significant disagreement. The group practiced reflective listening, where someone started their opinion and others offered the opinion back to the speaker to confirm understanding. Though it made the board meeting longer than usual, it “forced communication and forced respect, which I think is critically important.”

But, as Brenda reminded us, candid, inclusive culture doesn’t start in the boardroom. Rather, how a company and organization works sets the tone.

“If the culture of a company tends to be candid and inclusive, I believe that’ll spill over into the boardroom,” said Brenda.

Formalizing Board Norms is Imperative

It’s one thing for a board to say it’s committed to fostering a positive culture. It’s best practice to formalize it.

But how? Brenda believes “Each company should start with board norms.”

Essentially, board norms are a documented set of expectations and “rules of the road.” According to Brenda, these expectations include:

What each director expects of other directors
What the board expects of management
What management expects of the board

“When you have clarity on those, you function better in the boardroom,” said Brenda.

Board norms should be put in writing and may include expectations for board members including:

Every director is expected to be prepared, having read all materials in advance.
Everyone will show respect in communication.
All voices should be heard

Board norms should be agreed upon by all board members and management. In addition, developing board norms shouldn’t be seen as a one-time event. Rather, as Brenda explained, “Board norms should be a living, breathing document.” Things change in the boardroom all the time. Boards should revisit their norms on a regular basis to ensure they’re keeping up.

Another key to building a positive board culture is to incorporate executive sessions into the end of board meetings. At these sessions the lead independent director should ask questions about how the meeting went and whether the board feels they added value. Time should be set aside so each director has their voice heard.

As D’Anne put it, “a little touchpoint at the end of a meeting makes all the difference in the world.”

Another key way to foster positive board culture is to ensure clear, open communication throughout the year – not just during board meetings. One way Brenda recommends board chairs do this is by picking up the phone between meetings to hear from directors 1-on-1. “How much is the board chair communicating with the board between meetings?” said Brenda. “Everything doesn’t happen 4-5 times a year.”

Counterproductive Behavior and Environments Must be Addressed in Real Time

Working to create and foster a positive, inclusive board culture is important. So too is rooting out any counterproductive behavior.

According to D’Anne, the best way to do this is through board evaluations. “Board evaluations are the way to handle it,” she said. But it has to be done in a measured, thoughtful, and skilled way.”

Before crafting a board evaluation, D’Anne recommends knowing what the problems are – and then working backward to bring those things out. She advises that one way to get at the problems is to have people answer questions anonymously, but honestly.

“One of my favorite questions when I craft a board evaluation is, ‘on a scale of 1 to 5, how much do you agree that the board is the right size?’ How simple,” she said. “But if people give it a 3 or a 2 and you ask them why, you might get the answer. ‘We don’t have the right skills on the board. We need to add more people. The board is not the right size because a couple people need to get off.’”

Though board evaluations are an important tool, Brenda doesn’t believe they should be the only one used to root out dysfunction.

“Board evaluations only happen once a year,” she said. “If a board has dysfunction or disruptive behavior, you shouldn’t have to wait a year to address it.”

If a board chair or leader sees dysfunction happening at a board meeting, they should have a conversation with the involved director(s) after the meeting. “You have to deal with things when you see them,” said Brenda. “If you have your board norms, you can use that to talk about expectations. It goes back to candor and communication.”

Stuart agrees that ongoing communication and feedback is key. “Any good lead director or chair of the board really looks at that table all year long,” he said. “You know exactly who the performing assets are. It’s not waiting for a year to have the conversation [with a poorly performing board member.]”

Feedback – whether during the annual evaluation process or on an ongoing basis – should always be constructive rather than accusatory. As Brenda explained, “What you want to do is to have conversations that help people grow and develop. I believe in constructive conversations to help people grow.”

Ready to learn more about how you can leverage data and technology to boost board effectiveness? Save your seat for our next Atlas Leadership Webinar, Modernizing Your Board’s Approach to Data & Technology, featuring Wayne Sadin, veteran CTO leader, an analyst for Acceleration Economy, and NACD-certified director

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