Building a Healthy Board Culture

Whether you’re a seasoned board director or you’re just beginning your governance journey, each time you step into the boardroom you’ll encounter an invisible force that influences how decisions are made, how conflicts are resolved, and how the board steers the organization. That invisible force is the board’s culture.

Board culture is about more than policies and procedures. It’s about collaboration, mutual respect, and communication. When board culture is positive. it leads to a cohesive and supportive atmosphere that enhances the board’s effectiveness, increases trust among directors, and leads to better decisions.

Developing and maintaining a healthy board culture isn’t always easy, and it doesn’t just happen. It requires deliberate effort and commitment. Along the way, you and your board may need to address issues, overcome challenges, and re-evaluate existing norms of behavior.

This edition of The Savvy Director explores what a healthy board culture looks like, why it matters, and how to build it in an intentional way.

What is Board Culture?

When we talk about board culture, we’re referring to the unwritten rules — mindsets, assumptions, expectations, group norms, beliefs, values, and tools — that influence how discussions unfold and decisions are made. The unspoken language of culture has a defining influence on the work of the board.

The Spencer Stuart article, In a New Era for Boards, Culture is Key, groups board cultures into four styles:

• Inquisitive — valuing the exchange of ideas and the exploration of alternatives.
• Decisive — focused on measurable results and outcome-oriented decisions.
• Collaborative — valuing consensus and having a higher purpose.
• Disciplined — emphasizing consistency, risk management, and adherence to protocols.

No one style is better or worse than the others. What’s important is that the board’s culture aligns with the organization’s strategy, the environment it operates in, and the needs of management. For instance, an organization in a fast-paced, dynamic industry would be best served by an inquisitive, flexible board culture where directors challenge assumptions and exchange ideas. But for an organization where managing risk is top priority, a board culture focused on monitoring performance and following protocols would be a better fit.

A Healthy Board Culture

Regardless of the board’s style, a culture of trust, teamwork, and candor provides the foundation for collaborative and constructive board dynamics, where directors are highly engaged, openly share their views, and are able to reach consensus. Group dynamics significantly impact decision-making. — that’s why understanding and managing group dynamics is crucial for boards. With a board culture that encourages open communication, critical thinking, and mutual respect, boards can leverage their group dynamics to achieve better outcomes..

A healthy board culture:

• Fosters a sense of inquiry. Directors are curious, feel comfortable asking tough questions, and willingly share their views.
• Is characterized by transparency and open communication. Directors share information freely, are respectful of each others’ opinions, and don’t shy away from constructive conflict.
• Is aligned with the organization’s values and goals. Directors understand the organization’s purpose and the vision for the future, and they work together to keep it moving in the right direction.
• Prioritizes accountability. Directors take responsibility for their own actions and decisions as well as holding others accountable for results.

This kind of healthy culture requires both a collective focus from the full board and commitment from each of us as individual directors — starting with making sure our own actions demonstrate integrity, transparency, and accountability.

Signs You Need to Work on Your Board Culture

Cultural dysfunction is something no board wants. To avoid it, be on the lookout for these telltale signs. Any one of them can impact a board’s effectiveness. If several of them are present at once, it’s a good bet your board is not providing the value that it should.

• Meeting agendas are stale, repetitive, and uninspiring.
• Directors are bored and disengaged.
• There’s not enough time allocated to thoughtful discussion and healthy debate.
• There’s a poor relationship between the board and the CEO or others on the executive team.
• Board discussions are dominated by a few loud voices. Some directors hesitate to speak up.
• One or two influential directors steer the agenda and conversation.
• There are cliques within the board, with some directors excluded from meaningful conversations.
• Decisions are really made by the executive committee instead of the full board.

Faced with cultural dysfunction, boards can either tolerate the status quo or make a decision to intentionally change the culture.

Changing the Board Culture

Even if the culture is not actually dysfunctional, the board may still want to change it — perhaps due to underperformance, a new CEO, or a shift in strategy. That doesn’t have to be left to chance. Cultural change can be quite deliberate. It won’t happen overnight, but it can happen.

Moving in a new direction takes time, because culture tends to evolve slowly. One way to speed it up is with a dramatic change in board composition. Here are some other steps a board can take to intentionally change its culture.

• Define the desired culture. This involves envisioning the values, norms, and behaviors that will best enable the board to move forward.
• Assess board composition. Decide whether the people in the boardroom reflect the desired culture, and if not, what’s needed.
• Recruit the right people. Reinforce the desired culture by looking for new directors who are a good fit.
• Integrate culture into the onboarding process. Familiarize new directors with the desired culture by clearly articulating the board’s values and the expectations for director conduct.
• Focus board discussions intentionally. Integrate the desired culture into everything the board does.
• Make time for discussion and debate. Re-design the board’s agenda to allow for sharing views and building consensus.
• Develop a collaborative board-management relationship. Maintain an ongoing dialogue, especially between the board chair and the CEO.
• Make sure board leaders set the tone at the top. The board chair and committee chairs should model the desired behavior, including helping other directors find their voice.
• Insist directors take responsibility. Be clear that each individual director is expected to contribute to the culture through their own actions and words.
• Proactively address the areas that divide the board. Conduct regular board and individual director evaluations that include a focus on culture, and take action to improve performance.

The Role of the Board Chair

The board chair is critical to setting the tone for how the board operates. For a healthy board culture to thrive, the chair has to understand how to help the board make sense of an issue and to openly encourage dissenting views.

Board chair behaviors that facilitate a healthy board culture include cultivating a constructive partnership with the CEO, resolving conflicts before they become destructive, guiding the board toward consensus, fostering an environment that builds trust, and framing questions in a neutral way.

The board chair can help build a healthy board culture with some specific practices such as the following.

• Making In Camera sessions a regular part of board and committee meetings.
• Creating opportunities for in-person interactions.
• Allocating time in the board agenda for strategic discussions.
• Encouraging all directors to participate and express differing views.
• Articulating norms around director communication outside the boardroom.

Advice for the Savvy Director

The board is responsible for building a culture of trust, respect, and openness. But boards are not homogeneous entities. They’re made up of individuals, each with their own set of values, preferences, and experiences. As directors, we are imperfect human beings driven by ego and ambition, and often lacking in self-awareness.

A healthy board culture is dependent on the collective good behavior of each of us as individual directors. Paying attention to how directors interact with each other helps the board to set the tone at the top, resolve conflicts, build consensus, and withstand stress.

Acknowledging that directors hold diverse viewpoints and have a wide range of interpersonal styles, the board can still set clear expectations about boardroom behavior. As directors, we’re expected to :

• Show respect for one another and for executives and employees.
• Listen actively with an open mind.
• Ask questions constructively.
• Value and promote discussion and debate.
• Refrain from monopolizing discussion time.
• Strive to reach consensus after an informed and open discussion.
• Support, and not undermine, decisions reached by the board.
• Protect board confidentiality.
• Avoid acting or speaking on behalf of the organization or the board without authorization.
• Disclose conflicts of interest and recuse ourselves from discussing and voting on them.

Have you thought about how you are contributing to your board’s culture? I’d encourage you to reflect on your own behavior and whether it helps build the desired culture or detracts from it. As you and your fellow directors become more self-aware of how you’re promoting or working against the desired culture, you can provide feedback to one another. If that’s not comfortable, suggest that your board consider conducting individual director evaluations.

Your takeaways:

• Board culture is the invisible force that influences how decisions are made, how conflicts are resolved, and how effectively the board steers the organization.
• Unwritten rules — mindsets, assumptions, expectations, group norms, beliefs, values, and tools — influence the style of director discussions, the quality of engagement, and how the board makes decisions.
• An ideal board culture fosters a sense of inquiry, is characterized by transparency and open communication, is aligned with the organization’s values and goals, and prioritizes accountability.
• Boards can intentionally build the board culture they want by defining the desired culture, changing the board’s composition, setting clear expectations, and modeling behavior.
• The board chair has a key role in setting the tone at the top.
• As an individual, consider whether or not your words and actions help build the desired culture.

Resources:

• Building a High-Performance Board Culture. Peter Gleason. Starling Insights. June 2024.
• Culture as the Foundation: Building a High-Performance Board. NACD Blue Ribbon Commission Report. Sidley Austin LLP. October 2023.
• Trust, Respect, and Openness: Establishing an Effective Board Culture. Holly J. Gregory. Starling Insights. June 2023.
• How to Create a Healthy Board Culture. Rick Hoel. Diligent. May 2019.
• In a New Era for Boards, Culture is Key. George Anderson. Spencer Stuart. April 2018.

Thank you.

Scott

Scott Baldwin is a certified corporate director (ICD.D) and co-founder of DirectorPrep.com – an online membership with practical tools for board directors who choose a growth mindset.

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