The strategic board’ 3/3 – Cooperation within the board of directors

Cooperation within the board
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In the third and final part of our article series ‘The Strategic Board’, we look at board collaboration. We delve into the importance of cooperation within the board, what it means in practice, implications, advantages, and disadvantages. We also look at the role of the chairperson in facilitating good collaboration and how he or she works with collaboration both within the board and outside the boardroom. 

Why is cooperation within a board important?

Cooperation within a board is crucial for the board to fulfill its duty and for the company and the board to achieve its goals. Effective cooperation means, among other things, that the group can work together towards common goals, share information transparently, and also use the skills and knowledge of its members to make informed decisions. 

The purpose of the board is to provide the company with strategic direction, to translate owner directives into strategy, and then to ensure that management translates the strategy into action. The board plays an important role in the corporate governance function. Thus, cooperation within the board is essential for the overall success of a company.

Effects of non-functioning cooperation

  • Poor decision-making: The most important and primary activity, decision-making, can suffer if the board does not have functional decision-making. When decision-making is affected, it is both time-consuming and resource-intensive and results in a general lack of clarity within the board. Important discussion points that can be crucial for the company’s future can thus be put on hold and the company’s strategic direction is weakened.
  • Conflicts: When there is no functional cooperation within the board, the risk of conflict and dispute increases. This type of environment is damaging and can affect the board’s ability to act healthily in line with a board’s obligations.
  • Reduced trust: If a board finds it difficult to cooperate, it can reduce trust, both internally and externally. Internally, it may mean that company employees do not feel that the board is acting in the best interests of the company. It can lead to a reduced commitment to carry out operational activities. Externally, trust may decrease, especially among investors who want to ensure that corporate governance acts in the best interests of the company. 

What does good cooperation mean?

Good cooperation is multi-dimensional and is characterized by several different aspects, which we will address selectively in the following sections.

  1. Trust: A well-functioning board consists of members who trust each other’s skills and knowledge. They believe in each other’s abilities and that everyone can make a valuable contribution to the board and the company. 
  2. Effective communication: Communication is key for a collaborative board; communication must be constantly flowing within the group. This means that the board must also be able to address difficult topics constructively. For communication to be effective, it also requires engagement outside the boardroom.
  3. Striving for common goals: Cooperation is based on a shared vision. Thus, board members must work together towards the same goals in line with the company’s vision. 
  4. Accountability: All members must hold themselves and each other accountable for decisions and activities. This means being accountable for mistakes and working together to solve problems. 
  5. Ability to give and receive constructive feedback: A collaborative climate is a permissive climate, and it is based on the ability of Members to give and receive constructive feedback. This raises the quality of all discussions and facilitates better decision-making.
  6. Clear responsibilities: The smooth running of the work requires a clear division of responsibilities among members. The chairperson has the power to allocate responsibilities and has the greatest responsibility in ensuring the board’s performance. 

5 tips to increase the chances of good cooperation

  1. The chair should set clear requirements for cooperation and how the group should work together to achieve the best results. The chair has the ultimate responsibility to establish a culture and environment for collaboration and to communicate expectations to members. Collaboration should therefore be a core value of the board and should inform their work.
  2. Use technology and tools that help facilitate collaboration between members. As mentioned in previous articles, technology can improve board performance by streamlining their work. The same goes for improving and facilitating collaboration. If members have a platform that makes information easily accessible, the chances of collaboration and participation increase. 
  3. Find effective communication channels. Increasing the chances of good cooperation requires good communication. The illusion is that good communication can be done and finished, while it needs to be continuous to be effective. This means that the board must establish good and secure communication channels, not only for members involved in the company but also for those external to the company. 
  4. Set clear activities and deadlines. For the board to be able to implement their commitments in the best possible way, it helps if they have established a clear plan for their work. This means that they have a clear framework for their activities and associated deadlines. The plan ensures that members and the board are accountable for their performance, and thus how well they work together. 
  5. Evaluate the board continuously. Evaluating the current state of the board in a systematic way, and over time, gives members a chance to express their views transparently. This allows the board team to identify weak links and areas for improvement in their cooperation. 

Cooperation outside the boardroom 

As mentioned in the previous section, the board chair has the ultimate responsibility to facilitate and ensure good cooperation, which means an ability to communicate and establish clear expectations within the board. And this responsibility also extends beyond the boardroom. The chairman acts as a link between the board, the CEO, and the owners. This responsibility is based on the chair’s ability to collaborate with the different stakeholders. Cooperation can be strengthened through regular meetings, strategy development, succession planning, and performance reviews.

Collaboration between the board and other stakeholders in corporate governance and management is crucial to the success of a company. If the different stakeholder groups can work well together, the chances for the company increase. Resources are optimized, areas for improvement are identified and strategy work permeates the organization. 

A summary of the article series

The article series ‘The Strategic Board’ has covered key topics that underpin how a board can work strategically. The series highlights three different aspects: board composition, effective meetings, and board cooperation. As a board, reviewing and optimizing these three areas increases the chances of effective work. 

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