Episode 11 - The wise owl: political awareness in the boardroom

SC: Today, we are talking about the wise owl and that is the company secretary within the environment of the board. I'm Sharon Constançon, CEO of Genius Boards. We spend a lot of time doing board evaluations and witnessing boards behaving, delivering, meeting, making decisions. The wise owl is the one that can pull together disparate parts of the equations, the discussions. We'd love all our chairman to be the wise owl, but often it is the company secretary and if we're luckier, the senior director as well. It's [the question of] how the wise owl delivers effectiveness [that] I would like us to cover today.

SC: I think by being knowledgeable, by being wise, by being unemotive ¬– in other words not throwing your toys around ¬– being resilient, being agile to the needs of the person you're facing and talking to. The wise owl can influence people to calm, to think logically, get others to listen, to allow the conversation to have multiple parts of the debate occurring. I think that influencing skill of just allowing everybody their space. It's a massive talent to have when you're talking to somebody to actually just keep quiet and listen and make them feel empowered to have the conversation they're trying to share with you.

What a company secretary can do is [use] this knowledge of understanding people's need to express themselves in a safe place. It's really useful to help the chair by, post-a board meeting, doing a sort of autopsy, post-mortem, by discussing with the chair areas where they said or did certain things and how they might improve in future by asking a different question.

I spend quite a bit of time working with boards teaching them how to have a conversation, which sounds really mind blowing! Because they're so busy telling, they're so busy instructing, and they're so busy talking, that nobody's having the conversation. One of the important components of a conversation is to ask questions, because otherwise, how are you ever going to know, from the point of reference you wish to have, how the other person is thinking or is referenced relative to the point you've just asked them? It's really important to ask and listen.

[Questions] also provide time to calm. If you are seeing red mist, and you are feeling really frustrated with the conversation, to ask even a very simple question gives you time to calm and to listen and to bring that normality back to the context.

This is where the company secretary can also intervene if things are getting quite heated around the boardroom table, which can happen from time to time and there's nothing wrong with it, provided it's constructive. [They can] interject and ask a question of one or other of the parties that are getting excited, and they can obviously see what the question [should be about] because it [addresses the issue] that everyone's dancing around their handbag over. Ask something quite innocent and that will defuse the conversation. [Company secretaries] can become very influencing in allowing the topic to stay relative to what is important to get to the decision or the outcome that is needed. It is important that they are given that voice in the boardroom; they are not the minute taker.

SC: Negotiation skill is actually quite a difficult one, because you agree with both parties and you disagree with both parties, and you find a way that you will draw both of them towards the centre. Negotiation is about agreeing with somebody so that they feel respected, but saying, ‘have you considered in addition, in complement to your thoughts, this aspect?’ Rather than [acting like] another director who might turn around and say, ’no, I disagree, because my point is x.’ You can imagine, now you've got two warring parties. Whereas the company secretary can bring that exact same point across [through] working with the individual in a conversation rather than a telling environment around the boardroom.

One of the things I think really gets in the way of conversation is the boardroom table. I often joke about the boardroom table, because [when we’re] standing with a glass of wine in our hand, or a cup of tea in our hand and a sandwich in the other, we’re actually a lot more decent at having conversations that we are around the table. We must be mindful that the formality of the environment we're working in causes us in a way to misbehave, and not be authentic to ourselves and we start posturing and standing on our chairs. Really, that is not what we should be doing; we should be listening, but we all do it, because nobody's listening to us. We all tend to need to fight for our space and do it in these inappropriate manners.

I come back to one of the earlier topics we had on a podcast [episode] around leadership. One of the key capabilities of a chair is to tailor the meeting, which should allow the conversation to give and take. A conversation can in itself be a negotiation. Two directors, director and executive or non-executive and an executive can actually negotiate their way through a conversation by asking questions, by listening, by countering and by coming together without anybody saying a word, no cheering is needed if they are behaving in an appropriate manner. But that negotiation can so easily fall down, and you might need a third party like the chair, or offline the company secretary, or even in the meeting the company secretary, to be the wise owl for a moment.

SC: Can you imagine the strength and the capability of a wise owl in the nominations committee meeting? We've got a long list of ten and we want a shortlist of three for one role. How are we going to get there?

I see that ability at two levels. One, I can see the ten people, and I can see what they look like: their characters, their DNA, their capabilities, everything that is the makeup of that individual. I can see those ten [people]. I equally could see what my board looks like and I know where my gaps in the board are. Is there anyone here that's going to fill the gaps? Is it going to complement something I already have? Is it going to add to something I already have? Which of these do I need?

So when I'm looking at balance on the board, [I seek out] the ability of a company secretary as a wise owl, who has the ability to see the hole in [the board’s] behaviour, the gaps in it as it is currently, and look at these pieces of the puzzle and work out which puzzle piece is going to fill the gap best without creating world war three, we have enough of that around us at the moment. How can we use that ability to see through the outward character to the genuine DNA of the individual and how they're going to fit in as a character within this board? Are they going to be very egocentric? Are they going to be so humble they never speak? That is the balance that I believe in the appointment process of the nominations committee, the value gets brought of bringing balance.

SC: I've seen that happen once. It is so difficult for a chair or a CEO to accept [that no-one on the long list is suitable] and for the head-hunter to accept that nobody fits. We've seen it how many times. I see it not so much in the non-executive space; you do see it but that's easier to fix. But in the CEO space, you end up with, ‘oh, we’ll take the last man standing, or the one most convenient, or the cheapest, or the one most local,’ and they use completely the wrong filter to bring in a CEO. All you've done is set the individual up to fail. I've seen that time and time again, whether it’s an internal or external appointment.

Sometimes it's best not to have a CEO for a moment, or not to have a chair for the moment and let somebody take it in rotation for the next two, three months, or two, three meetings. It's far better than having to undo what you've done, particularly if it has to happen quite quickly in the case of having to say to a board director, ‘you don't fit.’ What we all will try and do is we'll all try and make it work first; we won't see the warning signs. We will delay that decision as long as we can. Eventually it's in our face and somebody else has told you, ‘You better do it otherwise eventually it will be outside of the normal decision-making process and become more of a big thing.’ It’s then got all the emotion and the reputational risk and damage that could go around it. It really is important to make that first decision right and spend more time on it and stop. Start again, if it takes you another three months, it's better than three years.

SC: I like the way you've positioned that Rachael, because it's so easy for a nominations committee to define [the recruitment process] as it's always been. Because that's what we're used to, that's how we churned out the last six non-executive positions we've done over the last ten years, and we've just reiterated the same stuff. We're not going to bring diversity of thought unless we’re prepared to be brave, and we're prepared to think outside the box.

Let's assume most people, and I think it's a fair assumption, don't like change. Therefore, it is really critical that the nominations committee, often led by the senior independent director and the company secretary particularly, readies the board for change and [makes sure it] understands the value of change, the refresh of change. Yes, some people might not like it, yes, it's going to be a little difficult to begin with. But just think how much more powerful we'll be because the customer is becoming part of our conversation, and the customer has never been part of our conversation. We've always talked about the regulator and not the customer and we need to think differently.

I use that as an example because [it brings to mind] a situation with a bank. They'd never had a female on the board, and they'd never had somebody who was not dyed in the wool in the industry and now they did both in one person. That person was extremely competent. But what happened was, the ability for the others to be inclusive, in other words, politically aware of the differences of the other person, to be wise in recognising their differences as a value [was not there]. [They] just shunned the individual completely, absolutely cut them out, they couldn't bring their value.

Now that's not a bunch of wise owls. That really is a bunch of inept sheep, because that's one of the other [metaphors we can think about], the innocent sheep and the inept donkey. We've got those kinds of characters that are suddenly not thinking about the implications of their nuanced behaviour that has such a powerful outcome to the individual who is not being included. Therefore politically, as a team, we're falling apart because we can't work together. It's really important for the wise owl to help the person fit into the board without having to redesign their own DNA [because] they have to stay authentic to themselves. Everybody else on the board, chair included, has to absorb that person's differences and diversity for their own learning. That's the change environment that we find directors really struggle with and chairs can struggle with as well. A financial director and a CEO are going to be asked questions they’ve never been asked before, and it's coming from somebody who is different: immediately their defence mechanisms are up. There's a lot of internal awareness of behaviours and understanding of one another that really is so critical [that] it needs to be [covered] in the induction process and beforehand. The chair needs to say to the board, ‘we've appointed somebody completely different, it's for us to make that person welcome. We need to welcome them because we've brought them in for A, B and C reasons, not for D, E, F that they are not equal to us. That's the whole point.’ Share that information, share the journey with the rest of the board. Otherwise, you're not using your ability to influence the people to accept change if you're just dumping the person in the middle of the pond and saying good luck, swim. That's unfair because everybody, the entire board, will fail not just the individual.

SC: The political awareness model has four quadrants, and you've just very competently mentioned them. We can't have a boardroom full of wise owls, as we will all nod sagely at each other, and nothing will happen. We equally don't want a whole bunch of foxes who are out for the kill all the time, who are trying to drive the business, looking for opportunities, very politically savvy, navigating the icebergs out there, and getting on and doing attainment of the goals and the strategy of the business. But if we had everybody sitting in that space, we'd have absolute chaos on board.

You have the donkey and the sheep, which you don't want too many of. But sometimes you have the value of the innocent question. We often hear about the silly question, the stupid question; there's no such thing as a stupid question. The innocent sheep could potentially be somebody who's new on the board, knows nothing about the organisation, but in time will become a wise owl with very good business competencies and sits somewhere towards the middle of all three of those quadrants.

People can journey through these different roles within a board partly because of their DNA, and partly because of their experience and their knowledge. The importance is to get the most out of them at each of those stages. One of the things we enjoy doing is meeting with somebody who has just joined a board and asking them, ‘what was the thing that surprised you most ¬– positively and negatively – when you walked into this boardroom? What worked for you? What surprised you? And why? Why did it surprise you? What did you expect?’ Equally, that [applies to] an exit interview. Now that you don't have a political agenda to protect, or a seat to preserve, what do you really think needs to be done on this board to be more effective?

You need to [speak to] people outside of political influence to be able to get some honesty, and it's [about] picking your time to have these kinds of conversations. Absolutely a role for a company secretary rather than a chairman. The company secretary is there to be politically wise, and to work out how people are a mix of these roles, and how to make the most of them.

SC: Yes, I think it can be helpful. You could do two things, you can sit them all down and say, ‘you are one of these four, and you are one of these four and good luck, get on with it’, which can sometimes create a whole bunch of laughter and solve the problem. Other times, you might need to be a little more subtle and use more influence and more coaching, particularly if one of them is being biased in their thinking. One of your biggest risks to effective decision-making is [that] people are biased. They're biased by money, their own agenda, previous experiences.

One of the biggest concerns we all have in the risk assessment of decision-making is what we call metacognitive bias. Metacognitive bias means [thinking] I don't believe I'm biased. We are all human; we are biased, let’s just assume that. One of the models we use to help company secretaries support directors to be politically aware of each other and of themselves, is what we call ‘seven business biases.’ How do we respond to something that is an anchoring bias: something I've seen before? How do I respond to diversity, which is the seventh set of biases, which are outside of the bias codex, the other six fall within our summaries that have come out of the codex that we're most likely to see in business.

For example, if something is given a positive slant, we're more likely to respond and not challenge it as deeply as we should. There's a couple of frameworks that company secretaries can use. [For example,] the seven bias model where you go through the 28 biases, and the diversity biases, and ask the question, ‘am I being influenced by it?’ There's another model, which is 12 questions [that] I ask myself, I ask the deliverer and I ask of the project, whether I'm being biased in any way. We have to tripwire ourselves and say, ‘am I being influenced? Or is this right for me?’ It's a very difficult process that we need to go through individually.

In the decision-making process of a board, we come back to the importance of the leadership from the chair, to allow the conversations but also to challenge with the question saying, ‘are we being biased in whatever way?’ Pre a decision, there's a lot of value that the company secretary can bring by having pre conversations, to try and filter out people's biases before they get to the board table. The company secretary being the wise owl will invariably know where those biases are and can address them quite innocently with the individuals to get the right outcome. That is [achieved through] positive engagement conversation with the individual so they start thinking straight rather than [being] influenced by a bias.

SC: The infighting usually [happens] because [an individual feels] I don't want to be wrong. [That’s] invariably what brings the infighting. Or [they think], I feel vulnerable if somebody's right and I'm not 100 per cent right. A lot of what the wise owl can bring is supporting a director to recognise there's no one right answer; there's a blend of information that's going to give us what's best for the business. It's not about you or I being right, it's about what's right for the company.

The wise owl can defuse the ‘I'm right, you're wrong’ [feeling] by bringing the middle road of the company into the equation. Helping [both parties] see that their perspective is either being influenced, or is grandstanding, we do see a bit of both of those things. The political awareness model can definitely help the wise owl point out to individuals how their behaviour is not conducive to the [success of the] company. Invariably not done in a board meeting, invariably done outside of a board meeting, prepared in advance if you expect it to happen. Or post the meeting, because the chair has decided that we need a bit more information, we're not going to make a decision now. Let's have a board call in three days’ time.

SC: It's quite funny. We talk about, we need 100 per cent consensus, we need everyone to agree. We want collegiate boards. Oh, but we don’t want groupthink. Do we really know what we want? It's finding the balance of those words. You do want collegiate, you do want to come to a decision, even if you haven't got 100 per cent consensus, because that is dangerous, and everyone seems to want that.

The most important part of it is that you've got independence of mind, independence of thought in the process of getting to what you're all prepared to consider as the right answer, not acceptable, that is the right answer. Now, you may get a 60:40, you may even get a Brexit difference of 52:48, in which case, oh dear. Sometimes, that case might be worthy of giving it a bit of time and coming back to the conversation if it's that close.

But [when] you have one or two dissenters to a decision [you should be] actively bringing in their independence of mind, because they genuinely do feel that this is not the right decision for the organisation. Don't force them into a box. The importance is to make the decision. If you haven't got 100 per cent vote, but you've got a decent majority, use those individuals that didn't agree to be your risk antennae. For the chair to regularly talk to those one or two others saying, ‘how are you feeling now? Do you think we were right? Are there things that you think are emerging risks that are arising? How does your gut feel on this one?’ Constantly be giving them a space to have a role. Because they think differently, doesn't mean they're not valuable anymore. They're extremely valuable. How do you bring their perception of the ongoing evolution of the situation to the fore? Because you could get a lot of value [from it].

Here is the independent thought that will totally put a spanner into groupthink because they're coming from a different reference point. They're not standing there saying ‘I told you so,’ that is very immature. What they are doing is saying, ‘if we continue on this trajectory, we're going to come across this kind of a problem, which is going to have a major impact on our customer delivery. But if we nuance it and we look at the product in this way, we're going to satisfy the regulator and the customer's going to buy into what we're doing because they believe in, I think…’ Those kinds of conversations are the way the disagree-er to the project can win around a morphing of the outcome to the right thing by using independence of thought.

What you want to look out for is [that] a board always wants a spanner, somebody who's going to say, ‘no, I disagree, and I disagree for these reasons but I'm listening to you. I still feel strong enough on two of my points. I'm pleased to have it minuted, but I will go with the group decision, because that is my role. And I will support the group decision because that is my duty and responsibility to the board. But my risk antennae are jangling; they're out there working and doing their job.’

SC: I think it's important to have it minuted because that will keep everybody's awareness a little bit more razor sharp. If you've just literally ridden roughshod over that individual, nothing is minuted, the entire board will be less mindful to any potential risks coming out of the decision taken. The most important thing in any decisions is to recognise when you need to alter a decision, nuance it, change it, reverse it, whatever it might be. You need to be mindful of that. To absolutely shut down a contrary view is very destructive to the board's risk nuancing going forward, because they just won't see the risks of any nature, least of all that particular topic.

SC: Sometimes the company secretary needs a confidante, a friend, and that might be their partner at home, it might be the dog. It can be a trained senior company secretary as a coach. It preferably is not somebody within the business because you are the holder of secrets, you can't start sharing. It is definitely somewhere where they need to be able to get out of that [workplace] space, and to be heard, or to share, or to learn, or to bounce ideas to help them recognise they're not the first to be in that position, and that there is a way out of it.

We all know [that when we ask somebody how to solve a problem, we tend to very quickly work out how to fix it ourselves]. Because the minute you speak, your brain engages in a different way. By doing that, we give ourselves the power to listen to our own voice. I do think it's important that to build resilience, invariably ten deep breaths is not enough. Writing it down might not be enough. Talking to somebody that has the positioning that is safe for us to have that conversation with them [can help]. And that's difficult. You’ve got to be very careful who you do that with. Definitely not a senior or junior colleague or anybody within the organisation, you need to go to somebody professional. I'm not talking about a psychologist; I'm talking about another senior company secretary that you can trust to share their learnings to your benefit. Resilience is built through [knowing] last time I got through this, so I'm going to get through this again. That in itself is the resilience, [knowing] I am able to cope.

SC: People have biases, which we've created the seven business biases model [to reflect]. But we've also created the seven director influences [model]. What are the things that influence us as directors? One of them is bias. Another one is the way we respond to information, for example. It might be specific diversities; it might be the way we respond to the hierarchy. There are many different influences that will impact different directors in different ways.

You also have what we call the ten quotients. Andrew Kakabadse, (Professor of Governance and Leadership at Henley Business School) [developed] the five leadership quotients. We've complemented that to the ten business director capability quotients, which include the leadership ones, which are combining your softer and harder skills and bringing those to the board. If you have a mix of those quotients, which might include digital, or transformation, or moral, or EQ, IQ, those are the kinds of things that make up your ten. One of them, believe it or not as we were talking about it a moment ago, is your resilience quotient.

If you have a good mix of those ten quotients around the board, not within one individual, because you’re asking for the impossible, nobody's going to be all balanced, it would be boring if we were. It's important that as a collective we have the ability to recognise what can influence us, and as a collective, work out which capability quotients we need to be able to deliver. If I'm not good at EQ, but you are, I'm going to draw on yours while I draw on my own IQ, as a simple example. Equally, talk to each other saying, ‘am I biased? What are the things I tend to do?’ And they'll say, ‘you immediately jump on the bottom-line bandwagon. You just want to know what the numbers are.’ And somebody will turn around and say, ‘but you always ask about the people, we know that.’ And they will look at you incredulously saying, ‘really, do I?’

I think you can use your bias models, your influence models and your quotient models, as well as picking up the different tripwires: the questions you will ask as a result of these things that will get in your way of being logical.

SC: I'd love to see three wise owls in amongst them at least. They usually fit into the roles appropriately: company secretary, we'd love to see as many chairs with the wise owl capability, and senior independent director. Those are your three typical wise owl roles. When worked in combination with each other's different abilities to approach being a wise owl, you get a very strong [wise owl presence].

You were talking about balance on the board, we were talking about the capabilities of the individuals to deliver balance. But the other aspect is balancing the ups and downs: the emotions, the mistakes, the positive and negative energies can equally be appropriately balanced by having the right degree of wise owl [capability] in the room.

You don't want a board director to come out of a board meeting extremely frustrated. The lack of wise owl [capability] in that board meeting will result in nobody listening, wrong decisions being taken, not debating and [not] making the right journey on decisions. All those things are what will go wrong and will frustrate so many directors, but they don't have a voice to be able to allow the board to learn that this is not effective.

SC: Let's hope there are a lot more wise owls being evolved in boardrooms.

SC: Thanks, Rachael..