A key role for any board is to provide leadership for the organisation. The board sets the tone, defines the values to drive culture, decides the appetite for risk, assesses the environment, agrees the strategy and monitors performance including financial performance. That’s a big task in anyone’s book. So why is it that boards often do a great deal more than what is set out above? Why do many boards muddy the waters by managing the organisation, rather than leading it?
To answer this question, we first have to consider the differences between management and leadership. Management is the process of dealing with or controlling things or people, while leadership is the action of leading a group of people or an organisation (both definitions from the Oxford English Dictionary). So that’s clear then?! I think of management as planning, budgeting, organising and supporting staff to achieve targets and problem solving. On the other hand, leadership is about establishing a vision and direction, and motivating and inspiring people to reach that vision.
Strong leadership and management are both important for an organisation to be successful. The role of the board is firmly rooted in leadership. However, many organisations have boards which not only seek to provide a leadership role, but also a management role.
This can cause a number of problems. Boards which are too operational can lose focus on the big picture, leading to missed opportunities or unperceived threats. They can also, consciously or unconsciously, undermine the CEO and make their job more difficult.
Boardroom Leadership Mistakes
There seem to be a number of reasons why board members can be sucked into a management role. Most board members are themselves senior executives in other organisations, used to providing both leadership and management. It can be tempting to see their board role as akin to their senior management role. There can be a quick payoff from an operational role, whereas the very nature of setting long-term goals for the organisation means that it can be a long time before the board see the fruits of their labour. The CEO can contribute to the confusion by bringing over-operational reports to the board, instead of helping focus them on strategic and oversight issues.
Acknowledging there may be a problem is the first step to making things better. Check your board agendas to ensure they are addressing leadership, rather than management issues. If the agenda is very management- heavy, you may need to take some time to refocus on more strategic issues. Using a board Away Day can be very useful in clearing the minds of board members and starting with a clean slate.
Even if your board is confident in its leadership role, remember to make how your board leads part of your annual board review. This will help all board members to keep on track and resist the urge to manage the organisation. Being a great manager is an extremely valuable skill, but a board must lead.
Some useful reading –
- How to Lead: Wisdom from the World’s Greatest CEOs, Founders, and Game Changers (Free with Audible free trial)
- The Oxford Handbook of Corporate Governance
- Corporate Governance: Principles, Policies, and Practices
- Corporate Governance and Accountability
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