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Board diary

Governance is more important than ever for housing organisations. In the first of a new series for WHQ, former editor Tamsin Stirling reflects on developments over the summer

Great, dysfunctional or compliant?

A lot of discussion about governance revolves around the process of getting the ‘right’ people around the board table. But how they behave once they are there is every bit as important, if not more so. In the last three months, a number of publications have provided me with food for thought regarding board member behaviour.  

July

The paper Making a Great Board1 reports on the views of 300 board members in the US regarding what they believe are crucial elements for making and maintaining a strong board. Four areas were identified as the most common responses:

  • –  quality of boardroom dialogue and debate, including the ability to ask tough questions of management
  • –  diversity of thought and experience amongst board members (tenants are a crucial part of this diversity for housing organisation boards)
  • –  effective peer and self-evaluations of the board and board members
  • –  managing board and chief executive succession

These findings are neatly summed up by a quote from one board member: ‘A successful board is engaged, communicative, collaborative, candid, knowledgeable [and] takes its responsibilities seriously.’

Interestingly, the paper identifies a number of behaviours that undermine the making of a great board including lack of candour in the boardroom, reluctance to (constructively) criticise fellow/sister board members, the chair and/or the workings of the board, not replacing board members who fail to contribute and lack of mutual respect and collaborative culture.

August

An article caught my eye in August with the title ‘Is your board dysfunctional?’ by David Doughty2. I think everyone will have had some experience of dysfunctional teams, or at least teams with some degree of dysfunction. And many (or perhaps all) of us who have been board members will have been through meetings that seem

to have no purpose, or where the huge elephant in the room never gets anywhere near being discussed, where some board members have clearly not prepared for the meeting, or where everyone just agrees with each other, or where personality differences feel like boulders rather than grit in the oyster.

Doughty’s article is helpful in structuring a number of elements of dysfunction. Informed by the work of Patrick Lencioni3, he explores five areas of dysfunction – lack of trust, fear of conflict, failing to commit to being a team, avoiding accountability and inattention to results.

September

September saw the publication of an updated UK Corporate Governance Code issued by the Financial Reporting Council4. Changes have been made in relation to going concern, risk management and internal control, remuneration and shareholder engagement. While the preface to the revised code notes:

‘Essential to the effective functioning of any board is dialogue which is both constructive and challenging. The problems arising from ‘groupthink’ have been exposed in particular as a result of the financial crisis.’

There is little in the text of the code itself that references behaviours rather than processes. Given the ‘comply or explain’ nature of the code, to me this matters. It would not be surprising if, in demonstrating compliance, organisations focus on the processes outlined in the code, rather than on crucial behavioural issues such as whether constructive

and challenging dialogue is taking place, groupthink is avoided and how the organisation enables this.

And what of purpose and values which influence behaviour at an organisational level? Tom Murtha in a recent blog5 quite rightly states that identifying and maintaining values is one of a board’s main responsibilities. He calls for boards to pay as much attention to monitoring performance in relation to values, as to monitoring performance against other business objectives. How might this approach impact on board appraisals? Many appraisals skip past any examination of the workings of the whole board and move straight to appraisal of the contribution of individual board members – a big mistake to my mind.

Community Housing Cymru recently consulted on a Code of Governance for the housing association sector6. A response to Tom’s blog on twitter asked whether a requirement for boards to assess purpose and values and whether activities are in line with them should form part of this new code.

For me, it is interesting that an increasing number of articles and reports explore the issues of board behaviour and diversity and their pivotal role in avoiding groupthink and achieving the highest standards of governance, yet our regulatory systems and supporting documents (codes) seem to be finding it difficult to move beyond the era of process.

I would like to thank Gayna Jones and Alison Inman for their advice and input in relation to this article and more broadly on governance issues.

Alison and Tamsin are authors of an essay on governance in this year’s Welsh Housing Review published by the Chartered Institute of Housing Cymru.

Tamsin Stirling can be contacted at [email protected] and is on Twitter @TamsinStirling1

1. http://www.boardmember.com/hot-topics/making-great-board-2/

2. http://david-doughty.com/2014/08/22/is-your-board-dysfunctional-2/

3. http://en.wikipedia.org/wiki/The_Five_Dysfunctions_of_a_Team

4. https://www.frc.org.uk/News-and-Events/FRC-Press/Press/2014/September/FRC-updates-UK-Corporate-Governance-Code.aspx

5. http://tommurtha.wordpress.com/2014/08/26/dont-worry-our-values-will-save-us/

6. http://chcymru.org.uk/uploads/general/Code_of_Governance.pdf


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