While board voting can serve as a mechanism to resolve conflicts and make decisions, it should be approached cautiously – and used only where absolutely required in corporate decision-making processes i.e. as a last resort (or for not-so-important decisions).
Let’s consider why board voting should be the last resort and how to avoid it.
Board voting should be the last resort in support of:
- Preserving cohesion: Board voting, by its nature, pits directors against each other, potentially leading to divisions within the board. An ‘us-and-them’ mentality can undermine the overall cohesion and effectiveness of the board, hindering its ability to function as a united entity.
- Enhancing relationships: Contentious voting can strain relationships between board members, creating a negative atmosphere within the boardroom. This can have long-term implications for collaboration, trust, and open dialogue, which are crucial for effective board governance.
- Improving decision quality: When a vote becomes necessary, it signifies a failure to reach a consensus through open dialogue and deliberation. In such cases, the decision made may not be the result of a thorough exploration of all perspectives and alternatives, comprehensive analyses of each of the alternatives uncovered, and robust debate about the decision and its contribution to the best interests of the company. The lack of these key decision-making elements too often leads to sub-optimal outcomes.
Avoid the need for voting by:
- Allowing for robust discussion and debate: Encouraging open and constructive discussion among board members is vital. By fostering an environment that values diverse perspectives, the board can explore alternative viewpoints, identify common ground, and uncover innovative solutions before resorting to voting.
- Actively seeking consensus: This approach involves finding agreement among board members through compromise and negotiation, and ensures that decisions are made with support by all board members thereby fostering a sense of shared responsibility among directors. Being reminded of the fact that directors and their decisions ultimately should serve the best interests of the company is a key part of this.
- Establishing decision-making processes: Boards can establish clear decision-making processes, such as through designing appropriate reports and dashboards, or using task forces or committees where appropriate to thoroughly analyse and vet proposals. These processes and structures enable boards to engage in in-depth discussions, gather relevant information, and seek input from subject-matter experts before bringing issues to the boardroom.
So, what is the alternative? Consensus building is key, and the benefits are numerous:
- Enhanced board unity: Seeking consensus fosters a culture of collaboration and teamwork among board members. It promotes shared ownership of decisions, leading to a more cohesive board and stronger boardroom dynamics.
- Robust decision-making: Consensus-based decisions tend to be more comprehensive and well-rounded. They incorporate diverse perspectives, encourage critical thinking, and result in higher-quality outcomes that consider the long-term interests of the organisation.
- Increased stakeholder confidence: When stakeholders witness a board that consistently seeks consensus and makes decisions based on that, they gain confidence in the board’s ability to navigate complex challenges. This can enhance the company’s reputation and stakeholder relationships.
In summary, first prize is having board members who seek consensus by allowing for robust dialogue, discussion and debate, rather than having a board that adopts a culture of decisions made by voting which could result in contention within the boardroom and a lack of alignment.