The effective inclusion of diverse board members
In the article Optimal Boards Foster Inclusivity, Tierney Remick emphasises that optimal boards focus on four critical factors: encouraging self-reflection and feedback; adopting inclusive onboarding practices; empowering directors in decision-making; and prioritising adaptability and inclusivity. She stresses that merely having diverse representation isn't enough; boards must create cultures where every voice is heard and influential.
The importance of regular evaluations and individual feedback for all members, regardless of seniority, is highlighted. Effective onboarding and mentoring are crucial for integrating new members into board dynamics. Remick suggests that inclusive leadership, where all voices are valued, enhances board effectiveness. She concludes by advocating for inclusivity as a top priority for boards aiming to meet the evolving demands of their stakeholders and achieve long-term success.
Board member induction
We regularly hear directors criticise their processes for new board member induction—often from directors whose own induction experience was long ago and, in memory, less than satisfactory. This criticism may tell us that its sources are not aware of current practices in their organisation. But the more effective boards are, the more likely it is that serious attention is paid at both board and staff levels to assisting new board members ‘hit the ground running’.
A recent publication by US consultancy Vista Cova (Board Preparedness: Ready to Lead From Day 1), while focusing on association boards, is likely to be a valuable resource for any organisation looking to create or refresh an effective orientation policy. Based on interviews with leaders from 35 associations and running to nearly 100 pages, it is a handbook that covers a lot of nuts-and-bolts material.
It also offers a four-part organising concept called ‘The FOCUs Framework for Board Success’ and many additional resources:
Foundation: establishing board roles and the overall structure and mission of the organisation
Orientation: acquainting (or reacquainting) board members with core documents and procedures and mentoring newcomers
Confirmation: better establishing longer-serving board members in their roles and improving board culture and communication
Unification: ensuring that the board addresses matters of trust, bias, and acting with purpose.
The aim of the handbook is to ensure that organisations “do not simply react to the arrival of new members; they proactively cultivate them, ensuring the transition into board service is seamless and every director’s tenure begins with confidence and clarity”. This proactive approach can significantly improve board dynamics and performance. Too many boards assume that just because most people in the room apparently know what they are doing and what is expected of them, everyone does. Don’t be that board.
Experts v imitators
The excellent Farnam Street blog suggests that, if you want the highest quality information, you have to speak to the best people. The problem is many people claim to be experts, who really aren’t.
The article discusses how to tell the difference.
Musk – the $56b man?
This piece in The Guardian about the Elon Musk pay affair highlights various governance issues. For example:
- Board independence: Tesla’s board was criticised for its close personal ties to Musk, compromising its ability to negotiate a fair compensation package. Key figures had long-standing relationships with Musk, raising concerns about their independence and objectivity.
- Flawed incentive process: The process for setting Musk’s $56 billion compensation package was described as “deeply flawed” by the Delaware judge, lacking robust oversight and pushback against Musk’s demands.
- Lack of accountability: Despite the court’s criticisms, Tesla’s board has not adequately addressed the governance issues raised, showing little self-reflection or willingness to correct past mistakes.
- Potential future conflicts: The board’s unwavering support for Musk raises concerns about its ability to manage potential future conflicts of interest, especially if Musk seeks further compensation or shifts focus to his other ventures.
It’s worth reading if you are concerned about whether your board/rem committee is doing its job properly. The Guardian correctly notes of the board that: this is a listed company and the job involves more than being a cheerleader in the Elon Musk fan club.
More on Daniel Kahneman
McKinsey’s remembrance of Kahneman includes a 2021 interview on the subject of noise in decision making and a list of other insights inspired by his research.
