There’s an expression that’s become part of the corporate-speak lexicon in recent times and while I’m still now sure how it sits with me, I can say with a great deal of certainty that it pretty much sums up what I’d like to explore today.
The elephant in the room…
Yes, we’ve all heard it and understand it means that large, looming issue that we’re too frightened to address, that we choose rather to tiptoe around in meek fashion. Better still, we pretend it’s not even there.
But the elephant is well and truly in the room for many boards when they sit down to assess their skill set and determine which directors bring what skills to the table – and, more critically, what gaps are evident, what skills are missing and how are we going to address the deficiencies.
All too often, boards pay lip service to this important assessment when what’s required is the courage to talk about the hard things openly and honestly, to confront the challenges and to address them.
The common practice among boards these days is to draw up a skills matrix which lists, down the left column, the skills the board considers it requires to do a good job and govern well. Things like governance working knowledge, financial nous and legal expertise, as well as strategic planning, marketing and communication, brand and risk management, investment knowledge and banking and finance expertise.
The next step is to list the names of the directors horizontally and get each to assess their knowledge and skills in these areas – with five being exceptional and zero weak.
And while this, in theory, is certainly good governance practice, it falls short if not conducted openly, honestly and comprehensively.
What I’ve found is that less effective boards tend to have directors who overly assess their ability and give a three – or average – to areas where they probably have zero knowledge or understanding. Conversely, slick functioning boards are invariably sticklers when it comes to member assessment. They tend to be more careful in defining the skills and more honest and accurate in their assessment.
For example, they drill deeper and ‘law’ alone is not sufficient an answer. They want to know what specific areas of law….after all, knowing the person has high level corporate or commercial law experience is far more valuable an answer than ‘law’.
The courage I spoke of earlier comes into play when we conduct honest assessments and learn that a member or perhaps even members do not have the skills to take the organisation down its chosen strategic path.
We owe it to our organisations to ask these people to make way immediately so that we can create a casual vacancy for someone with the skills needed.
That’s the elephant in the (board)room. Good boards stare it down, not-so-good ones tend to look the other way.
Where’s your gaze?