THE FAULT LINES THREATENING BOARDROOM DISASTER
Geology explains that faults in the Earth’s surface are the result of stresses from rocks beneath. In any review of boardroom dynamics, this geological analogy offers valuable insight into the mechanics of corporate governance where similarly subsurface, stressful and unaddressed situations invariably lead to faults in the form of conflict.
These conflicts not only disrupt growth but can also result in an unfortunate and terminal organisational demise.
How an organisation progresses is largely dependent on how its governing board works, in partnership with the management team, to deliver high business value. However, there is a host of accompanying questions concerning the path to achieving competitive advantage in a 4.0 economy.
What flaws lead to conflicts? What consequences await the organisation’s future owing to the board’s susceptibility to conflicts? In an increasingly digital world, do modern technologies offer salvation or destruction? These are key points of contention.
Unmanaged risk precipitates boardroom conflict
Boardrooms sit at the top of any organisation’s power pyramid. Our 2017 study, in association with The Chartered Governance Institute UK & Ireland, highlights the primary reasons why boards find conflicts among themselves.
Some of these issues relate to people and personality, historical disputes and decision making. The study further details how unchecked tension in the boardroom may be resolved through healthy debate, but it also has the potential to turn into conflict that can escalate to unresolvable levels.
Other challenges can be identified as unmanaged risks, a delineation of roles between the board and its executive and even organisational change. The dynamics between risk and reputation are such that while well-mitigated hazards may lead to an upright reputation, this alone could prove inadequate at keeping longer-term risks at bay.
Oct-Dec 2022 Issue
Henley Business School