When It Comes To Your Board – Trust Is Earned

When It Comes To Your Board – Trust Is Earned

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While some may think that a high-performance board is determined largely by the qualifications and experience of the directors around the boardroom table, our experience has shown that the most critical part is the quality of relationships around that table and the trust that emerges.

Trust is the Keystone

As with all effective and engaged relationships, the keystone holding everything together is trust. Trust at board level creates a culture of openness and authenticity, where robust debate and productive engagement ensures that the board makes the best possible decisions for the business in all its activities.

Without trust, the board simply cannot deepen it perspective, unlock its value and have the courage to tackle the tough issues to accelerate growth.

Related: Just Because You Attended The Board Meeting Doesn’t Mean Your Job Is Done

In our experience, when we place independent directors onto a private company board, there is usually a certain degree of trust between executive directors through their established relationship of friendship or family connections.

In some cases, one or more of the executive directors has concerns that the new directors will erode their power base and undermine their ability to control the board. This is sadly a reality we see all too often in founder-led or shareholder-managed businesses, where the desire to control the board is placed before the best interests of the company.

In this case, independent directors must work hard to establish trust. A high-performance director understands that it takes time for the dust to settle and for shareholder-managers to realise that the independent directors are as concerned and focused on the business as they are, and that their independence brings perspective that you simply cannot have being on the ‘inside’.

At the opposite end of the scale, we have seen independent directors being trusted earlier in the process largely due to the perceived value of their skill and expertise. They are seen to be trusted advisers who are there to guide and support the board towards a high level of performance.

In such a case, establishing trust and a high-performance relationship can move relatively quickly. The pathway to trust is therefore greatly dependent on the shareholder-managers’ emotional intelligence and understanding of what a high-performance board is really about.

Trust Takes Time and Focus

trust-is-earned

On our Sirdar Applied Directorship Programme, where most of the learning process focuses on developing practical experience through a simulated board experience over a period of over eight months, the board works together to grow and develop a fictitious company.

These boards report that it takes at least four board meetings before the board starts settling into an understanding of the people around the table and establishing a climate of trust that really takes board discussions from the surface to deeper levels of engagement and discussion.

We have seen this phenomenon replicated in companies implementing a board process for the first time. It takes at least six to nine months for the board to start mobilising its journey. However, privately-held companies do not have time for a board to start adding value later than necessary.

Considering that a board for a private company is a choice not a requirement, high-performance independent directors need to hit the ground running and mobilise a culture of trust.

Related: How To Make Your Board Meetings More Effective

Getting to know the directors around the table is a key tool to accelerate this process. You work to determine how each director best contributes to the board and how to engage effectively to maximise each person’s contribution and the collective contribution of the board.

Trust, once earned, is not a once-off deal. It requires continuous investment from the board to establish deeper levels of understanding that will allow the board to deal with the ‘elephant in the room’ or address, in a positive way, necessary conflict to unlock new levels of value in the board process.

In private company boards, especially where there are shareholder-managers, the relationships are complex. Any independent director stepping in must take cognisance of this intricacy and work tirelessly to establish and maintain a climate of trust.

Carl Bates
Carl Bates is a global entrepreneur, speaker, author, mentor and director. Currently based in South Africa, he is a dynamic entrepreneur from New Zealand who guides small to medium businesses to achieve Extreme Business Success.