The secretary general’s perspective: governance culture and board dynamics - Part one

Board culture and board dynamics

Board culture and board dynamics are closely related concepts that influence the effectiveness of a board of directors. 

• Board culture refers to the shared values, norms, and collective behaviors that shape the way board members interact and work together.

• Board dynamics refer to the interpersonal relationships, interactions, and specific behaviors of board members during their work. It focuses on how individuals and groups within the board work together in real-time. The dynamics of governance are shaped by factors such as individual personalities, communication styles, and the ability to manage conflicts constructively.

Both concepts are interdependent and mutually reinforcing.

• A strong, positive board culture lays the foundation for healthy board dynamics. A culture that values respect and collaboration is likely to lead to constructive interactions and effective conflict resolution among board members.

• Conversely, poor governance dynamics will erode governance culture over time, creating a toxic environment that hinders performance. It is a gradual, but effective process, 'death by a thousand cuts'.

A strong dynamic reinforces a constructive culture, and a positive culture fosters a healthy dynamic, creating a virtuous circle that improves board performance and organisational success.

Importance of the board dynamics and board culture

The role of the Board of Directors in the governance of the company can be summarised in on the one hand providing strategic leadership to the company and on the other providing supervision, challenge and support to management.

In order for a board to properly fulfil its role through productive board meetings, three related elements will need to be present and reinforce each other: an effective board organisation, the right composition of the board in terms of skills, knowledge and expertise, and the right board culture and dynamics.

• A first element is the efficient and effective organisation of the meetings on the basis of the mandate, the annual work plan and the organisational practices of the company's secretariat. This includes having a good agenda, with the right topics on it (mandatory/non-mandatory), clarity about the purpose of the meeting, documents that are available on time and placed in a board portal, an effective organisation of meeting rooms, etc.

• A second element is to have the right directors in the room, chosen on the basis of their skills, knowledge and competence, based on a matrix of skills, with an impeccable reputation. This involves also a clear repartition of roles between management and non-executives. In the composition, which is a never-ending exercise, one must apply the rules on diversity and complementarity and ensure the right mix between INEDs and SNEDs. This mix can vary from company to company.

• The third element is the governance culture and board dynamics, which involve effective and reliable interactions between directors, both inside and outside the boardroom. It involves building and maintaining trust and mutual respect among NEDs, relying on each other's skills, and fostering a complementary environment to fulfill their responsibilities. A good and healthy governance culture uses the skills of directors for strategic decision-making, supervision, providing management challenges and support.

The company's secretary, who serves as a key advisor and diplomat between the chair, the non-executive directors (NEDs), CEO and the management, plays an essential role. He/she assesses the situation, intervenes when necessary and gives discreet advice. 

Thus, the culture and dynamics of the board of directors are a key element in the overall set-up of the board of directors, in the achievement of its goals and in the ability of the directors to fulfill their responsibilities in the most optimal way. Encouraging and working on good governance dynamics, promoting an overall positive governance culture, therefore increases the likelihood of good governance decision-making, oversight and positive interaction between management and board, both in the supporting and challenging roles.

Addressing board dynamics and governance culture makes implicit issues explicit and more visible.