Don’t forget the human aspect to deliver effective governance

It is easy to approach governance in a purely legalistic or box ticking process orientated way. However, good governance involves people working together in a system, therefore we ignore the human factors of governance at our peril.

By John Harte (pictured), Managing Partner at Integrity Governance

It’s by building strong emotional and interpersonal connections, along with the culture this helps to create, that makes boards more effective and deliver good governance. Effective governance demands three fundamental human characteristics that are the currency that keeps the system working well. They are trust, respect and honesty. All attributes of people!

The dynamics of the group - the way that it interacts and the way that power manifests in the social system that is our governance - can have an enabling or constraining impact on how well governance works.

The challenges of not being able to meet in-person

Unfortunately, the move to the virtual world, the growth in hybrid working and the challenges of meeting “in-person” have made relationship building between those on the board more difficult. The virtual world makes it harder to assess nonverbal communications and has reduced the opportunity for spontaneous “corridor” or “kitchen conversation” interactions where governance and other issues can be informally raised and advice dispensed.

Emotional intelligence and governance

Today, the hybrid way of working demands that directors are emotionally intelligent to generate good relationships with others on the board, and beyond. This means that they are empathetic and have self-awareness when communicating; enabling them to build engagement, generate trust and respect, and provide leadership. To provide an example of emotional intelligence in action, a chair with emotional intelligence will evolve away from a traditional command and control style to a more facilitative leadership. This will see them create and nurture a board culture of psychological safety, where bad news travels to the board more quickly than good, where directors have the courage to constructively challenge, and where it is fine not to have all the answers, particularly during these difficult times. Challenging assumptions is particularly important during a period of volatility, when decisions need to be taken quickly. Only then can the board have assurance that they are on the right path and governance is as it should be.

Relationship between the CEO and chair

Role clarity and mutual respect are crucial foundations of the most important relationship in the governance system – that between the chair and the CEO – because of the enormous impact it has on the performance of the business. However, to be a value adding relationship it needs to be one built on trust and where there’s candour and honesty on both sides, which is where emotional intelligence comes in. It’s those who operate with emotional intelligence who will reflect on how well this relationship is working, and take the opportunity to recalibrate, where required, to ensure that the rapport is an asset to the board and the organisation.

Culture

In fact, emotional intelligence is hugely important in helping the board to foster a positive company culture One which encourages healthy dayto-day attitudes, ethics, behaviours and “ways of doing things round here”, that sets the foundations for real, tangible business growth.

There are four pillars of culture that engender business success and good governance during these complex and uncertain times, all linked to the board being emotionally intelligent.

• Agility and adaptability . To deliver this boards need to promote an entrepreneurial spirt which will help unleash the potential of their people to devise new ideas to take the business forward. Boards need to encourage a curiosity and fearlessness to inspire creativity, innovation and continuous improvement. As part of being emotionally intelligent boards must lead by example by demonstrating diversity of thought and ideas in the boardroom, so the rest of the business has the confidence to follow suit.

• Resilience. In order to bounce back after setbacks and be in a position to deliver growth it’s emotionally intelligent boards that have robust, transparent and visible leadership, to help ensure engaged and empowered employees.

• Moral courage . Building on from resilience it’s emotionally intelligent directors who are courageous in confronting reality and dealing with problems with integrity. They will create a culture of psychological safety to protect those employees who do speak up, and encourage them to do the right if sometimes difficult thing.

• Candour. It’s those organisations with an open culture where bad news comes to the board more quickly than good which can quickly focus on and solve challenges before they potentially become bigger issues.

It’s not possible to deliver effective governance by ticking off a set of legal requirements. Good governance relies on positive relationships between those on the board and the culture they generate, which requires directors to have emotional intelligence. Only then in today’s increasingly hybrid working world can directors gain trust and respect on the board, and throughout the organisation, enabling them to deliver effective governance. Additionally, having an emotionally intelligent board is key in helping businesses to navigate uncertain times and drive long term profitability.