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Team dynamics

Team dynamics of a board is an important aspect in improving board efficiency. On the one hand behavioural characteristics of individuals contribute to boardroom efficiency (as suggested by the quote cited in Box 6.1), on the other it is the working environment created by the team dynamic created by a group of members together. This is not only influenced by the perception of its board members as to their role, but also in terms of what their added value is. In order to contribute to the efficiency of the board, it follows that employee representatives should act as part of the board team, as opposed to the

Box 6.1. Perspectives on boardroom efficiency

“Boards often resemble families with each person appearing to have a particular role. Some boards also have director 'cliques.' Upon joining a board, directors should think about their role on the board and where they fit. New directors should work to establish themselves by leading with their unique skills. For example, a director with a strategic background could ask questions about how well the company analyses what its competitors are doing and how it’s operating structure compares to theirs. It can be difficult for new directors - particularly those in the minority - to find their voice on a board. New directors should strive to bring a different perspective to build credibility and avoid “add-on’ comments. Directors may need to work extra hard to make their mark and avoid exclusion from debates on issues that do not directly relate to their minority status.”

Source: OECD (2008), Using the OECD Principles of Corporate Governance: A Boardroom Perspective, OECD Publishing, Paris, www.oecd.org/daf/ca/corporategovernanceprinciples/40823806.pdf.

representatives of the constituencies which appointed them. These factors will influence whether the board, acting as team can have an impact on the performance of the company.

A typology for SOE boards suggested by an earlier OECD study reflects all these different factors which influence the team dynamic and can determine whether a board can be effective (Table 6.1). The team dynamics of a board can be broadly classified in four categories: i) the conduit board, which runs the SOE as an extension of a government department and relays directions given by ministers; ii) the subjugated board which is dominated by a powerful CEO/ Chair; iii) the effective board; and iu) the symbolic board which is circumvented and uninvolved (adapted from Frederick, 2011).

Table 6.1. Team dynamics on SOE boards

Type/function

The conduit board

The subjugated board

The effective board

The symbolic board

Decision-making

powers

Board functions as an extension of a governmental department

Approveswithoutcontest or consideration

Board makes

Circumvented and powerless

Does not consider alternatives

performance-related

decisions

Not consulted on decisions by either management or owners

State vs. Company orientation

Focus on state expectations versus needs of the SOE

Limited strategic focus Relies on information fed by executives

Strategic focus

Unable to influence orientation

Relationship with executive

Limited role of nonexecutive board members

Limited role of nonexecutive board members

Board is actively overseeing management

Not privy to key discussions between owners and management

management

Relays directions given by Ministers

Dominated by executives

Significant role for nonexecutive directors

with all decisions taken by owners

Value

adding

Compliance/ conformance checking

Does not see its role as adding value

Value adding with visible board influence and presence

Lack of recognition, influence and impact

Source: Adapted from Frederick, W. (2011),“Enhancing the Role of the Boards ofDirectors of State-Owned Enterprises”, OECD Corporate GouernanceWorking Papers, No. 2, OECD Publishing, http://dx.doi.org/10.1787/5kg9xfg6n4wj-en.

 
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