This newsletter’s Table of Contents is as follows:
- Tackling Workforce Vaccination
- Why Board “Attributes” Matter
- Board Refreshment – NOW!
- Overcoming “Authority Bias” in the Boardroom
1.Tackling Workforce Vaccination
A debate in executive suites and boardrooms is raging over whether to require that employees get vaccinated before returning to the office. It does seem clear that getting to herd immunity is a win-win for companies in all industries and society as a whole. It is also legal in the USA for companies to mandate.
But while it may be legal to require vaccination, for many companies, the decision won’t be that simple. Most companies will have one population of employees chomping at the bit to inoculate and another dead-set against it.
So, given that, what’s advice should a board give their CEO?
One option is to poll employees about how they feel. But ultimately, the BIG decisions like these are the Board’s and the CEO’s, since it affects the entire workforce. Bottom, bottom line: it should all come down to culture. If you’re running a manufacturing plant, for example, or a restaurant or a hospital—all of which require employees to come to work in person—and you champion a culture that prioritizes safety and health, then a companywide mandate would show you’re putting muscle behind that credo. If, on the other hand, you’re running a services firm that doesn’t necessarily require in-office work, and your culture prioritizes autonomy and personal accountability, then it may make sense to let your employees decide for themselves whether to vaccinate.
2.Why Board “Attributes” Matter
- First: “A board that has enough trust, to be honest, discuss the pros and cons openly (and not in the back room), and have healthy disagreement” – which means disagreeing without being disagreeable
- Joint Second: “A board that engages and considers the interests of all stakeholders when making decisions” and “A board that implements management remuneration schemes linked to long-term value goals”
- Third: “A board that proactively identifies and engages potential investors focused on long-term value”
Source: EY
3. Board Refreshment – NOW!
Every year, as part of PwC’s Annual Corporate Directors Survey, directors are asked to evaluate the performance of their peers, and whether any of the members of their board should be replaced. The share of respondents who say one or more of their fellow directors should go has been rising, and in 2020 it reached 49%. Given the importance of collegiality to a well-functioning board, that may seem surprisingly high.
But it’s nothing compared to what C-suite executives said when asked them the same question. More than four in five (82%) said at least one of their company’s board members should be replaced. And 43% said two or more directors need to go.
These insights, drawn from our recent study Board effectiveness: A view from the C-suite, are bound to be discomfiting to many directors. Candid feedback from management teams on board performance is rare. But it’s extremely valuable, especially when it confirms what many directors already recognize—namely that board composition and refreshment deserve a closer look. (Editor’s Note: It is considered a best practice today for boards to ask management to participate in their anonymously attributed board evaluations.)
The 3 major actions boards can take now to focus their ‘refreshment efforts’ are:
- Focus on board succession planning, not just for the CEO
- Assess corporate director bandwidth
- Chart a path forward
The news from our survey wasn’t all bad. Almost all executives (94%) gave their boards high marks for their understanding of their company’s strategy. And the vast majority said directors had a strong grasp of the company’s key risks (89%), shareholder base (87%), and competitive landscape (86%).
Source: Harvard Law
4.Overcoming “Authority Bias” in the Boardroom
The boardroom needs experts. Directors are, of course, recruited for their skill sets and expertise. But in some cases, boards may rely too much on one director’s experience or opinion. They can become too influenced by that opinion, dismissing what others have to say, or abdicating responsibility. Directors who are seen as an expert in one area might not contribute much to other discussions. Boards might find that some directors suck up all the oxygen in the room, while others are rarely heard from. Or the CEO may hold too much power over the board, such that the board is unable to effectively push back.
This dynamic is not just about respecting expertise. It’s also about a perceived power structure within the board. For example, the board may be more likely to prioritize the views of its male members, long-tenured directors, or those with a commanding stature or tone of voice. As part of this, boards can fall into the trap of waiting to hear from these authorities first, or always giving them the last word. They can fail to provide an important check and balance against the “expert.” And directors might be personally reluctant to push back against the prevailing view.
Tips to minimize authority bias:
- Board leadership can solicit views from each director in turn. This ensures that all directors have a voice on an issue—and also that the “expert” speaks up in other areas as well.
- Offer deep board education opportunities in specialized areas to prevent the board from relying too much on one director’s experience.
- Have board leadership purposely withhold opinions until the end of the discussion. Alternatively, if the same person always has the last word, ask them to contribute first so their idea can be discussed.
- Ask each director to offer thoughts or ideas at the beginning of the meeting on what they would like to cover, or, at the end, about items that were not captured during the meeting.
Source: PWC
