purpose and effective decision-making, whilst bringing their multiple stakeholders along with them.
purpose is about being able to add value by enhancing the security of members' benefits, not simply being seen to fulfil a governance function. To do this, the board needs to be able to operate in good faith and, in particular, free from political interference. And politics comes in many guises, from small ‘p’ company politics to the large ‘p’ variety facing sovereign wealth funds and public schemes. To circumvent this bear trap, the most successful boards have established independent committees to make investment decisions. Populated by investment professionals and industry experts, this has allowed them "to build a culture of professionalism" which is recognised and respected by the political forces they face.
decision-making. In the fast-paced world of capital markets, this is crucial for implementation and opens the door to tactical investing and maximising potential investment returns. Timely decisions are often no-brainers, as one board member observed: "important decisions rarely need a vote".
"good bunch of people with diversity of thought" - by celebrating the frictional rub, allowing diverse individuals to debate freely in a space where it is psychologically safe for them to disagree and to admit to knowledge gaps. This requires a healthy culture of respect between low ego individuals who are prepared to listen, overseen by a benevolent chair who enables debate.
And as the number of stakeholders increases, so does the volume and complexity of their interactions and, with it, the scope for dysfunctionality: "A complex governance structure contributed to tensions". Having clearly-defined roles and responsibilities helps to manage conflicts and expectations: if unchecked, these can lead to slow and muddled decision-making and mounting frustrations for an “operating company that isn't allowed to do a lot without the approval of people who know little of the business". Great boards are thinking carefully about board dynamics and stakeholder management. They strive to hire collegial individuals with high EQs to complement their IQs, who are motivated by achieving good outcomes optimised across stakeholders, rather than simply furthering their own agendas.
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