Board of Directors: What is going on?

Joke or Joker? Are you playing with a full deck? (Picture by Clifford Photography)

In the past years, I had the privilege to work with multiple great companies and with great people.

This experience was unfortunately clouded by the existing leadership (or lack of?) around in pockets, or in its entirety.

As I got to work with VPs, CxOs and further global leadership levels, the only thing that keeps creeping back every time is:

How much leadership / management is messed up in many of these companies.

Hence I had to write about it again.

None of these are small, family companies or startups.

Before people think I'm here to disrespect these companies, that's wrong.

These companies try to do the right things…they do…many of their leaders really honestly try and many of them are good leaders, some are great.

Yet, they have people in critical leadership positions in place, who are not just destructive at leadership levels, but throughout the whole organisation and somehow these cases go either straight undetected or unresolved despite detection.

Case A.

• 500M USD annual revenue business with global locations, around 2k employees.

• Consistent direction and expectations from C-suit and board are non-existent (this is not even the quarterly direction change, but zero direction overall).

• Abandoning critical cross-functional processes agreed, directly by C-suit happens every day.

• Saying A then doing directly B after by C-suite leaders happens every day.

• Same for wanting to go in direction A and doing everything to pull the ship into the opposite direction.

• Blaming one person for a persistent problem, without even root causing an issue properly, or passing blame without fundamentally understanding what's behind.

• Moving organisation around people (who weren't even capable, but old friends - not necessarily clueless but definitely not the capability level that would be required to successfully do the role), instead of building the fitting organisation and checking if people should belong in the roles.

• Directly stabbing VP/director level leaders in the back on a daily basis by promising support, then immediately redirecting the same relevant resources elsewhere without informing them.

• Making decisions behind the leaders back without informing them, but informing people below them.

• Never ever listening, only speaking without any meaningful communication attempt (essentially thinking everyone else is stupid around them).

Case B.

• Global industry leader, revenues in Billion USD level, around 40k employees globally.

• GM doesn't make decisions and doesn't set expectations in the leadership team, therefore those who don't want to make an effort, they stir the crap around every day.

• No consequences of shabby quality going out of the door landing at customers (who actually complain), no consequences for producing high-value products 2x times as the first batch was fully messed up etc.

• Almost every manager below the GM is focusing more on others' areas than theirs with no consequence or KPIs being really measured.

• Financial bookkeeping is from the 1900's, not following HQ requirements.

• Paying for an ERP system that never got correctly implemented and is causing more issues than it helps to run the business overall, they are trying to patch it up but with total lack of collaboration from every function.

• Insensitive internal communication (e.g. sending the site on short-work weeks for months which means income loss for the workers, while boasting of how much profit they could provide to shareholders).

• Product goes out of the door which is clearly non-compliant and arrives to regulated industry customers, which local management is fully aware of and they decided to hush it up.

• Internal audit doesn't see a "good enough" case to investigate potential internal fraud, even though books are messy and don't follow HQ requirements.

• Nobody from above is doing anything to truly change these on site.

These are just examples of real, recurring cases that I see and others around me see very clearly every day.

All of those people I worked with (from assistant to CxOs etc.)....most of them are acutely aware of all these. Some of them ride the ambiguity, some try to fight it.

Now, unless you live under a rock, we all know the outcome of such leadership behaviour:

• Good, talented people and fellow leaders will leave.

• You might find others, but at what price and with how much knowledge lost?

• You are losing top line revenue and bottom line results at the same time.

• You are reduced to solutions, which are expensive and provide little relief in reality.

• Granted, you will make further huge mistakes as you will panic along the way.

• The company is suffering, or goes bankrupt in the end if you go too far (e.g. the site or subsidiary at least).

This is not fear mongering. This is life in many companies. Might be peanuts for some, but life for everyone working there at the "bottom of the food chain".

Even though those worthy leaders I also met, try to firefight these issues and/or solve them with every tool/resource they have, many times these are far from enough and the issues continue if not get worse over time.

Many of those leaders burn out and leave as well or left already, struggling to find meaningful employment (especially men over 50 and women over 40 already…they are all in their prime as professionals).

Then the Board of Directors starts asking questions, but they are never really truly interested or invested enough to find the real root cause.

Many times the board is silent as the C-suit covers it all up for too long.

Obviously, short-term, quarterly targets also harm all of these companies, as nobody from the board or from the C-suit will look further than 3 months. Hard to address systemic issues with this focus horizont.

It is also the case many times that there is a clear conflict of interest and board members/presidents are also owners and CxOs in the same company, as nobody changed that since the company grew from startup to SME or even bigger.

But not caring about your own revenues, profit and how people right below the Board are draining it because of the Board not doing its job….that's frankly hard to understand (I'm talking here short-term revenues and profitability, no less).

When will boards start asking the right questions again and hold those directly below them accountable? When will they hold themselves accountable again?

When will companies revise their incentive strategies and seriously hold back remuneration from executives if the teams below them have prolonged issues?

When do we get to a point of honesty to introduce the 360 degrees feedback again for everyone at every level of the organisation (including boards and C-level)?

I strongly believe that if someone is a good enough leader, they don't mind 360 degrees feedback as they know what they are doing.

They also don't mind strict evaluations and negotiations - heck, the good ones are the first ones who will negotiate a fair contract and ask for fair but strict evaluations, as they evaluate themselves the hardest.

Today, many companies have dysfunctional boards where none of the critical questions are asked, or they don't have the knowledge and the tools to detect the real root causes, or both.

Too many times, we have boards where functional knowledge is missing for critical functional areas (e.g. operations & supply chain) and they don't even bother adding advisory board members to help them with such cases.

Time to change these and include the right functional expertise.

If I'm really honest, everything one needs to know is already published many-many times everywhere. We just need to actually apply these in real life.

Boards have the authority to kick out people who destroy. What is keeping them from doing it?

One board member will not make a change, only if boards have a full cultural change.

Many times this comes only via ownership change, as otherwise board members get changed one by one, therefore no cultural change happens.

How much does a company need to lose to make a real change? Where does it start really hurting?

It seems now, that we have no limit in this race to the bottom.

Once again, my suggestion for companies would be:

1. Transparent and strict incentive structure at every level: easy to say, hard to truly achieve but not impossible!

2. Diverse board appointments: only if you are ready to actually benefit from it, instead of having token roles who never get heard.

3. Have advisory boards, if you don't want to change your board and listen to them!

4. When something doesn't work, follow up and make a change, especially at C-level and in middle management.

5. Check your structure: if you are top heavy on base salary for execs as aggregated figure vs your total payroll costs, it can be already problematic.

6. Ask yourself the question: am I the right person for this board role? If you are not certain what value you deliver, don't do it, if you are asked.

If you are a board member, what does your gut say?

From us, you can get the functional expertise and honest feedback on how your leadership is faring (as advisory board members). If you are open and honest, we can also help repairing your functional structure.

If your ownership structure is still as if the company was a startup, that you need to sort out and fast.

If what I wrote made you feel slightly uncomfortable - good. That's how it should be. What are you going to do?