Disaster in the Boardroom Questions and Answers
To hold the Board Members accountable, and to improve board behaviour, what happens to the 360-feedback given to a particular board mentioned in a case study?
The feedback is shared with the director. If at the end of the first appointment the director has not achieved a reasonable standard, then they are not reappointed. Although I will say that this is rare. The value is in signalling very specific expectations for how to behave in the boardroom.
I haven't read the book but have sat on numerous different boards. I'm surprised that 20 minutes in the critical role of the chair of the board has not been discussed. The chair leads the board. Did the research find any disasters which had effective chairs?
The role of the Chair is extremely important as Gerry said in answer to the question about Independent Directors. Randall also mentioned that in his recent research on behalf of the FRC that the most important item was whether other directors believe that the Chair is a good listener. Both of these points support your intuition that the role of the Chair is critical. Indeed, there is also extensive coverage of the role of the Chair in the book. In the research we did not find any scandals with very effective chairs.
Would you recommend current UK Government Ministers read this book?
Yes, most definitely. We are sending a copy to the Minister responsible for business.
What is the role that cognitive bias plays in the functionality or dysfunctionality of a board?
Cognitive bias can distort thinking leading to poor decision taking and judgement. The six board dysfunctions explained in the book provide the examples of cognitive bias.
What percentage of FTSE 100 boards have a cohesive and consistent view of culture and more importantly how this culture influences good behaviours in their organisation?
The FRC commissioned a report on Corporate Culture and the role of Boards because there is so much room for improvement. Our book supports the FRC decision to focus on culture.
Does remuneration of board members change their behaviour and increase diversity of board members? Should charities and education institutions pay their board members?
Remuneration can be used to reward ‘good board behaviour’s eg, encouraging greater board diversity. Gerry’s book on governance in the charities and education sector argues that charities and education institutions should pay their board members in order to promote greater diversity of boards.
How to address "bad behaviour" of a board member who represents a major shareholder?
The chair could privately talk to the person and the shareholder. The other Board Members especially the Independent Directors could strongly disagree with that person and be able to help call out bad behaviour.
What's a board assessor?
The role is assisting with the performance evaluation of Boards and Directors.
Given that most disasters are the result of bad decisions, did you analyse how they get made?
Yes in the book we provide many examples of this link between bad decisions and disasters.
How does Financial Times boardroom certification contribute to improved boardroom performance? Alternatively, is there an alternative certification... would this book contribute to finding a better practise?
The FT Director training and certification most certainly improves the capabilities and competences of Board Directors.
The authors believe that the government should promote certification by convening all of the interested parties to agree proposals. Hopefully our book can be used to persuade government to take action to reduce business scandals by ensuring directors are current on critical boardroom issues.
Should there be term limits on appointments as Board Directors?
Yes, for example the Combined Code for public companies in the UK does set a maximum of 9 years.