High Performance Boards. Didier Cossin

Figure 3.2 The Roots of Good Judgement: Mapping One's Strengths and Weaknesses

      Good judgement is especially important today, as boards face increasing external pressures and may have to deal with crises that challenge their decision-making skills. We will discuss crisis management in more detail in Chapter 12.

Duty of Loyalty

      Conflicts of interest are rampant in today's world. They arise when directors lose impartiality because of either material interest or a conflict of roles. When directors are in a position that may benefit them, or someone close to them, in any way, then they can no longer make impartial decisions; this is a material conflict of interest. A conflict may also result from one director having different roles, so that their obligations to one company are compromised by those to another. Directors who sit on multiple boards may therefore have a potential conflict if two of these organisations form any kind of relationship.

      Another source of conflict is self-interest. When directors focus primarily on maintaining their position, comfort, and income rather than on what is best for the company, they are likely to be highly biased. They may also become compliant and not wish to be unpopular. Again, they lose their impartiality.

      Sometimes directors fail to acknowledge conflicts of interest – even to themselves. It is critical that directors think about this honestly, because it has a direct impact on board service. All of us are conflicted, and figuring out these conflicts is part of our duty. We explore the four tiers of conflicts of interest facing boards in Chapter 13. A good rule of thumb is for board members to have a list of their own conflicts of interest: time, money, effort, friends, relationships, financial interests, reputation, social network, and more.

Integrity: A Key Characteristic of Board Directors

Directors need to know what is right and have the courage to stand up for it. They also need clarity about their role. In times of crisis, confusion may obscure the right course of action, making individuals vulnerable to mental biases. But board members with integrity devote themselves to doing the job for which they were hired, and conscientiously equip themselves with the necessary knowledge and skills. As such, integrity is a keystone of successful directorship.

      For some, integrity means fully adopting the values one believes are right. This requires authentic deliberation about individual values through deep personal reflection, rather than a simple acceptance of social norms. Maintaining integrity means being able to resist engaging in self-deception about whether individual actions are the logical outcome of personal values or some other force (such as fulfilling psychological needs).

      Another definition of integrity is the ability to be clear about the boundaries of what is acceptable, and the commitment to stand by these regardless of the consequences. In other words, integrity is the way in which individuals support projects and then loyally commit to them. This is the case with artistic integrity, for example, when artists demonstrate loyalty to their vision and pursue their path, rather than conforming to what others think is right or acceptable or commercially valuable.

There is also a social dimension to integrity.¹ Having integrity means not only standing up for what you believe and defending it, but also recognising that others have their own judgements and convictions. Bullying and coercion are therefore antithetical to integrity, whereas compromise and ambivalence might not be.

Table 3.1 summarises the key behaviours of successful directors.

      Board members' specific legal responsibilities depend on the nature of the organisation and the jurisdiction within which the board operates. But clearly, successful directors need to have good judgement and the integrity to stand by what they believe. During crises, directors need to rise to the occasion, simplify the situation, and have the courage to do what is right.

We will return to the subject of board leadership and values in Chapter 17. But now we will look more closely at the first pillar of a board's effectiveness: people quality, focus, and dedication.

Table 3.1 Behaviours of Successful Directors – A Checklist

Note