A while ago I read an article about boards and voting by Roger Hitchcock, a senior partner at the Sirdar Global Group which guides boards to become more effective. I met Roger when I was a participant in his Sirdar Applied Directorship Programme some years ago, and as always in this article he was full of common sense, leading me to completely agree with his line of thinking.
While board voting can serve as a mechanism to resolve conflicts and make decisions, he writes, it should be approached cautiously and used as a last resort. This, I may add, applies equally to all kinds of organisations.
The reasons board voting should be the last resort are fairly obvious. By its nature, suggests Roger, it pits directors against each other, potentially leading to divisions within the board.
An “us-and-them” mentality can undermine the overall cohesion and effectiveness of the board, hindering its ability to function as a united entity. Indeed where I am a board chairman I work hard to avoid situations where there are winners and losers — even without that ultimate victory— and defeat outcome that results from voting.
Beyond sustaining cohesiveness among directors, avoiding contentious voting lessens the likelihood of straining relationships between board members, which would create a negative atmosphere within and beyond the boardroom.
This can have long-term implications for collaboration, trust and open dialogue, all crucial for effective board governance.
But it’s not just the soft relationship issues. Avoiding voting improves the quality of decision-making, asserts Roger. When a vote becomes necessary, it signifies a failure to reach a consensus through open dialogue and deliberation.
In such cases, the decision made may not be the result of a thorough exploration of all perspectives and alternatives, comprehensive analyses, and robust debate with the best interests of the company. Yes, voting offers a speedy approach to decision-making, but the lack of these key elements too often leads to sub-optimal outcomes.
So, Roger insists, we can avoid the need for voting by allowing for robust discussion and debate. Encouraging open and constructive discussion among board members is vital, I have seen in my many years as a director and chairman, going back to the late seventies.
By fostering an environment that values diverse perspectives, the board is relaxed and open enough to explore alternative viewpoints, identify common ground, and uncover innovative solutions without having to resort to voting.
This approach involves finding agreement among board members through compromise and negotiation and ensures that decisions that are in the best interests of the organisation are made with support from all board members.
This cannot be accomplished merely within board meetings, I have found. Where I am the chairman I frequently engage with individual directors prior to the formal board meeting to seek the spread of views and build towards consensus. Some may call this manipulation, but given that it is always pursued in the best interests of the organisation I do not hesitate to invest time in such activity.
Boards should establish clear decision-making processes, recommends Roger, like designing appropriate reports and dashboards, or using the normal board committees or temporary task forces to thoroughly analyse and vet proposals and come up with recommendations.
These processes and structures enable boards to engage in deep discussions, gather relevant information, and seek input from subject-matter experts before bringing issues to the boardroom.
Roger identifies a further benefit of boards consistently seeking consensus and making decisions based on that togetherness, which is that it leads to stakeholders gaining confidence in the board’s ability to navigate complex challenges, thereby enhancing the company’s reputation and its stakeholder relationships.
So, seeking consensus fosters a culture of collaboration and teamwork among board members. It promotes shared ownership of decisions, leading to a more cohesive board and stronger boardroom dynamics. Consensus-based decisions tend to be more comprehensive and well-rounded. All those in favour, please vote “Aye”.
This is my last article of the year (my 440th ), so I wish you a happy and relaxing time in the coming days and look forward to re-engaging with you in January.