Figure 1
Figure 2
Figure 3
Two contrasting board-of-directors’ models
| Forbes and Milliken (1999) model of board-of-director effectiveness | Vandewaerde et al. (2011) model of shared leadership in the boardroom | ||
|---|---|---|---|
| 1. | Human capital heterogeneity | ||
| 1. | Board demography | 2. | Chairman behaviour |
| 2. | Knowledge and skills | 3. | Individual and team conditions: Affective |
| 4. | Individual and team conditions: Cognitive | ||
| 3. | Cognitive conflict | 5. | Individual and team conditions: Behavioural |
| 4. | Effort norms | 6. | Task complexity |
| 5. | Use of knowledge and skills | 7. | Task interdependence |
| 8. | Shared leadership | ||
| 6. | Cohesiveness | 9. | Behavioural control |
| 7. | Task performance (control and service) | 10. | Output control |
| 8. | Firm performance | 11. | Advice |
| 12. | Networking | ||
Questions for future research concerning boards as teams
| Context | When do boards benefit from teamwork versus individualistic behaviour in boardrooms? |
| Boards as teams | What are the unique features of boards as teams? |
| Board task performance | What board tasks benefit from teamwork? |
| Board dynamic | How is board dynamic enhanced/diminished by boards working as teams? |
| Psychology | What is the relation between teamwork and groupthink? |
Differentiating boards of directors and typical teams
| Board of directors | Typical teams | |
|---|---|---|
| Composition | All non-executive directors, a mix of non-executive and executive directors, or all executive directors | All executives |
| Affiliation | Work for several organisations, possibly full time in one organisation | Work for the same organisation |
| Interaction | Spend relatively little time together | Spend a lot of time together |
| Time and information | Limited time, with information dependence on management | Immersed in day-to-day activities |
| Leaders as members | More likely to have leadership experience | Less likely to have leadership experience |
| Roles | Govern | Manage |
| Authority relationships | Boards have ultimate authority in law, which systemic contextual issues may constrain | CEO has authority under delegations from the board. Other executive team members have more limited authority |
| Accountability | Hold executives to account | Accountable to the board |
| Structure | Horizontal authority structure (Vandewaerde et al., 2011) | Vertical authority structure |
| Average team size | Larger | Smaller |
| Formality | Boards operate formally (see Dynamic) | Managers operate informally (see Dynamic) |
| Dynamic (Brennan et al., 2016, p. 145) | “Rules of the road” | “Rush hour” |
| Socialise | Occasionally | Regularly |
| Familiarity | Do not know each other well | Know each other quite/fairly well |
Paradoxes of boards of directors
| Role | Conflicting role |
|---|---|
| Boards are collegial groups | More and more discussion is delegated to board committees |
| Boards need to have collegial chemistry | Boards need to be diverse |
| Boards reach consensus fully supported by the whole board | Independent “free thinking” non-executive directors promote critical and constructive dissent |
| Boards engage in collective decision making based on effective group dynamics | Board decisions must be based on a diverse set of individual opinions |
| Boards must work together as a team | Boards must avoid groupthink |
| Truly independent directors | Annual election/ad nutum dismissal (power of dismissal without justification) |
| Boards need to build trust | Boards need to be vigilant on verification |
| Executive directors are peers of non-executive directors on the board | Non-executive directors monitor executives |
| Board members direct | Board members monitor |
| Non-executive directors are advisors/mentors to senior management | Non-executive directors are critical monitors of senior management |
| Board members support executives | Board members challenge executives |
| Boards’ duties and time commitment are increasing exponentially | Remuneration of non-executive directors is not keeping pace |
| Boards take decisions behind closed doors; Confidentially is a legal obligation | Increasing demands for transparency |
| Non-executive directors depend on the CEO for information | Non-executive directors have the same legal responsibilities even though they know less about the company than the executive directors |
| Non-executive directors have less company-specific information than executive directors | If non-executive directors have as much company-specific information as executive directors, they could not do their job (Brennan et al., 2016) |
| The conformance role requires monitoring and scrutiny and is risk-averse | The performance role requires vision, in-depth understanding, and an appetite for risk |
| Directors on a collegial board are equal | Executive directors (e.g., CFO) other than the CEO are day-to-day subordinates to the CEO, yet cannot act as subordinates on the board. |