Standard page format

Newsletter on Governance and Leadership

June 17, 2004

Observations regarding the question-asking mode of board governance

During the height of the Enron media frenzy, Greenspan, when asked what he would have said or done, were he to have been on the Enron board, stated, “Even I wouldn’t have known what questions to ask.” By this answer he revealed that he shared in a very common mental model of what a board meeting looks like. The CEO, committee, vice president, or whoever gives an oral report to the board (with supporting material), and board members, in turn, ask questions.

Most articles (or books) concerning conventional board governance remark favorably about the need or ability to ask good questions of the CEO (or management). Good board governance is equated with asking good questions. Certainly there is a place for asking questions, but as a model of governance, it has serious flaws. If that is our mental model, we have not thought through the implications of this approach to governance.

Note two things are going on with this concept of a board meeting.

A.) Questions to management can be one of two types, simple curiosity (the desire for more information), or, more likely in my experience, the kind of questions interrogators ask, fundamentally judgmental questions, knowing what answer the interrogator would like and making a silent judgment on the answer, usually without telling the person questioned the value or intent behind the question, leaving him guessing. Behind such questioning lies a hidden value, unexpressed, which the questioner has not revealed. It may, in fact, only be vaguely present in the questioner’s mind. “Guess what I’m thinking” results. The questioner is making a judgment regarding the answer and may not even reveal that! Furthermore, the board as a whole isn’t in on it either but must guess as to the questioner’s purpose. The board may or may not share the value, and no discussion result to find out! (Unless someone asks what the questioner is getting at.) The chairman either also attempts to answer for the CEO (because of the felt need for loyalty to the CEO) or goes on to the next person who has a question until all questions have been asked and answered. Occasionally a questioner will express an opinion after hearing answers to his question, but even in that case, that opinion is likely to be what the questioner would have done, not the value underlying the question. Usually the board meeting as it proceeds is actually a series of dialogues between the presenter(s) and the questioner(s) while everyone waits. I observed this just two weeks ago with a board composed of very bright people. At any given time about 80% of the board was bored, since any given question was not their issue. I could feel the irritation of the board rising. The dialogue may engender a reaction from another board member, but unless the chair compels a discussion on the opinion or forces the underlying value into the open, no full board discussion results or the brief discussion goes nowhere.

We need say little about the demoralizing effect that this approach has on management and the board members suffering through it. Such board meetings are like minefields as far as the presenter is concerned. “Guess where the hot buttons are?” becomes the game. And the board rarely has the integrity to force out in the open a discussion whether it supports the (hidden or implied) value at issue or not and, then, after finding closure, gives clear instruction to management concerning the value at issue.

B.) Secondly, a board conducting itself this way is in a reactive mode. Questions in this common scenario are, by their nature, reactive and serve to keep the board in a reactive style. Since about 80-90% or more of a typical (non-Policy Governance®*) board agenda is receiving reports, the board is chronically and mainly in a reactive mode. There is no leadership in reacting, be it by questions or by approvals. Such governance cannot lead to proactive leadership. Committees end up doing that, if at all, instead of the board, which is where the full governance accountability rests.

Richard M. Biery, MD, 2004

* (Policy Governance is the registered service mark of John Carver; the authoritative website for the Policy Governance model can be found at www.carvergovernance.com.)