From the CEO: A Roomful of Strangers

Korn Ferry’s Gary Burnison on the challenges directors face getting to know each other amid a sea of changes today.

Gary Burnison is the CEO of Korn Ferry.

The best way for a consultant to get fired, someone joked to me the other day, is to suggest a board assessment. There’s more truth than humor here. For one thing, it’s human nature—people resist being assessed and would rather not know too much about their weaknesses and areas that need development. At the board level, the assessment issue is complicated further by the unwritten etiquette of not criticizing one’s peers.

Unfortunately, this thinking misses the most fundamental aspect of a board: It’s supposed to be a team. The challenge is that board members are chosen based on their pedigree as CEOs and senior leaders at other firms. Once they’re part of a group of eight, 12, or even more members, it can be a crapshoot as to how well directors function together—and the larger the group, the more difficult it becomes.

Given the mix of personalities, plus the fact boards typically get together only a handful of times a year, there’s no guarantee members will coalesce as a team aligned on purpose and performance. Even when directors know each other, at least by reputation, and have been carefully chosen for their leadership experience and expertise in areas from capital markets to driving digital transformation technology, they can become a “roomful of strangers”—and very smart, opinionated strangers at that.

Consider this analogy: Imagine you are entertaining three world-class chefs and want to take them out to dinner. As you review all the cuisine options with the chefs, it would be next to impossible for these three experts to pick one restaurant. Now, expand that to a party of 12 chefs and imagine the frustration of trying to get them to agree on where to go to dinner. It would be an “interesting” exercise, to say the least.

Board members, just like those chefs, are generally high achievers. They undertake “board effectiveness” surveys once a year (a requirement for every publicly traded firm), but these are largely perfunctory around legal and compliance issues. Rarely do directors go deeper into their own leadership and thinking styles. To bring the group together, that’s precisely where they should start. Otherwise, personality clashes—introverts and extroverts, risk seekers and risk avoiders, differences in thinking and decision-making, plus some oversized egos—can result in board dysfunction.

Stylistic differences among very accomplished directors who are accustomed to doing things “their way” is a recipe for disaster. As RJ Heckman, a Korn Ferry vice chairman who works closely with boards, told me, “The stakes are really high right now, and boards may not be equipped to handle crises that may hit on any given day. By building trust and gaining insights into how each member operates, boards improve their ability to handle the seemingly inevitable data breaches, environmental accidents, product failures, financial crises, activist investors, and/or social-media blunders. That’s just good business.”

Boards that can handle disasters well are also more effective at bringing their organizations to higher levels of performance when guiding executive teams to mitigate risk, allocate capital, plan succession, improve culture, and enhance diversity. All of these challenges require greater transparency, against a backdrop of an ever-increasing pace of change. This will be extremely difficult for boards until they invest in gaining insight into one another.

A director of a leading financial services firm told me recently that the only reason his board was able to handle wave after wave of serious problems during the financial crisis was because the members functioned so well together. Without that close alignment, the board would have been severely hampered in its effectiveness in advising management under such dire circumstances—and the fallout could have been catastrophic.

Enlightened and progressive leaders today value a deep dive into personal and interpersonal dynamics, often using assessments. The catalyst for gaining greater understanding into board member personalities and group dynamics might be a new board chair or an influx of new members. When directors understand both themselves and their peers better, group dynamics improve. For example, the director who always digs in his heels during discussions is not just being difficult or contrarian, but is actually highly risk averse. But in the mix of the overall board, that risk aversion helps balance the majority who are more risk tolerant—some exceedingly so. Or, the board member who doesn’t speak up as much as others isn’t disengaged; she’s an introvert, but highly self-aware and values cohesion in the group.

The only way to gain these insights is with a formal assessment of each director, who then receives confidential feedback about their strengths and weaknesses, leadership style, and thinking style. A composite drawn from all the assessments reveals the tendencies of the whole board, as well as the spectrum of traits and behaviors.

Our experience has been that the highest performing board chairs understand their fellow directors so well, they can align committee responsibilities with both expertise and personal passion. Their insight into each director, combined with their understanding of the board’s priorities, serves to take directors from feeling “obligated” to do what they’re known for (e.g., chair the audit committee), to providing these same directors with opportunities to leverage their personal passions.

High performance among any team, and especially boards, doesn’t just happen: It’s the result of investing in each other so that the right directors are in the right place at the right time to optimize performance. Otherwise, it’s just a roomful of strangers.