How can boards exert influence from the boardroom?

A burning question for many directors is encapsulated in the title of this muse. In recent years, the business media has published many stories about boards; questionable board practices; assertive CEOs that 'take over': and, missteps and failures that seem to emanate from the boardroom. Some of these stories are justified, whereas others lack substance. Alongside, the academic community has investigated the question, although typically from the perspective of a distant observer using public data or, at best, interview comments. Reliable knowledge about the board's role in influencing business performance has remained elusive. Sadly, populist claims have filled the void.

I have spent several years investigating the question of board influence beyond the boardroom as well, in an effort to discover whether boards are simply disempowered groups that meet to rubber stamp decisions, or whether influence (especially over firm performance) is possible. The quest has included longitudinal observations of board meetings; interviews with chairmen, directors and chief executives; and, the analysis of very large piles (mountains, seemingly!) of board papers, minutes, reports and observation notes. Useful insights have been gleaned from informal discussions with directors have provided useful insights as well.

While no definitive answers to the burning question have emerged(in any predictable sense anyway), a pattern is clearly apparent:

• Influence is possible. The board's active and sustained involvement in an agreed set of strategic management tasks (notably strategy formulation and strategic decision-making) is crucial if board interventions are to have any effect on the achievement of business performance outcomes. The harmonious exercise of five underlying characteristics of directors and board interactions are conducive to effective involvement.
• However, outcomes are not guaranteed. The board does not operate the company directly (that task is normally assigned to the chief executive), and many other factors both within and outside the company (most of which are outside the board's direct control) can affect actual performance. 

Findings have been written up in my doctoral thesis. The findings are summarised in two published papers, with similar sounding titles. The first, entitled How boards influence business performance: Developing an explanation was recently published in Leadership and Organization Development Journal (Volume 37, Issue 8), an academic journal. The second, entitled Board influence from and beyond the boardroom: A provisional explanation, was warmly received (attracting the best paper award) at the European Institute of Advanced Management Studies' 13th Annual Workshop on Corporate Governance in Milan in late October.

If you would like to know more, please get in touch. I'd be delighted to discuss the findings (especially the implications and guidance for practice) with any board or larger group intent on realising and sustaining high levels of company performance.