Self-regulating is a board’s best defense against unproductive or counterproductive directors, according to Jack and Suzy Welch.
The husband-and-wife team who co-authored the business and leadership manual “Winning” based on Jack’s four-decade tenure at General Electric—including 20 years as CEO—identified five types of dysfunctional board members in a recent article for BusinessWeek.
Their advice, which applies to credit unions as well as for-profit companies: Don’t tolerate troublesome performance by those who personify these five behaviors, and emphasize to your nominating committee the need to weed out potential directors who show signs of these traits:
1. The Do-Nothing. A “seat-warmer” who’s more concerned with the prestige or perks of being on the board than investing any time or emotion in the direction of the company. They “rarely manage or probe. Nor do they venture into the field to make sure what they hear in the boardroom about values and strategy matches what employees feel,” the Welches write.
2. The White Flag. Like the Cowardly Lion, this subset lacks courage. They live in fear of taking bold action, especially when that action may have negative repercussions, and sell out on their principles “just to get out of the cross hairs.”
3. The Cabalist. A silent type who sides with the majority, then proceeds to work behind the scenes on a personal agenda. Solid boards often are able to nip this intrigue in the bud.
But when the executive committee IS the cabal, you wind up with a “controlling, secretive, board-within-a-board that turns other directors into second-class citizens.” The resulting dynamic of distrust can tear asunder a board’s relationship with management by creating confusion about whose best interests are being peddled.
4. The Meddler. Good directors take a 10,000-foot view, focusing on topics such as succession, strategy and industry dynamics. Contrast that with the folks who like to “get all mucked up in operational details” and the” day-to-day running of the business,” which irritates the board and a company’s staff.
5. The Pontificator. This is the person who places such a high value on his or her opinion on all topics, especially “matters of state” such as world affairs and social trends, that it absolutely must be the leading edge of conversation … with everyone.
The “self-important bloviator” is a constant distraction that saps the board of energy to deal with the pressing matters at hand.
As Welch points out, you don’t have to break the law to be a bad board member. But a bad member or three can break the board.
Read Credit Union Directors Newsletter for perspectives that can shape boardroom discussions.