05 Dec Coaching and the board in the age of disruption
Group director for coaching and leadership at Institute of Executive Coaching and Leadership.Gabrielle leads a practice that specializes in developing human potential. Gabrielle has had a successful business career spanning 25 years, most recently in a variety of leadership roles with the Australian Institute of Company Directors or AICD. As an experienced director and practice lead, she has advised boards and executive teams, helping companies govern for growth, drive performance, and achieve sustained value. Immediately prior to joining IECL Gabrielle was the head of the AICDs board advisory practice, a practice she built from the ground up. Fellow and graduate of AICD, fellow of the National Heart Foundation of Australia, chair of the New South Wales Cardiovascular Research Network and a committee member of the 30% Club in Australia, an international working group dedicated to improving diversity on boards.
Directors are human beings like the rest of us. Coaching plays a significant role in helping them see themselves more fully and therefore show up differently around the board room table.
In times of crisis the impact & the toll that is taken on directors when they find themselves in the firing line can be devastating.
What we have responsibility for, as institutions that educate at that level, is to make sure that we’re building resilience, capability and capacity so that those situations are prevented
The Royal Commission, particularly the Hayne Royal Commission has brought to the fore some real expectations on the part of consumers regarding the board’s role in governing for culture and behaviours and the decisions that employees make in their organization.
Boards are struggling to reorient around what is becoming a much greater level of understanding and knowledge in our community on what good governance is and should be. Boards are having to really respond to rising community expectations around that role.
If you think about the role of the board, the board is supposed to be independent of management and the organization. It can be very difficult to grasp how boards might actually execute on controlling for behaviours in an organization. Marrying the worlds of governance and coaching has a significant role to play in helping boards to navigate that quite paradoxical challenge.
A research piece by AICD with hundred chairmen on “when does good governance lead to better organizational performance?” highlighted some interrelating findings:
- good governance is situational
- governance was perceived by the chairmen as a team activity.
- individuals, directors and executives all need to bring an independence of mind to decision making.
- good decision making benefits from different perspectives, different lenses.
- There is a need to maintain openness to alternative views: a genuine ability to be able to suspend judgment and to be able to change one’s views in light of a better alternative.
For boards today, these traits coupled with how the board builds its relationship with the executive maintaining independence, but equally building high levels of trust is really critical, particularly in times of high change.
A recent gender diversity report by AICD highlighted a drop in the number of women on boards. In some respects this may well have been an unconscious outcome. We need to continue to be very vigilant to make sure that boards are critically assessing who is around the table, the skill set that is needed today and into the future and making sure that board decisions are best supported through a clear diversity of views and perspectives.
It wasn’t really until the notion of what a good board looks like, and what the best makeup of a board might be for best decision making, was challenged that the perspective of the composition of the board started to shift.
We have seen quite a significant impact in terms of females on boards. Our target as part of the 30% Club was 30% of female directors on ASX 200 companies by the end of 2018. We didn’t quite reach that. We got close, now we’re seeing some slide and maybe that is because of the kind of challenging environment that we’re operating in and maybe there is this unconscious bias slipping back in.
Role of coaching in terms of improving board performance
Using the study of ecology to evaluate how natural systems survive in periods of stability and periods of disruption can be useful for boards. The ecologist that we studied was a fellow by the name of CS Holling. Using the Holling Cycle, he identified four stages of ecology that is applied to businesses.
The board needs to understand where the organization is at any given stage in its life cycle, so that it can govern effectively.
Coaching is about being able to tap into and access the kind of knowledge that’s innate in people, built up over years of experience and expertise. That knowledge is the thing that will give directors context, the ability to be able to have perspective, to be able to understand scale, to be able to predict different circumstances resulting from different decisions. The ability to be able to tap into this collective wisdom is essential particularly when we’ve got such a high degree of change, at so many different levels. In this sense there is also a real natural affinity between coaching, and the role of a coach, and the role of a chairman.
On so many levels coaching is one of those critical elements can enable a board and executive team to be able to perform at their peak.
Gabrielle, welcome. Thank you for joining us today. IECL Coach Cast. It’s great to have you here as a guest.
Thank you Renee, it’s great to be here.
You have a unique set of experience and insight into boards. What do you see are the current challenges and pressures on directors?
Great question. Clearly the Royal Commission has had, I think, a significant impact on the world of governance and boards. And I think boards are really struggling at this point to reorient around what is becoming a much greater level of understanding and knowledge in our community around what good governance is and should be. And therefore boards are having to really respond to rising community expectations around that role.
The Royal commission, particularly the Hayne Royal commission has brought to the fore some real expectations on the part of consumers in particular, around the board’s role in governing for culture and behaviors and the decisions that employees make in their organization. And if you think about the role of the board, the board is supposed to be independent of management and the organization. It can be very difficult to grasp how boards might actually execute on controlling for behaviors in an organization.
And so one of the things that I’m quite interested in is kind of marrying the worlds of governance and coaching. And I do believe that coaching has a really significant role to play in helping boards to navigate that quite paradoxical challenge.
Could you expand on that a little further in terms of talking to how you feel that good governance leads to good performance?
So interestingly, when I was at AICD, that’s a couple of years ago now, we conducted a piece of research (LINK TO “WHEN DOES GOOD GOVERNANCE LEAD TO BETTER PERFORMANCE” BY AICD), quite a serious piece. We had a hundred chairman who were interviewed one on one for a period of one to two hours, asking exactly that question, when does good governance lead to better organizational performance? And we coded the responses and came up with a couple of really interesting findings.
So the first finding, which was quite novel at that time, was that governance was perceived by the chairman as a team activity. And the team was not just confined to the board, but in fact it was the board and the executive team. And when chairman described where governance was working at its peak, so working really well, was when the board and the executive team had four key attributes at play.
So the first was that for individuals, directors and executives, each were bringing an independence of mind to decision making. So previously we thought about independence in a structural sense. So directors being quite distant from the organization physically and in terms of their relationship commercially. So this is quite an interesting kind of development, what does independence mean? Well in fact there’s the independence of the mind in terms of decision making.
The second was diversity of views, good decision making, benefits from different perspectives, different lenses. And when those came to the fore that really helped to drive a better performance and decision making outcome.
The third was an openness to alternative views. So a genuine ability to be able to suspend judgment and to be able to change one’s views in light of a better alternative. But all of those things couldn’t come to the fore unless there was an underpinning of trust. And of course we’ve seen that play out in the consequent years, this study was about 2015. And so the deficit of trust, obviously it has the reverse impact in terms of decision making.
So I think that for boards today, those four traits and how the board builds their relationship with the executive, maintaining independence, but equally building high levels of trust, is really critical, particularly in times of high change. And I think most organizations would say that they are in periods of fairly significant change at this point.
On the topic of diversity and different perspectives and building trust, I’m curious to understand your perspective on a recent gender diversity report by AICD which highlighted a drop in the number of women on boards. Why is it that we still have this issue and in fact it seems to be a worsening issue?
It is, I think, a real challenge. I mean if I go back 10 years when we really started to look at the issue of diversity, prior to that, boards were largely an homogenous group and there was very little diversity certainly in terms of gender diversity apparent and in place in organizations of ASX 200 companies. And part of that reason I think, and this is just from my role and being in close proximity to boards, was that when you’re building a board, when a chairman and directors are building a board, one of the key things is to ensure that the board operates in a very stable manner.
So there are factors at play to make sure that the board can operate effectively. And so when organizations are in periods of high stress, that there is a level of predictability around how the board will respond and how individual directors will respond. So I think there was an almost an unconscious bias and there’s been a lot of research since then to prove that that’s the case, where there’s sort of a selection bias around people that look like me, that are part of my networks, I’ll pick Joe because I know how he will react in a certain circumstance. And because my primary aim is to make sure that the company is stewarded well through periods of high stress, I’m picking a board that really will be able to deliver that.
And so I think that’s kind of how it had played out. So I don’t necessarily think was a conscious thing. I think it was more of an unconscious thing. And it wasn’t really until we started to challenge the notion of what a good board looks like and then what is the best makeup of a board for best decision making, that the perspective of the composition of the board started to shift. And we have seen quite a significant impact in terms of females on boards. Our target as part of the 30% Club is or was 30% of female directors on ASX 200 companies by the end of 2018. We didn’t quite reach that. We’ve got close 29.7, but of course now we’re seeing some slide and maybe that is because of the kind of challenging environment that we’re operating in and maybe there is this unconscious bias slipping back in.
So we really need to continue to be very vigilant to make sure that boards are critically assessing who is around the table, what is the skill set that we need today and into the future and making sure that those decisions are best supported through, as we said, a clear diversity of views and perspectives.
What role do you see coaching might play in terms of improving board performance?
I think it’s got a real role to play, particularly given our current context. So I’ll preface this by I guess some other findings in this research, which I find fascinating. One of the things that we did determine with the chairman that we interviewed was that good governance is situational. So it really depends on where the organization is in its current life cycle and the way that we use to kind of make sense of different phases of a business and then its life cycle, was to actually look at the study of ecology. So ecology looks at natural systems and how natural systems survive in periods of stability and periods of disruption. And the ecologist that we studied was a fellow by the name of CS Holling and he identified four stages of ecology that is applied to businesses.
The first is conservation. So in conservation the organization is very stable. There is a real focus on efficiencies. There is progressively a greater degree of interdependence within the business, which is very good for a period of time. But as those interdependencies become more apparent, of course the organization itself becomes more fragile. So a disruption in one part of the business then has a more catastrophic impact on another part of the business.
So in any given life cycle, after a period of conservation, there is always a release. So this is unavoidable. If you think about bushes and bush fires and what have you, there’s a constant kind of evolution around ecology and how it treats itself through life cycles, same as organizations.
So the next phase is a period of release. So this is a period of high instability where the organization is disrupted, it might be a new competitor, it might be a hostile takeover, it might simply be the wrong leadership at the wrong time. And of course there’s a different kind of capability that’s required in the organization and for boards. And the challenge for boards is to make sure that when that release occurs, that the release is managed well and that there isn’t total value destruction through that process.
After the release there is a period of reorganization and this is where you see emergent leadership occur. Often there is very little capital to access. Different business models need to be re engineered. What worked in the past will not work in the future. And so organizations really need to rely on being able to experiment, test, innovate, be creative, very different kind of leadership that’s required to reorganize the business. And boards need to govern for that and make sure they’ve got the right leaders at the right time.
And then for the fourth stage of course, is once the reorganization has occurred, is gearing the organization up for exploitation. So in that stage, organizations are much more strategic. They need clear direction. They will have more access to capital as it makes itself available. And the organization obviously can traject itself up to a new stage of conservation at a higher level of value.
So in the context of governance, what that means for boards is that boards need to be able to understand three key things. First, boards as a collective need to have perspective. So the board needs to understand where the organization is at any given stage in its life cycle, so that it can govern effectively. If it’s in a period of conservation, the board would be thinking about what likelihood that there is of a disruption and if it would be better for the business to actually disrupt itself prior to any kind of adverse disruption. That of course requires very careful governing context and very specific types of leadership to be able to disrupt and enter into a release phase. And you don’t want the whole organization to go into release phase. Often it’s just one or two components to make sure it’s isolated, but that it can obviously then start the process of reorganizing the business. So perspective is really important and that’s where the diversity of views, openness to alternatives, independent mindset come in.
The second piece is an ability to understand scale. So a decision at one level of the business, what are the implications for another? So it might be a decision at an organizational level and the impacts at a team level. Often it can be the impacts at an industry level. So if you’re a big player, what are the impacts of your decision to the industry as a whole? And as we’ve seen in GFC, it actually can be global in that kind of impact. So scale is really important.
And the third piece and probably the hardest to be able to build capability around is predictability. And again, that’s where perspective comes in. So if you think about coaching, so if coaching is about being able to tap into and access the kind of knowledge that’s innate in people, built up through years of experience and expertise, that is the thing that will give an organization in a board context, directors, the ability to be able to have perspective, to be able to understand scale, to be able to predict different circumstances based on different decisions. And I think there is a real need, particularly when we’ve got such a high degree of change at this point, at so many different levels. And coaching to me is one of those critical elements of enabling a board and executive team to be able to perform at their peak.
You’re relatively new still to IECL and Growth Ops and coaching and leadership is an area that you’ve quickly come to understand but still exploring. So as you consider future possibilities and formulate strategy, where do you start to see your experience from the past 10 years and beyond, which we’re starting to get a sense of through this conversation. How do you see that starting to inform your thinking around the next 10 years? A sort of where to from here?
Based on my experience, I do see a real opportunity for coaching and the discipline of coaching to play a fundamental role in helping boards and executive teams to navigate what is a very difficult and changing circumstance for most organizations at this time. I think there is an innate challenge in that because obviously a lot of what the board deals with is highly confidential and setting up and operating with for a board, it’s very kind of intimate in terms of the players around the table and making sure that that is something that’s built with layers of trust. But I think coaching can play certainly a role in the individual, in terms of helping directors realize their full potential at any given point through a decision making process. I also think there is a role for coaching in a board team context and I think that more and more chairman and boards are looking for ways to create support mechanisms to help them navigate through very kind of difficult circumstances.
The other thing that I would say is that there is a real natural affinity between coaching and the role of a coach and the role of a chairman. So exactly the same kind of ability to be able to facilitate good decisions through great interaction and bringing out those differences of perspectives and experiences. So the chairman as coach I think is a concept that will become much more prevalent as we continue to build our knowledge around good governance, what it takes and how we can best support that as an education institution and an organization that’s committed to supporting executives and boards to realize the full potential of their organizations.
So Gabrielle, directors are human beings like the rest of us. How might coaching play a role in helping them see themselves more fully and therefore show up differently around the board room table?
I’m so glad you asked that question Renee. And I’ve been contemplating this because in the last few years when I’ve been working more in an advisory capacity to boards, one of the things that I have been exposed to is boards in times of crisis. And I’ve experienced firsthand the impact and the toll that is taken on directors when they find themselves in the firing line. And it can be devastating. So yes, absolutely, directors are human. And I think one of the things that we have responsibility for as institutions that educate at that level, is to make sure that we’re building resilience and make sure that we are building capability and capacity so that those situations are prevented.
So I think that one of the things that coaching can do at an individual level is to really help individuals prepare for that. So really understanding and having sort of some ability to be able to train for circumstances where you might find yourself in periods of high stress. Understand how you show up in those moments. So in those moments you are most likely, if you’re human, to have certain derails. So some of us will jump to conclusions or responses, solutions quickly, want to act, response is all in the doing, but not necessarily giving time for reflection. Others of us might well seek to avoid decisions and sort of revert to a much more insular place. Coaching helps to draw out awareness around how we’re likely to react in certain circumstances and you do need an external perspective to help appreciate how I do show up in those situations and then you can train for it.
You can actually work through the sorts of things that I need to look out for as part of my own makeup. Address those and make sure that you are acting in the very best interest of the company, with your very best ability and a very clear growth mindset at play. In a board setting, it’s very similar. Again, we’re looking at a dynamic that ensures that there is honesty, transparency, trust, that people feel very confident to be able to voice views, have alternative perspectives, that those perspectives then sit in the middle of the table, they’re debated. And really there is a process by which that board can come up with the best decision based on always imperfect information at the time.
The other part of it is, in boards there is no boss. So chairman doesn’t have any innate powers above other directors. So one of the things that’s really important in a board setting is the ability for each director to be able to hold themselves and each other accountable. And so again, coaching can help to create an environment where you’ve actually got a group of equals coming together to steward an organization without hierarchy. And so that there is this sort of internal, independent, individual responsibility to make sure that we are all showing up and we are all giving our best. So if everybody’s receiving the support of an independent coach to understand how I need to be the best that I can be and how to make sure that I’m mitigating any thing that might prevent me from being the best that I can be.
I’ve also got more knowledge about how others are showing up, what their derailers might be and I can make sure that they are as aware of those issues as I am.
As you’re speaking now I’m starting to map some of the things that you’re talking about around the IECL landscape model. What’s going on internally for us, the things that others not observe, our self talk, our thinking patterns, our values, how that translates to how we show up in our behaviors and how that shows up around the board table, but also those dynamics between people, the relationships and that dynamic that you describe and also the systems and structures. So you’re actually working all your way around the landscape there as you talk.
I’m wondering what your thoughts might be also on that connection between the way a board member might work with their own coach and then how, the connections between that and then how they show up around the board table and that role of chairman as coach, how those two things might come together.
Look, I think there’s definitely a very significant role for coaching in both of those settings. In the director setting, I think there is some things that can be certainly done between the coach and the director off-site. So away from the board environment. And that’s really about deepening awareness around my individual capabilities, my experience, my expertise, what I can draw on to be able to help through any particular given situation and that can apply whether the organization is in a period of disruption, which is often when that sort of support is sought.
Funnily enough, in our research, one of the things that the chairman did identify is that it’s actually harder to have the right conversations when the organization is in a period of relative stability. Because when things are all going well it’s easy to be able to just tick things off and not necessarily have the sort of the impetus to challenge, are we actually thinking about things in the right context and looking at different scenarios. Are there weak signals that we need to be paying attention to? Where’s the next disruption going to occur? Do we need to be thinking about a release scenario? If so, when, how do we manage it?
So again, coaching can help, by having those independent sort of curious questions posed outside of the boardroom, can help a director to be able to then contribute in a much more meaningful way, to bring those sorts of questions to the table and be able to recognize that actually, yes, this is where we are in our phase, it is a stable phase, but we need to be constantly vigilant around testing ourselves as to whether or not there is a disruption of some sort around the corner.
In a board setting, equally. I’ve actually had a simulated environment where we’ve had a coach that has observed the behaviors of the board and then provided individual and board level coaching through a scenario that’s a simulated scenario. And that process was invaluable, in fact interestingly the scenario we were in sort of two groups, where two boards were set up and we were run over three day program, run through a scenario where a listed company was in a state of crisis and as a board we had to resolve this issue and a whole range of other things that sort of came into play as a result as you can imagine.
Two different boards, same scenario. We came to the end of the three days and we shared our decision and the decision making process. The two boards came up with entirely different outcomes as a result of just the makeup, the nature of the conversation, how issues were raised, what was brought to the fore, what wasn’t, polar opposites in terms of the decision made. Now the interesting thing is neither of those decisions are wrong or right. They’re just the decisions that were made up by the group.
So again, this sort of awareness that coaching can bring around that, I think it’s just so critical. It does bring to the fore how important the makeup of the board is and sort of the attention that the board plays on particular aspects and how material that can be to the direction of a company. And having the support network of a coach just helping to guide some of those other things that might not necessarily be at play when the board is sort of operating in its rhythm, actually can be critical, materially making a difference.
Really appreciate your time today and being able to share with us your insight into boards. The connection with the ecology piece, I found really fascinating, so thank you. And I’m sure our listeners, you’ve provoked some thinking here in terms of the where to from here and the role that coaching might play. And I’m loving this thought around chairman as coach. Fascinating. Thank you, Gabrielle.
Thanks Renee, it’s great to be with you.