When the World Series Meets the Boardroom
November 02, 2017
Gary Burnison is the CEO of Korn Ferry and author of "The Leadership Journey: How to Master the Four Critical Areas of Being a Great Leader."
Imagine putting the starting lineups of two baseball teams—the Los Angeles Dodgers and last night's champion, the Houston Astros—in the same boardroom. You ask them to agree on who will serve as the manager and the general manager—and you need complete consensus on who plays, what the batting order will be, what positions they play and how the pitching rotation sets up.
Think about how hard that would be— impossible!
Such is the case when considering the right sizing of boards, and maintaining the semblance of a true team.
The other day I happened to catch CNBC’s Jim Cramer talk about a company that has run into tough times and he mused about whether the large size of its board (18 directors) was part of the problem. It seems that 18 is not a board – that’s a gathering. I am not sure how that works.
To put it in simple terms, when a decision needs to be made, two people weighing in will lead to either complete consensus or a stalemate. Three brings in a tiebreaker, or else a third wheel on a tangent. Four adds another opinion, but also the potential for two sides squaring off. And so it goes…
This simple number exercise shows there’s no magic formula for “right sizing” any group or team. While there is something to be said for collective genius, too many people expressing opinions and influencing decisions makes it difficult—if not impossible—to drive consensus. At some point it becomes impractical and even dysfunctional.
An analogy is a dinner party. Seven, maybe eight, around a table makes for a pleasant evening of conversation. But a double-digit guest list is almost guaranteed to fracture into smaller groups—even if everyone can be seated at one long table. People cluster; cliques form.
The same can happen within a board of directors, which is why “right sizing” is so important to improve effectiveness in governance, consensus-building, and decision making.
Board size can vary by type of industry (heavily regulated ones tend to have larger boards) and the scope of business. The general consensus for right sizing is 7-8 people, while the average board today has about nine members. Boards can also be far larger, with some comprised with as many as 30 members. But one has to wonder how difficult are attendance, discussions, and consensus-building with the equivalent of two baseball lineups in the boardroom?
Boards are teams, plain and simple—but their responsibilities are anything but. In today’s era of shareholder engagement and investor activism, the role of boards has shifted significantly.
From decades of research on teams, we know that one reason they fail is that people cannot successfully transition from being individual contributors to team members—just like it’s tough to go from a golf team to a basketball team. While corporate directors tend to be seasoned professionals, including current and former corporate executives, the fact is their experience does not automatically translate into boardroom cohesion. Particularly because most of them were stars on their own golf team!
As with any team, high performance does not just happen—it takes time and effort, as well as proper guidance and support from the team leader. Most important, team effectiveness relies on an organizational culture that enables and fosters collaboration and teamwork.
For boards, there are lessons to be learned from other types of team-building—for example, the kinds of teams that thrive within organizations.
Among the factors that drive team effectiveness is trust—simply stated, successful teams have members who trust each other. Four other key factors for effective board teams, derived from Korn Ferry research and team effectiveness models, are: thrust, a common purpose about what needs to be accomplished; talent, the team’s collective skills and expertise; team skills, operating effectively and efficiently as a team; and task skills, executing successfully.
Irrespective of the size or skills of its members—teams of any shape or context do not happen automatically. For boards of directors, just like any team, they require hard work and development, trust, mutual respect and, most importantly—a common purpose.
7 Tips for Creating a Purpose-Driven Board Team (Of Any Size)
- Set a vision and agenda for the board.
- Agree on quarterly and annual milestones.
- Agree on a board constitutional framework, including rules of the road.
- Measure against milestones.
- Create a mechanism for nonpartisan feedback, including team reviews.
- Invest time in getting to know fellow board members.
- Hold people accountable and deal with nonperformers.
These responsibilities are difficult enough without undermining effectiveness unnecessarily simply by having too many people in the room at the same time. While the number may vary from one organization to the next, there is a right size for every board. It’s up to the board leaders to look at the culture, dynamics, and team effectiveness to decide if the optimal number of people are around the table.