Boardroom Bust Up – What to Do When Things Go Wrong

Out of the ruins of huge mistakes you can often find important business lessons. When a board fails and falls apart or implodes from the inside out, this can have a devastating effect on everyone involved. Therefore if you can learn from the mistakes that are made and try to pick yourself up, the board, the company, and all people involved can learn from these seemingly devastating mistakes.

Just how important communication really is:

You hear it all the time but it’s very easy to dismiss. This is especially important when it comes to a board communicating their operations and the decisions that they are making. These decisions affect so many people and if there is even a small lack of communication many people can suffer from that. Communication should never be underestimated for when it exists a board can be successful and truly benefit all of the people that it serves. Even if you’ve heard it a million times before, be sure that there is a great emphasis placed on the communication function. This helps the board to be successful and ensures the overall health of the company as well.

Transparency really helps a company to stay diligent:

When you see a board fall apart there were usually issues that were not visible to the outside world. It may have been that there was a lack of transparency between the board and upper management in the company. It may have been that there were issues that the board kept from shareholders or key players. When mistakes are made it’s very easy to try to sweep them under the rug—but then they come back bigger and even worse than ever. Not only that but if there is a lack of transparency in the daily operations and the way that the board runs, this creates a great deal of tension and anxiety for everyone involved. Having full transparency can make for a much better situation and is therefore an important lesson to learn and carry with you moving forward.

It’s truly a group effort for better or worse:

When a company fails it’s often very easy to blame the CEO. When a board fails, it’s often easy to point to one board member or one big mistake. The reality is that when these failures happen at such a grand level, it is often the fault of the board as a whole. The demise of an entire board doesn’t just happen overnight and it was often a long time in coming. There were reasons that you can look back upon that showed the path towards failure and devastation. Therefore if you are honest in your evaluation, you can see how the board failed and carry these lessons with you. That can make for a better future but also eliminate the desire to play the blame game with just one individual who played only a part in the whole failure.

A broad range of experience can be very helpful in avoiding crisis:

You often see a business go down in flames when the board fails. When that board fails the company and the people within it, there are usually very identifiable reasons. One such reason is that there is a lack of different experiences and backgrounds among the board members. This might not sound like a big deal, but the broad range of experience can be a really great thing for everyone involved. This means that there are challenges to decisions that are made. It means that people bring different perspectives and professional experiences to the tables. When you have a lack of diversity there tends to be a much easier time agreeing and thus making bad business decisions. This clearly isn’t good for anyone and therefore the board ultimately fails when there is a lack of diversity and different experiences.

If you find yourself in a situation where you are facing a high profile board fallout, you are exactly where few people want to be. You may have worked very hard to achieve a high profile board career, but the stakes are high when there is a fallout between board members, there is a company collapse or significant crisis; the consequences can be significant for individual board members and the CEO.

Increasingly board members are in the media spotlight and when things go wrong it can be very difficult to protect your reputation. The thing to remember is that the way that you deal with these circumstances and move forward with your life can be everything. Try to focus on the future after you deal with the immediate issues at hand. If you can work to protect your reputation and look forward to the next best opportunity, it will truly serve you well and help you to be successful with this potential professional downfall.

You may need to consider engaging a professional PR advisor to help you through this situation, particularly if you are caught up in a public news story. How you handle communication in public and in private during a board fallout is critical. The board director world is very small. Bad news and gossip travels at lightning speed. Keep your own counsel and be careful about what you say to other board members in the wider market especially when there is a PR crisis in play.

Be sure that you keep your career on track:

You do need to take care of the company to the best of your ability but you also have to think about your career. This is where you need to do some damage control and try to look forward to the next natural step. It may not even be apparent at this point in time, but try your best to focus on the future and what that means to your career. Saving face within professional adversity is always important. Considering what may work as a next step within your career will help to keep you moving forward with some momentum, and you’ll need that.

Be sure that the company is taken care of and things move forward despite this:

The last thing you want to do is run and hide. You have to be sure that the company that you have served is taken care of. Do your part to control whatever you can and try to keep the company on track for success. This may not always be possible, but try your best to keep things running smoothly. Try to see what you can do to offer in helping with the issues, particularly if it wasn’t your doing. There is always something that you can do in offering help to keep things on track. Showing that you want to take care of your company will help people to feel good about who you are and help you tremendously in the future.

Take responsibility if there were significant issues that you played a part in:

The worst thing that you can do in the face of professional tragedy is to avoid the issues at hand. You need to deal with the issues and take responsibility where necessary. Even if the issues that lead to this fallout are not due to you alone, if you are at the head of things you have to deal with them. First and foremost this shows your integrity and character in how you handle things. It also shows that you own up to the issues at hand rather than ignore them or deflect them to somebody else. If you are the person that falls on your sword, it will serve you well in landing future career opportunities. It shows that you are somebody that can rise up in the face of adversity, and that goes a long way!

Hold your head high and focus on the future:

This is easier said than done admittedly. The reality is that you have a lot to contend with no matter what the situation may be. Focusing on the past or even the chaos of present day isn’t going to get you anywhere. You want to admit responsibility, show compassion for the situation, but then you want to focus on the future. If you are seen as somebody who deals with their issues but then has the ability to look forward, that works well for you. A high profile board fallout is certainly not a positive thin g, but if you have the strength to move past it then you will be much more successful in the future.

It’s not going to be easy and you may have to give yourself a pep talk every day, but it will serve you well in the long term. Deal with the current circumstances and then show bravery in moving forward with your life in a positive manner. When a high profile fallout occurs it can be devastating to the career of the CEO or board member that takes the blame. It may be that the issues occurred due to the CEO or board member or just due to other circumstances, but the one in charge will always take the fall. You want to address the issues, deal with them in a proactive manner, and do your part to keep your career on track. This isn’t always easy and it will take some work and concerted effort, but it will benefit you if you can manage this. Your reputation is so important here and so the way that you deal with this fallout will tell the story and help to protect it moving forward.

Dealing with Difficult Personalities on a Board

Board members come with different skills, experiences and of course, opinions. They are in charge of making important decisions that push the organisation forward. With divergent opinions however, conflict in the boardroom is inevitable. As a recent study found, conflict will often arise when dealing with structural processes and finances, mergers or acquisitions as well as board members’ behaviour and attitudes. Handling conflict immediately, when it arises will make sure that the board’s effectiveness and the organisation’s performance is not affected. Difference in opinion is not always a negative thing. But when the disagreement gets personal and deep rooted then it’s time to make sure it is a conflict that needs to be dealt with in the following ways.

Establish a Conflict Resolution Process

Understanding that board conflicts cannot be avoided is the first key step in dealing with conflicts when they arise. Anticipate conflicts before they happen and have a process in place to manage them. Think of all the possible conflicts that may arise. Look into the past conflicts and heated debates to guide you on this. Then decide how each kind of disagreement should be handled and the people to be involved in the conflict management process. By doing so, you make sure that you have a fall back plan to immediately handle and hopefully resolve any conflict before it affects business operations.

Establish a Decision-Making Protocol

Often, boards will not have a clear guide on how to hold a productive meeting that will let the members get through the business of the day quickly and efficiently. Not having a guide may not seem so important until a conflict arises and no one knows how to handle it. Come up with a clear decision-making protocol to avoid debates from getting out of hand. A decision-making protocol will come in handy when people can’t agree on something. Your guide should articulate what procedures are to be followed and outline appropriate behaviour should conflict arise. Without this kind of protocol, it will be very difficult to hold individuals accountable for inappropriate behaviour.

Appoint an Arbitrator

Sometimes you may have to bring in an authority – not part of the conflict – to mediate through the conflict. This could be the board chairman or the company CEO. You could also decide to appoint a third party to counsel both parties. Make sure that the mediator that you bring in does not have any vested interest in any of the conflicting parties to ensure fairness.

Get to the Root of the Conflict

Sometimes conflict can easily be resolved by simply getting to the root cause. Is the conflict as a result of power struggle, difference in personalities, or a genuine strong opinion on an issue? Let the arbitrator understand each party’s views on the issue and then come up with the best way to resolve the conflict. By understanding each party’s views on the issue at hand, the arbitrator can help expain the views of each person to the other. Hopefully, they will then reach a compromise.

Show Leadership

The board chair should always assert authority during conflicts. The chair should give directive on how the board will be run in terms of behaviours and attitudes. They should also ensure that information flows properly and everyone fully informed in order to make proper decisions. The chair should remain neutral during conflicts, take control of the situation and begin a conflict resolution process immediately. It will be much easier to resolve conflict and prevent it from getting out of hand when the chair is in control of the situation.

Hold Each other Accountable

With a decision-making protocol and conflict resolution process in place, the board should take on the responsibility of holding each other accountable for following the set guidelines. Members can do this by regularly reminding each other about meeting protocols. If during a meeting there’s some sense of tension between certain members, the chair should have a private conversation with the individuals involved to prevent it from spilling over and become a conflict. Debates are part and parcel of the boardroom and every now and then not everyone will agree with the discussions taking place. However, the board should not lose sight of its goal and responsibility to the organisation and allow conflict to get out of hand.

When to Resign from a Board

There are some red flags or obvious signals however that can tell you that this is the time. If you see that things are changing and you don’t necessarily feel the way that you once did, then it’s time to move on. Your professional career may have taken on a different direction, and that means that you have to make changes to keep up with this. When you see the writing on the wall, be sure to resign in a timely manner so as to exit on professional and friendly terms, this will be important later on and for your reputation as a whole.

• You’re unable to be present or play an active role as much
• You don’t have good relationships with upper management or other board members
• Your other professional responsibilities have taken on a new direction
• You don’t agree with the direction of the company or decision making anymore

It’s never an ideal situation to have to face when you recognize it’s time to move on from a board position. You may feel conflicted because you really want to see your role through, but somehow you know when it’s time. If any of these situations sound familiar and you just can’t find good balance or harmony, then it may be time for a new role or board position. Know when it’s a good time to move on and it can help to save you aggravation and frustration, while also ensuring that you can move onto something that’s a much better fit for you in the long run. This is a common cycle that so many board members go through and it will make more sense later on.

Check out our new eBook Welcome to the Boardroom: The Step-by-Step Strategy for Launching Your Board Career, available via Amazon Australia. Visit our website for more information.