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Boardroom bloopers

A boardroom full of smart directors and supervisory directors is no guarantee for smart decisions. The importance of communications is an underestimated and scarcely researched factor in this process. Board members run on routine and automatisms and often do not speak frankly. This can lead to costly mistakes.

 

Researcher Marilieke Engbers gave a glimpse into the research she is conducting for her doctoral dissertation in an article in the August 2017 edition of the MCA (Management Accounting & Control) trade journal. Her research focuses on the decision-making process in the boardroom. Engbers is the Programme Director of the new ‘Board Dynamics, leadership and communication’ executive programme at VU University Amsterdam.

 

She has been struck by the fact that research into boardroom decision-making has so far been focused primarily on tangible aspects such as governance, the composition of the board and the role of the chair. This is striking because, in her opinion, the quality of the decision-making is largely determined by the board members’ dynamics, behaviour and intercommunications. Engbers says this remains a black box for researchers.

 

The researcher notes that strategic and complex decisions must be made in the boardroom by a relatively large group of people. There is little time for an extensive exchange of information. The relationships among the board members also play a key role. Speakers decide themselves at the last second what they do or do not say. They also attune their remarks to the context in which they are operating.

 

Communicating in a group requires the willingness to take risks. You can place yourself or someone else in a vulnerable position by sharing information. The estimated risk is connected with the people on the team and the balance of power among the members (who has the formal and who has the informal power). This estimation can in turn be based on assumptions or speculations.

 

If supervisory directors do not have a shared vision of the objectives they are aiming to achieve, different supervisory directors may pursue different objectives. As a result there is insufficient time to examine each topic in depth and to tap into the existing diversity of knowledge and experience.

 

It is remarkable that the role of communications in decision-making processes has been paid so little attention. This is probably due in part to the fact that communications are wrongly associated with large groups and mass media. Communications are also often only deployed at the end of the decision-making process, so once the decision has already been made. This is odd considering that the effects of a decision depend to a large extent on the acceptance by stakeholders. Communications are crucial for the successful implementation of a decision.

 

One reason why communications are applied at such a late stage could be that the professionals in the field increasingly focus on the execution process rather than the content. Change processes are currently being completed at an ever-faster pace and are increasingly managed by super specialists. This is causing the gap between content and process in communications to become wider and wider.

 

This leads to tension in the communications and comes at the expense of the support for changes among internal and external stakeholders. The task of communications is to close that gap by focussing more on the content than the process and claiming a role at an earlier stage in the decision-making process. Also in the boardroom.

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