Is a Board of Directors a Team?

This section applies the team diagnostic survey to a board-of-directors’ context. The team diagnostic survey (Wageman et al., 2005) is probably the most advanced of such instruments to assess team effectiveness, and it is well-grounded academically. Wageman et al.'s (2005) team diagnostic survey comprises six criteria, three essentials and three enablers (see Figure 1). The essentials require (i) a real team, (ii) the right people and (iii) a compelling purpose. The three enablers include (iv) a sound structure, (v) a supportive context and (vi) team coaching. A real team is bounded (team members know who is and is not on the team), stable (team members stay together long enough to learn how to work together) and interdependent for a common purpose (team members must interact and share resources to accomplish the team's compelling purpose). The right people means that the team has the right skills to do the work effectively and brings a range of perspectives needed to perform creatively and well. A compelling purpose is challenging (a stretch, but not impossible), clear (team members know what it would look like to accomplish it) and consequential (it has a meaningful impact on the lives and work of others). Compelling purpose orients and motivates team members to operate in the same direction, even when they work in different places simultaneously, and they do so with energy and conviction. Other model criteria are key task processes and team effectiveness.

Figure 1

Figure 1 also includes the team diagnostic criteria applied to a board-of-directors’ context (text in italics). Key to the board being a real team is its composition. In terms of the right people, modern governance emphasises the importance of having independent people on the board (Brennan and McDermott, 2004). Board diversity is assumed to enhance independence. In relation to the enablers, appropriate board structure in terms of board committees is also necessary. Some consultants offer board team coaching, although few if any boards avail of such services. Instead, the emphasis is on induction processes and board training. Relevant aspects of board key task processes include board effort norms (Forbes and Milliken, 1999). In terms of knowledge and skills, at least one board member/audit committee member should have appropriate financial expertise. Following the 2008 banking crisis, knowledge of a company's sector is now recognised as important. The quality of board processes is essential for board effectiveness (Currall et al., 1999).

Many team diagnostic survey criteria apply to boards of directors. Boards of directors would benefit from considering their performance against Wageman et al.'s (2005) team diagnostic survey criteria. Board evaluation exercises could incorporate these criteria. The following sections draw from prior board-of-directors’ literature considering boards as teams.

Payne et al. (2009) suggest five attributes of high-performing teams – knowledge, information, power, incentives and opportunity/time. They argue that these attributes promote board effectiveness, which in turn influence corporate financial performance. Forbes and Millikan (1999) construct a model of board effectiveness whose eight elements (see Table 3) resonate with elements of teams, including “effort norms”, “knowledge and skills”, and “use of knowledge and skills” (see Figure 1). Vandewaerde et al. (2011) extend Forbes and Milliken's model, specifically in a team context, developing a 12-element model (see Table 3). In a board-of-directors’ context, Sonnenfeld (2002, p. 109, p. 113) observes that:

Pastra et al. (2021) survey 184 Nordic board members on their perceptions of their boards’ behavioural integration as a team and impact on board performance. They expand the prior literature on top management teams by demonstrating clear differentiation between the various board microdynamics on boardroom performance. They conclude that a team's conversational environment crucially impacts team outcomes.

Bentley (2000) is an executive and team coach. From that perspective, he applies six Gestalt concepts to his case company board of directors. He describes a board of directors as an “intimate system”. His six Gestalt concepts are (i) relationships in intimate systems, (ii) relationships in the context of the field, (iii) the importance of “what is happening in the moment”, (iv) all round awareness, (v) meaningful contact and (vi) working with boundaries. He observes that board relationships are often tenuous, superficial and even dishonest. He contends a board-of-directors’ context is fertile for developing better relationships among people who may undervalue such contact. He applied his Gestalt approach in one board which was experiencing time-consuming misunderstandings and off-target decision-making. He got board members to work in pairs. He found the directors had a complete lack of conscious awareness of what was happing in their dialogue. They created barriers in developing relations within the group. He urges boards to become more aware of the field in which they operate together, from the individual, group and systemic context. Following the exercise, Bentley (2000) found the quality of directors’ contact improved, and they related to each other with greater authenticity. Bentley (2000) also discusses conformity and differentiation behaviour in social groups. He worked with his board to get directors to locate themselves on a continuum between conformity and differentiation. He believes their early life attachment patterns may influence director positioning on the continuum. Bentley also highlights directors’ biases in focussing on the past and urges consideration of the gestalt notion “what is happening in the moment”, which benefits growing awareness. He conducted a further exercise in pairs to deepen the directors’ self-awareness by getting them to consider mirroring or reflecting to another person how they are currently reacting to them. For this purpose, Bentley (2000, p. 182) got the directors to use three phrases: (i) I am noticing, (ii) I am imagining/wondering/thinking, (iii) I am feeling, which relate to Gestalt's three zones (outer, middle, inner) of awareness. He concludes that moving from superficial minimalist boardroom contact to contact at deeper levels improves board effectiveness.

To conclude this section, the prior literature generally assumes that boards of directors are teams but raises questions on their effectiveness.

A key attribute determining whether groups of people perform as a team is psychological safety. Unless people feel psychologically safe to express their views freely, they will perform as individuals, not as team members. Ogunseyin et al. (2019, p. 51) consider team-level trust or intra-team trust, a form of trust that team members have for their fellow teammates. They define trust in the boardroom as “the willingness to be vulnerable to another board member, and this feeling is shared across board members.” Psychological safety is central to effective teams. Edmondson (1999, p. 350) defines psychological safety as “a shared belief held by members of a team that the team is safe for interpersonal risk taking.” Psychological safety encourages cognitive conflict, considered essential to effective board processes (Forbes and Milliken, 1999). Team climate features in the extensive literature on team dynamics. Kozlowski and Ilgen (2006) review 50 years of research into team effectiveness and identify key team processes with well-established, empirically supported contributions to team effectiveness. Among the team cognitive processes they identify as enhancing team effectiveness, “climate” is the most mature and applicable and evidenced by 70 years of research. They describe climate as cognitive, based on interpretive perceptions of salient features, events, and processes that characterise the strategic imperatives of the organisational and team context. Exposure to strong strategic imperatives/situations, perceptual filtering and leaders’ interpretation and social interaction, sharing of perspectives, and collective sense-making can shape teams’ consensual, collective climate perceptions. They further identify the levers affecting climate as including leadership and interpersonal interaction. Within a team's interpersonal processes, they identify team cohesion (including shared experience and leadership) and team affect, mood and emotion (including member similarity) as key levers which enhance team effectiveness. Derdowski et al. (2018) survey 423 Scandinavian corporate directors. They find task-related conflicts negatively influence boardroom psychological team climate inventory (task orientation, safe participation, support for innovation vision). Pugliese et al. (2015, p. 8) assess the board climate on the two boards that they observe, finding contrasts in the following three dimensions: (i) the tone of the discussion; (ii) the way of dealing with dissent, and (iii) the formal or informal structure of director participation. They observe greater cohesiveness, spontaneous interactions on one board and a higher tendency to build consensus (“dissenting opinions are questioned and discussed”). Meetings showed a more disciplined “parliamentary procedure” at the second board, and directors were less participative.

Veltrop et al. (2021) observed five boards, coupled with a substantial survey, to ascertain how board climate shapes directors’ monitoring of executives. Directors are likely to be influenced by boardroom norms. They may need to overcome social pressures to monitor or challenge effectively. Veltrop et al.'s (2021) qualitative and quantitative analyses indicate that board psychological safety climate influences the monitoring behaviours of directors. Additionally, they find that the behaviour of the board chair, who creates a psychologically safe boardroom climate, increases monitoring by stimulating individual directors’ engagement in monitoring. Their findings also suggest that a “psychologically unsafe board led by a nonparticipative chair would inhibit even well-qualified and independent directors from monitoring the CEO” (2021, p. 209). Veltrop et al. (2021) identify five indicators of a psychologically safe board climate for monitoring (details shared privately with this author): (i) “If you make a mistake on this board, it is often held against you”, (ii) “Members of this board are able to bring up problems and tough issues”, (iii) “People on this board sometimes reject others for being different”, (iv) “It is safe to express views within this board” and (v) “Working with members of this board, my unique skills and talents are valued and utilised.” Veltrop et al. (2021, p. 218) also identify six positive participative leadership behaviours of the chair which set the tone for a safe board climate (adapted from Arnold et al., 2000, p. 268) which are: (i) The chair encourages directors to express ideas/suggestions; (ii) “The chair listens to directors’ ideas and suggestions”, (iii) The chair uses directors’ suggestions to make decisions that affect the company, (iv) “The chair gives all directors a chance to voice their opinions”, (v) The chair considers directors’ ideas when they disagree with them, and (vi) Chairs make decisions based only on their own ideas.

Coles et al. (2020, p. 1) distinguish between boardroom groupthink and teamwork, arguing that “greater overlap among directors can lead to greater cohesiveness of the group, which in turn can result in groupthink (negative synergies) or in better teamwork (positive synergies).” Many boards favour consensus or democratic procedures. Limited groupthink may be acceptable if it permits boards to function, rather than experience conflict and failure to reach resolution. In a survey of 100 organisations (Drew and Coulson-Thomas, 1996), respondents ranked “Encouraging teamwork in the boardroom” sixth lowest of 17 corporate objectives for which teamwork was considered a “very important” contributing factor. Drew and Coulson-Thomas (1996) do not discuss this finding. They are not transparent about who completed their interviews/survey, whether managers or non-executive directors. Thus, it is difficult to surmise what is driving their finding. The low ranking of this corporate objective may reflect an appreciation that a board's role is to challenge management rather than engage in teamwork in the boardroom.

Edmondson (1999, p. 354) distinguishes group cohesiveness and team psychological safety, observing that group cohesiveness can reduce willingness to disagree and challenge others’ views. She cites groupthink as an example of group cohesiveness, manifesting as a lack of personal risk-taking. Commentators regularly accuse boards of directors of groupthink. Regulations require non-executive directors to question and challenge executive directors and senior executives. The corporate governance literature and best practice identifies mutual respect and trust as necessary for this questioning and challenging to be effective but does not articulate why this is so. Edmondson (1999, p. 354) identifies that psychological safety gives team members “a sense of confidence that the team will not embarrass, reject, or punish someone for speaking up.” Edmondson (1999, p. 354) defines team psychological safety as “a team climate characterized by interpersonal trust and mutual respect in which people are comfortable being themselves.” Arguing that it is not the rules and regulations, it is the way people work together, Sonnenfeld (2002) advocates creating a climate of respect, trust and candour in the boardroom, which can foster a healthy culture of open dissent.

The curse of teamwork – groupthink: Reading about psychological safety is a reminder of organisations and their leaders who adopt actions to undermine psychological safety. For example, Enron – arguably the world's greatest financial reporting fraud – had a standard practice of sacking a proportion of its workforce annually (Greenwald, 2001). UK listed company, Patisserie Valerie, collapsed suddenly in 2019, following a financial statement fraud perpetrated by a supplier supplying fictitious invoices with the collusion of five finance staff members. Marriage and Beioley (2019) report that these six people were motivated by “trying to keep people happy … It was easier to fiddle the numbers than admit to bad results [to the executive chairman, Luke Johnston].” Mr Johnston could not handle people telling him bad news. Mr Johnston paid heavily for undermining psychological safety in the organisation he founded. He lost £225 million of his personal wealth. Thus, contrary to the literature on team effectiveness, some organisations deliberately engage in the opposite of a supportive context (from the team diagnostic survey – See Figure 1) in the mistaken belief it improves organisational performance.

While noting that healthy tension is essential for effective boards, Kakabadse et al. (2017) discuss how, reaching a tipping point, healthy tension might spill over into conflict inside and outside the boardroom. They acknowledge that not all conflict occurs inside the boardroom, and many conflicts are resolved outside the boardroom. Heemskerk et al. (2017) classify boards of directors into four types depending on the extent to which a board agrees/disagrees on its current and desired roles (i.e., “compelling purpose” in the team diagnostic survey – see Figure 1). A “forward-looking” board (high current disagreement/high desired agreement – Now we do not always agree, but we desire to agree) shares a common understanding of how the board should work but disagrees on its assessment of the current execution of the role. Such boards are forward-thinking because opposite thinking is not discouraged. In an “established” board (high current agreement/low desired disagreement – Now we agree, but we do not desire to disagree), all board members share an understanding of their current and their desired roles. There is groupthink as there is no desire for opposite thinking. A “static” board (high current agreement/high desired disagreement – Now we agree, but we desire to disagree) lacks a proper course. The board is stuck/static, probably because directors do not know what is not working. Finally, a “lacking” board (high current disagreement/high desired disagreement – Now we do not always agree, but we desire to disagree) lacks a common framework and is dysfunctional. Figure 2 adapts Heemskerk et al.'s (2017) classification into four board-of-directors’ categories. The ideal board is low on agreement yet also low on disagreement, called the challenging board. A board with high current agreement and low desired disagreement risks suffering from groupthink. The static board (high current agreement and high desired disagreement) brings to mind the notion of “stuckness”. Finally, a board low on current agreement and high on desired disagreement is likely to be a dysfunctional board.

Figure 2

Teamwork is likely to vary depending on the roles being executed. The prior literature broadly classifies board tasks between strategy, monitoring and control, and service roles (Brennan, 2006). Boards are expected to formulate firm strategy and shape strategy through continuous interactions and teamwork. Strategy development involves collaboration and cooperative problem-solving in groups. Positive teamwork is likely to affect the outcome of strategic processes. On the other hand, monitoring and control under agency theory, assumes individualistic self-seeking and opportunistic behaviour. The tension between control and collaboration (Sundaramurthy and Lewis, 2003) has also been conceptualised as adversarial versus harmonious behaviours in the boardroom (Buchan, 1981). The adversarial perspective views boardrooms as locations of ‘contestability’.

Pernelet and Brennan (2021c) video record boards who meet in public in front of an audience and in private. They interpret their findings through Goffman's (1959) dramaturgical lens. Goffman (1959, p. 79) uses the term “performance team” to describe “a set of individuals who co-operate in staging a single routine.” Goffman (1959) identifies two key elements of team membership. First, there is loyalty to the team. Members depend on each other's cooperation to ensure that nobody makes a mistake or disrupts the show by their conduct or by disagreeing with each other while performing, which could lead the audience to question the effectiveness of the performance. Pernelet and Brennan (2021c) find that their boards perform governance as performance teams in public but not in private. Thus, the context (meetings in public before an audience or in private) influences how the board performs as a team.

Boards engage in annual evaluations and regular training. Boards/consultants/trainers tend to base these exercises on corporate governance codes of best practice. Evaluations and training would benefit from broader considerations of softer skills, such as insights from team coaching, which form the basis of this paper. Nicholson et al. (2012) develop a board evaluation instrument based on Wageman et al.'s (2005) team diagnostic survey to diagnose board problems reliably. Their instrument assesses the team attributes of organisational boards. Their survey participants include 118 nonprofit board members from 18 boards. They find that constructs generally applicable to teams generally appear to apply to boards. However, they find boards differ from typical work teams in terms of (lack of) interdependence (board members’ inter-reliance on each other), which they attribute to the episodic nature of boards’ work. They also observe that singular group interactions at formal board meetings differentiate boards of directors from how typical work teams interact, which involves meeting more regularly. Cheng et al. (2021) design a survey for directors on board effectiveness based on insights from team effectiveness. They find that factors associated with team effectiveness in other settings are highly associated with a corporate governance context, specifically internal board operations.

Figure 3 shows that processes to improve board effectiveness may operate on a continuum from board induction to team coaching. Some boards may procure team coaching to improve team effectiveness. Shekshnia (2018) urges boards to practice teaming—not team building. Edmondson (2012, p. 14) defines teaming as “the activity [emphasis in the original] of working together.” Farmer (2015, p. 73) defines team building as “a one-off, specific event in which teams focus on improving interpersonal relations; productivity; or alignment with organisational goals.”

Figure 3

Niamh Brennan is Michael MacCormac Professor of Management at University College Dublin and Founder/Academic Director of the UCD Centre for Corporate Governance. A first-class honours, first-in-class UCD Science (Microbiology and Biochemistry) graduate, Prof Niamh Brennan qualified as a chartered accountant with KPMG, holds a PhD from the University of Warwick and is a Chartered Director of the Institute of Directors (London). In recognition of her research, Niamh was elected to the Royal Irish Academy in 2020, Ireland's highest academic honour, the first business school academic to be so recognised. Niamh also received the 2018 British Accounting & Finance Association Distinguished Academic Award, was inducted into the Interdisciplinary Accounting Research Hall of Fame in 2019 and was awarded a Fellowship of the Irish Academy of Management in 2021. Prof Brennan's papers received a British Accounting Review best-paper award, Mary Parker Follett Accounting, Auditing & Accountability Journal best-paper and ‘highly commended’ awards, and an Accountancy Ireland best-article award. Niamh is an Inaugural Honorary Fellow of The Institute of Directors in Ireland and an Honorary Fellow of the Society of Actuaries in Ireland.