Decision-making in a virtual world

Decision-making in a virtual world

Many boards will be pleasantly surprised at how they’ve mastered virtual meetings, the odd hiccup notwithstanding.  But having surmounted the challenges of the first few months, chairmen and other directors – not to mention regulators and investors – are starting to turn their attention to effectiveness in this new environment.  As we conduct our board evaluations, we are looking increasingly at the impact of virtual board interaction, finding ourselves asking if the way in which boards are taking decisions has changed.

Is a smooth-running Zoom meeting all that it is cracked up to be?  In this month’s bulletin, we give some examples of good practices we’ve seen and some pointers on what boards need to avoid if they want to ensure that the quality of their decision-making doesn’t deteriorate without anyone really noticing…

Good practices to consider…

Keep an independent mindset. Many organisations have faced serious trials – some even existential. Non-executives and management have had to pull together, which may have brought them closer. Maybe the non-executive directors (NEDs) are experiencing a new-found sympathy and understanding for management, which is a positive thing. The Board is a collective body and the NEDs and executives need to work well together, so many boards will come out of the pandemic more cohesive and stronger. But NEDs can’t get too close, if they’re to exercise the independent oversight that is at the heart of governance structures.

Things to avoid…

Failing to challenge management hard on their thinking and plans because the nature of the interaction has changed. Let’s remember that the separation of the two distinct roles of NEDs and executives is vitally important for good decision-making. NEDs can help management to see different angles and, at times, that means pouring a bit of cold water on their plans and disappointing them. It also means being ready to see the weaknesses in the strategy they’ve developed. In a crisis, this can come across as naysaying or obstruction. There’s a real danger that NEDs may have inadvertently become too sympathetic during the pandemic, getting into the habit of going along too much with the management view. If so, it’s time for a reset.

Good practices to consider…

Keep meeting frequency under review. Meet often enough for the Board respond well to the continuing challenges. But don’t let it become so often that the decision-making dynamics are affected, with NEDs responding to each new development almost at the same time as management. If you haven’t already done so, consider the calendar for next year: meetings may need to be more frequent than pre-pandemic. But check there’s enough time in between for executives to do their thinking and for non-executives to come at questions afresh.

Things to avoid…

Allowing frequent and spontaneous meetings to carry on for too long. Board updates are one thing, but too much interaction and meetings start to get in management’s way. Also, it shouldn’t be all about updates that could have been provided in an email. That’s not the purpose of a board meeting, which should be a forum for discussion and debate, stimulating thoughtful challenge from a more detached perspective.

Good practices to consider…

Take stock of the Chair and CEO roles. The Chair is likely to have been more active in recent months, whether it’s negotiating government assistance, interacting with key shareholders or simply having a lot more calls with the CEO. This may have strengthened the CEO-Chair relationship – which is central to good information flow to the board and effective decision-making. Or the relationship may have started to become too close, or a little frayed at the edges…

Things to avoid…

Blurring the roles. We hear of Chairs with too much time on their hands, and CEOs starting to remember fondly when the Chair used to spend a day, maximum two, a week on company business, while making him or herself scarce the rest of the time. It’s important for Chairs to “step up” in a crisis, but it’s equally important for them to step away again and give the CEO space once the situation is more stable in order to retain the right degree of distance.

Good practices to consider…

Work on the discussion dynamics. Good quality decisions, ones that really stand the test of time, are arrived at after a good debate. All the views in the virtual room need to be aired and discussed, which is not so easy in a video conference. Directors need to be particularly concise in virtual meetings – even more so than usual, so everyone has the chance to speak.

Things to avoid…

Having superficial discussions, which consist mainly of clarificatory questions and answers. It’s by sharing diverse viewpoints, listening carefully to what someone has to say, building on their point or countering it with clear arguments that a solid decision can be taken. Don’t use the excuse that “it’s not possible to have a good debate on Zoom”, because we have seen them. It’s more difficult, of course, but that’s why you need to work at it that little bit harder.

Good practices to consider…

Explore new ways of chairing to get the debate flowing. In some meetings we’ve observed, a really good informal discussion has developed, often stoked by the Chair taking the conversations in interesting directions. Back when directors met in person, with the formality imposed by the big board table, these good discussions might not have taken place. Or they might have been prompted by the casual catch-up over lunch or dinner that can’t happen at the moment.

Things to avoid…

Sticking rigidly to chairing in the same way you always have. Different skills and strategies are needed. Previously debate might have developed spontaneously, leading to decisions. Now it might need to be proactively enabled. Summing up clearly is more important than ever. And now it’s particularly difficult to read the room, so, unless their bandwidth drops, don’t put up with colleagues keeping their cameras switched off. Without seeing their faces, you have no verbal cues at all and more awkward silences.

Good practices to consider…

Make sure everyone’s had a chance to speak. If there’s an important decision to be taken, this might mean asking for a 30 second view from each board member, before calling on specific people to ensure the main viewpoints are fully explored. Not for all topics of course but, from time to time, this can be a good way of guarding against “first person to speak” bias when an extensive and strong argument given at the start of a debate sets the tone and closes down dissenting views.

Things to avoid…

Letting the few dominate. The button on the screen that indicates a raised hand may seem clunky to boards that are used to free-flowing debate just happening naturally, but it can be a real help on video calls, so encourage people to use it. And of course the usual chairing techniques still apply, only more so: schedule enough time, don’t move on too fast and draw out quieter members at times when they’re likely to have something useful to say.

Good practices to consider…

Make sure decisions are taken in the right forum. Some larger boards have set up smaller “crisis committees” of a subset of directors. This is fine if the delegations are clear and the big decisions are still being taken by the full Board, based on thorough and timely reports from the Committee.

Things to avoid…

Drifting into a two-speed board: an inner circle that takes the decisions, with a periphery that is rubber-stamping. Don’t have too many people in the room at board meetings either. And avoid what we’re seeing happening at some organisations, where presenters who, in the past, would have previously joined for a topic then left are coming for much longer – even the whole meeting. Virtual lobbies make this unnecessary.

Good practices to consider…

Watch out for the risks that come with hybrid meetings, where some of the Board and invitees – often the management – are together in the room while others join by video. This is becoming more prevalent as people start going back into the office. But it can easily undermine the dynamics and might inadvertently change the nature of decision-making.

Things to avoid…

Allowing decisions to be unduly influenced by those who are physically present, especially if they start having side conversations off camera or on mute. This sort of bias can start to creep in, particularly if the Chair is in the room too. For this reason, some boards have consciously moved back to having everyone joining by video – even if they are in offices next to one another. This can be avoided if the participation is actively manged, with everyone staying aware of the need to keep those joining remotely fully in the debate and participating.

Good practices to consider…

Keep on top of the technology. If it keeps being glitchy, the acceptance of virtual decision-making will come under pressure. And that would be a pity as a mix of virtual and in-person meetings is perhaps the best outcome for many boards who could end up with a more convenient “new normal”.

Things to avoid…

Accepting the modus operandi you’ve got used to over the past few months. Invest in making it work better. And of course, fix the basics, that we’ve covered in our [virtual meeting checklist ]. That might involve, for example, dual devices for participants or switching systems. We even hear of some tech companies creating new platforms for virtual reality boards to recreate as far as possible the “360 degree” feel of a meeting. Far-fetched? The technology exists so we won’t be surprised to see the options expanding over coming months.



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