Effective Directors Bring Two Ears and One Mouth

CCBJ: You’ve had a great deal of experience on boards and seen many board members at work. What would you say are the most important traits for a director to have?

Ann Harlan: The traits of a good director are different than the traits of a good general counsel, CEO or CFO. Understanding the difference in the role of a board member and other C-suite professionals is critical to effectiveness as a board member. I often think of the board role and key responsibilities of the board as being three-pronged. First, each board member has a responsibility to evaluate whether the company’s strategy works and then to ask if the strategy works in the context of the industry and the larger global business picture.

The second prong is asking whether the vision of the leadership supports the execution of the strategy and analyzing whether leadership is working together toward execution of that strategy.

Third, ask if the all-important work of succession planning at the board level as well as the C-suite level supports the strategy. Certainly there is much additional oversight and accountability under each of those three prongs, which will depend on the company and where it is in its life cycle and the opportunities and challenges the company is facing.

What we described above is really the “what” of the board. The “how” is how the board performs those duties, and how the board functions is the other critical component – perhaps the most critical component. The key personal traits of an effective board member are reflected in how the individual members interact in the boardroom – that true commitment to listening. The old adage of two ears, one mouth is worth remembering and is an accurate and important component of the effective board. It’s making sure every voice is in the room and every perspective is valued.

Good board governance should never be about every board member agreeing. It is about the respectful ability to bring different points of view into the boardroom and to reach the best result possible. It is the diversity of thought and perspective that comes with different experiences that creates better results. We now see solid metrics that boards with more women, different ethnic backgrounds, even age diversity among board members drive better results. Organizations like DirectWomen, which I’m proud to be a part of, as well as Catalyst and a host of others, are doing meaningful work in this area with very tangible results.

Leadership in the boardroom is just as important as leadership at the management level – the concepts of self-awareness, emotional intelligence and working effectively as a team are as critical in the boardroom as they are in the C-suite. We also know that leadership has many components and we each have our different styles. At the end of the day, it really is true that people follow people they trust, and trust is central to a well-functioning board. Only when you have mutual trust and respect can there be open and honest communication.

As a director, how do you bring value to a company?

That is actually the very first question I ask myself when considering a board opportunity, and, in my opinion, it should be the question every board member asks. Where can I add value? If I don’t believe I can provide a perspective that is different, then it’s not the right fit for me or for the company. One area where I might add value is a perspective that provides corporate governance experience or executive compensation experience. In other situations, the board and the company may need a skill set that reflects a specific industry view, and it’s an industry where I’ve had some background. Every board member should also add value in terms of the traits that we have already talked about and the ability to communicate in a way that brings the strategic oversight process to the boardroom.

Part of a board member’s value is also understanding the true risks the company faces and helping the company mitigate those risks. It’s not the board’s role to avoid risks, so a good board doesn’t bring value by trying to eliminate risk. Rather, the board brings value by strategically knowing when to take risks. Avoiding risks is standing still, and that’s not a strategy that works in today’s world.

Those are the questions I ask myself about where I can add value. If it’s not the right fit, my other goal is to help the board leadership or the executive recruiter find a candidate that can add value in that particular situation.

Ultimately, the selection of a new board member needs to work for the full board and for the company, both short term and long term.

Let’s talk about the ethical obligations of a director.

Certainly there are legal obligations that are well defined, such as an obligation to corporate stakeholders – primarily shareholders as well as employees, customers and the communities in which the company operates. In my view, whenever there’s a legal obligation, there’s also an embedded ethical obligation. Beyond that, board members have an ethical obligation to be fully present, to understand the business of the company, to understand and guide the strategy, and to do so in a manner that serves all stakeholders.

This may sound aspirational, but if the board truly works with a focus on doing the right thing in the context of the company – the company’s strategy, the company’s finances and all stakeholders – and they do that to the best of their ability, it flows naturally. It’s difficult work, but it’s important work.

What advice would you give someone preparing to serve on their first board?

My advice would be to ask many of the questions that we’ve addressed here. Ask why they want to be on a board and what skills they have that will add value. Then, take a long-term view of how to best gain the experience of board work. Personally, I am a big fan of working in the community nonprofit sector as well as at the corporate level to gain that valuable learning experience. Additionally, it is always important to approach board service as a learning experience, and to identify organizations that will help you develop the skills and business acumen that you need to be a successful board member.

I mentioned DirectWomen earlier. DirectWomen is an example of an organization that works with female general counsel as well as women who lead major law firms and businesses. Each of these women is board-ready and has the ability to be an effective board member. DirectWomen provides the framework to transition those skills into the boardroom.

Lastly, perhaps the most obvious and also the most important advice is about relationships and networking. Your reputation as a professional is something you begin to build the day you enter the professional world, and the importance of strong business relationships and maintaining a reputation of integrity cannot be overestimated.

Well-functioning boards have both good reputations and good relationships. Boards also need to have “a fit” that works for the company and within the boardroom. It used to be that when we talked about fit, it was a reference to an old boys’ club that those on the inside appreciated and excluded most others. In my experience, that old concept has shifted and continues to change. When we talk about relationships and fit nowadays, we are really talking about key attributes of board members who communicate well, who respect each other and who bring their business skills together to work as a group for the company’s success. I think that the definition has really changed and that communication, including the ability to disagree and to still have respectful dialogue, is more important than ever. That is how I define “fit” in the boardroom.