Boardrooms have been the subject of an unusually high number of headlines so far this year. Notably in the UK, where P&O sacked 786 crew with a view to replacing them with a new third-party crew. P&O subsequently admitted to breaking the law, with CEO Peter Hebblethwaite receiving widespread condemnation as the country turned against them and the story became a global scandal - and a shining example of bad decision-making at the highest levels.
Clearly, at a time where transparency and exemplary ESG credentials have become integral to the external reputation and internal functioning of companies of all sizes, many boardrooms are still adjusting to this transition in expectations.
To find out more about making ESG work in boardrooms, I spoke to Monica Lagercrantz, the founder of BoardClic, a SaaS B2B platform for advanced evaluations of boards of directors, CEOs, and management teams - by providing benchmarking and qualitative insights on boardroom performance and transparency. With over 25 years of international executive search experience in international markets, Monica has particular expertise in recruiting to the boardroom, creating partnerships with companies with active major shareholders, and is a well-known advisor to private equity.
Gary Drenik: In recent months we've seen several notable cases of boardrooms getting it wrong - why do you think this has become a trend?
Monica Lagercrantz: Board work is a very complex activity and it's not hard to get it wrong. Especially as there is much more spotlight on the boardroom these days - the 'G' in ESG is a key component of this, involving many unaligned stakeholders. Getting it right often comes down to two simple, yet crucial, components of any well-functioning boardroom: self-reflection and feedback. Once you are appointed to a board or become a chief executive, the feedback often stops - when, if anything, it should increase.
If the people around you are either unwilling or unable to provide honest feedback, you quickly find yourself without the challenging perspectives needed to ensure robust and considered decision-making is taking place at the highest levels of any organization.
Drenik: So, from your experience, why does feedback often stop once someone becomes a board member or a chief executive?
Lagercrantz: Too often it is wrongly assumed that humanity and empathy are the enemies of profit when the opposite is in fact true. When you are surrounded by like-minded people at boardroom level, consistently generic feedback can quickly negate the incisive thinking that is required of decision-makers. Lethargic group-thinking, with minimal accountability for subsequent actions, inevitably results in slower growth and poorer outcomes across the wider company - at all levels.
No doubt the day-to-day running of any organization is important, but this should not come at the expense of neglecting the wider fundamentals involved in role definitions, planning, culture, and performance. All of which are underpinned by necessary and effective processes for feedback and effective communication.
This is where my company, Boardclic, comes in. Throughout my career in international executive search, I saw first-hand how hard it is to get one plus one to become two when you have a group of highly competent people. This is not obvious to everyone, but the impact that poor feedback processes were having on the performance of exceptional individuals - and the need for boardrooms to better take control of the ESG agenda - was clear to see.
The disconnect was often alarming, yet very solvable in my mind - and centered around an embrace of data. By combining analytics with enhanced feedback processes, Boardclic allows boardrooms that rare chance to get qualified feedback to improve performance and ensure they get major decisions right - with a key component of our work focusing on implementing instant feedback.
Drenik: What would you say to decision-makers that may find themselves paralyzed by a fear of making the wrong decision?
Lagercrantz: You can never have too much feedback, only bad feedback. Surrounding yourself with good people is only part of the equation; the other is ensuring they are people who are willing to challenge and disagree with you at critical junctures.
Poor decision-making, especially when this becomes a pattern, cannot be underestimated as a key driver of any company's demise. At the highest levels, this often comes with both external reputational and financial damage - much of which is often very hard to row back once it has happened.
We are all prone to making the wrong decisions sometimes. No one wants to get things wrong - but fear paralysis is even worse. In the midst of the great resignation, existing and potential employees will look for clear direction from the top. By having the conviction to make key decisions culminating from clear dialogue, mistakes can be learned, and outcomes continually improved.
Drenik: Do CEOs hold too much sway today? How do those below them navigate, and even change, this?
Lagercrantz: Naturally, in some organizations, the structure and dynamics are such that there is a power imbalance. A CEO is always going to hold a considerable amount of sway - but feedback is what ensures employees do not feel this level of power is undue or, crucially, unchecked.
According to a recent Prosper Insights & Analytics Survey, workplace happiness (happy and totally happy) among 18-34's is at just 42.1 percent, 48 percent for 35-54's, and 41.3% among the 55+ demographic. Clearly, too many employees are not as happy as their employers would want them to be - a concerning sentiment that is replicated across age demographics too.
And that's why feedback at all levels - allowing employees to feel heard and understood - should be a priority for any company; ensuring the processes are in place to build a consensual dynamic between the CEO and their employees plays a key part in improving existing workplace sentiment.
Drenik: For those who may not be receptive to the idea of having a variety of board members from different backgrounds, can you explain why this matters for feedback?
Lagercrantz: It all comes down to governance; putting the G well and truly into ESG. According to a recent Prosper Insights & Analytics, just 19.9% of respondents said that ESG was not at all, or even very, important to them when buying stocks. As more people become conscious of ESG, ensuring boardrooms are able to reflect this and drive accountability, growing sentiment across varied customer bases is vital to continued success.
Here, ensuring governance processes are influenced by board members with a diversity of minds, is key. Not only for a broadening of perspectives, but also for the dialogue this then precipitates; with a broader range of thought processes, internal debates will see an improvement in quality, driving more informed and considered decision-making.
Drenik: Thank you so much Monica for sharing your fascinating boardroom insights with me today.
This article was written by Gary Drenik from Forbes and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to firstname.lastname@example.org.