Imagine this scenario: you are seated at a board table, listening with your fellow directors to a presentation about a new idea. It’s subtle and incredibly complex.
Imagine this scenario: you are seated at a board table, listening with your fellow directors to a presentation about a new idea. It’s subtle and incredibly complex. Personally, you are struggling to grasp its true meaning. When you look around the room, your colleagues seem to be nodding knowingly. You will soon be asked for approval to proceed.
What will you say?
The truth is, there’s often no right answer – only the best answer. And the only way to reach the best answer is to be really fearless about airing your thoughts; tackling the pros and cons, discussing the consequences and exploring the potential for unintended outcomes.
A director refusing to have that debate, whether by remaining silent or by being disingenuous about how much they understand, puts the entire board decision at risk.
Why? Because of fear.
We are afraid of looking stupid, incompetent, out-of-step or out of touch. How often have we not spoken up because of our fear of what others might think? What is it about a culture that values avoidance more than it values openness and honesty? What makes a director more likely to be silent than to speak out against poor decision making?
I was asked once, in an interview, if I was proud of the work Broadspectrum was doing on Manus Island and Nauru. It was a confronting question, and I knew that it would be provocative to say I was proud of it. But I felt it was crucial for me to stand in truthful defense of what I believed, and not to back down because I might feel confronted … or afraid.
As we get older – and hopefully wiser – we’re more able to see the problems that exist. I believe it should be the role of people in positions like mine to call out problems that exist unsaid because of fear. With the benefit of experience, we can take a strong position against misunderstanding, groupthink, and lack of proper debate.
I love this quote from William J. McDonough, who was the President of the Federal Reserve Bank of New York: ‘If bank executives and board members don’t understand derivatives they have no business letting their institutions deal in them.”
Given about the role derivatives played in the GFC, few would argue against his sentiment.
What’s really striking about this statement, though, is that it was made in 1995 – a full decade before the on-set of the GFC. What prevented those responsible from at least questioning their efficacy? Could these decisions have been better managed if they were honest and fearless conversations at board level? I’m almost certain that the answer is yes.
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Diane Smith-Gander / About Author
Diane Smith-Gander is a professional company director with experience at many of Australia’s leading organisations. Her board experience includes AGL Energy, Wesfarmers Limited, Safe Work Australia, Keystart Loans, Henry Davis York, CEDA, NBNCo and Broadspectrum.
Diane is Immediate Past President of Chief Executive Women and a strong advocate for gender equity. She is a keen down hill skier and operates a vineyard in Margaret River.