News and Views
February 12, 2020
Posted in: WATSON Views
In the second part of our three-part series on trust, we explore how to rebuild trust when it has been broken. Read our first article for practical tips on building trust between a board and a new CEO. The third part of our series will take a closer look at the trust relationships within the board.
“It is better to suffer wrong than to do it, and happier to be sometimes cheated than not to trust.” – Samuel Johnson
In the first part of our series, we took a closer look at what trust means for the working relationship between the board and management. We concluded that trust is at the foundation of good governance and high performing board-management teams. Having strong trust in each other allows boards and management to focus on a common purpose, to exercise smart trust in oversight, and to disagree respectfully and constructively.
This can be difficult in practice. Trust is notoriously fragile, and once weakened a lack of trust can deepen rapidly. There are a number of symptoms that can indicate a lack of trust between the board and management:
- Excessive in camera meetings
- The board hears about important issues late or not at all
- Directors or the CEO voice their concerns in parking lots and hallways, rather than in the boardroom
- Management or Directors voice and reinforce their concerns within their own groups, without exploring and seeking solutions with the other group, which can lead to the different groups strongly believing only they are right
- Conflict is not constructive; feedback is not a two-way street; disagreements turn into finger-pointing and fester
- There are elephants in the room that nobody dares to tackle
- Meeting participants adopt passive-aggressive behaviour, such as refusal to follow through on decisions, declining accountability, or small acts, like defensive body language
- There is a “we against them” sentiment, with the CEO being dismissive of the board or seeking to “manage” the board or the board questioning every move the CEO takes
When a board and management experience these symptoms, it becomes important to rebuild trust. The steps we discussed in our first article still apply, although it is more difficult to establish trust once it has been broken. In a situation where trust needs to be rebuilt, there are some additional practical considerations:
- Start by focusing on the purpose of the organization, and each person’s connection to that purpose. Sharing a common purpose can be a powerful reminder to align the board and management.
- Rebuilding trust can take even smaller increments than building trust from a blank slate. Be relentless in making realistic commitments, even if they are small, and carefully keeping them.
- Once trust has been questioned, any new perceived breach of trust will make matters worse due to confirmation bias, which is a natural human response. Be attentive and accountable in your actions.
- Overcommunicate deliberately to avoid misunderstandings that could lead to another loss of trust. Remember that communication is as much about inviting views and listening as it is about sharing your own.
- Invite conversations about trust, rather than assuming that everybody has the same perception. See where others stand.
- Use conversation structure to avoid conflicts becoming unconstructive. This can take the form of allotted speaking time, actively soliciting views from multiple participants, keeping a parking lot for unrelated topics, etc.
- Make it part of the culture to ask “why” often, to better understand the rationale behind positions or actions rather than leaving room for assumptions about intent
- Acknowledge different perspectives to allow for respectful disagreement and constructive discussions on a way forward.
- Be generous by being the first to extend trust. For example, consider if a discussion really must be in camera. Give the board or the management a heads-up, even if it is not mandatory.
It may take time to regain trust and often additional factors make trust more tenuous, such as ongoing dynamics between individuals, external developments in the organizational environment, or crises within the organization.
Sometimes just a few people tip the dynamics of the working relationship. In these instances, the board needs to consider all its options, including the decision to make a conscious change. This is particularly critical if the board comes to the conclusion that the organization needs to change CEOs. It can be damaging to an organization if a good CEO or a strong director leave. A change can also be an opportunity to regain trust if it removes obstacles to a healthy working relationship.
Rebuilding trust is a lengthy and difficult exercise and it is important to maintain trust when it has been established. Read the third part of our series for practical tips on fostering trust within the board.
Stay tuned for part three of our series outlining some practical tips on fostering trust within the board.
February 4, 2020
Posted in: WATSON Views
In the first part of our three-part series on trust, we explore how boards and management can collaborate to build trust when starting out with a new CEO. Read the second part of our series to learn some practical steps you can take to rebuild trust when it has been broken. The third part will take a closer look at the trust relationships within the board.
“The best way to find out if you can trust somebody is to trust them.” – Ernest Hemingway
When a new CEO starts, their organization often enters a phase of substantial change. The CEO is excited about leading the organization. They often bring new ideas and sometimes face high expectations by the board and other stakeholders. As everybody gets to know each other, there are important questions that may arise: How does the CEO involve the board in their plans for the organization? Who makes changes to the organization’s strategy and how? Does the CEO inform the board of major operational decisions? This is the time when the board and the CEO lay the foundations for their working relationship.
The line that demarcates the responsibilities of the board and management is notoriously difficult to define. In most organizations, it can meander, be fuzzy for moments, and take shades of grey. In the end, the alignment between board and management is crucial for successful governance. The foundation for this alignment is strong mutual trust.
Trust is sometimes described as the glue that keeps life together. Merriam Webster defines trust as the “assured reliance on the character, ability, strength, or truth of someone or something”. We all know intuitively or from experience how trust can make things better and how a lack of trust is counterproductive. Science confirms this, proving that trust is universal to humans and strong trust is linked to better performance at work, higher satisfaction, and even higher compensation. At WATSON we believe that dynamics and context are major drivers for boards when safeguarding the best interests of their organizations. This makes trust the basis of meaningful governance interaction.
There are some practical steps you can take to build trust as a director or a new CEO when starting a fresh working relationship:
- Trust goes both ways and it starts with giving. Be generous and bring goodwill to the new collaboration. If it was a difficult transition, make a conscious point to turn a page and start over.
- Trust is about setting clear expectations and doing what you say you will do. This can be challenging when there are sudden changes or factors outside your influence. If you are unable to meet a commitment, it is important to communicate transparently and immediately, as silence can lead to negative assumptions by others.
- Many board and management teams believe in a philosophy of no surprises. Communicate a lot and very clearly, using different modes of communication if possible. Framing a message in different ways makes communication more effective; you can foster a better understanding of your decisions and actions by sharing information about your challenges and context.
- Trust yourself and know your capability as the basis of building trust with others. Harness your strengths to build credibility and trust, e.g., by contributing in your area of expertise.
- Be authentic, sincere, and respectful. You do not need to agree with others to ensure they are heard. Acknowledging other voices showing respect for other perspectives can make a difference in building trust with those who do not share your viewpoint.
- Right wrongs, even if they are small, and particularly if they are your own. This promotes accountability and fairness. Seek conversations to resolve issues and apologize if need be. It can be tempting to gloss over small issues to demonstrate confidence. When it comes to trust, being human, vulnerable, and well aware of your own weaknesses can make you stronger.
- Reduce trust killers, such as time pressure or stress. It can be as simple as booking enough time and transparently stating the goal of a conversation when starting it, so your conversation partner does not need to guess or assume there is any hidden agenda.
- Exercise smart trust by approaching work interactions and information you receive with goodwill, while applying common sense and reasonable care to ensure you ask the right questions.
- Celebrate successes and acknowledge where small things went well. Business often focuses on problem solving, which can lead to spending the majority of time on issues and taking wins for granted. Breaking this pattern will allow you to build trust by showing genuine gratitude for the contribution of others.
- Be patient as earning trust can be incremental. While it may look as if things are just moving along, others may be watching closely. Being trustworthy in small matters can pay off big when it comes to important decisions down the road.
Building trust requires a genuine investment. Having a mutually trusting relationship between the board and management can accelerate not only what the organization delivers, such as decisions, actions, and results, but also how it delivers it. Consider the degree of trust in your current organization and take steps to make a difference in building and maintaining trust.
Read more about trust in parts two and three of our series for some practical tips on rebuilding trust and on fostering trust within the board.
Posted in: WATSON Speaks
Natasha Himer will be a key speaker at the Chartered Professional Accountants of British Columbia Not-For-Profit Forum on February 12, 2020, in Vancouver, BC.
Through a series of talks and interactive sessions, participants develop actionable insights that tie mission to growth and boost performance outcomes. Plus, explore the latest issues in policy, compliance, disruptive tech and more from Canada’s top not-for-profit experts.
Equipped with the latest research and in-depth knowledge, Natasha Himer will review emerging areas of focus for Boards in the not-for-profit sector, drawing on case studies to illustrate how Boards are improving their governance in areas such as oversight of organizational culture and board diversity.
For more information visit: https://www.cpacanada.ca/
January 20, 2020
Posted in: WATSON Speaks
John Jennings will be a speaker at the Governance Professionals of Canada Co-op and Credit Union Governance Summit: Insights on Boards, culture, member engagement and more on January 27, 2020, in Vancouver, BC.
Equipped with the latest research and in-depth knowledge, sharing expertise with real-world examples, thought-provoking presentations, and engage participants in stimulating discussion, John Jennings, alongside Bob Armstrong, Board Chair of Coast Capital Savings; Carmel Bellamy, Associate Vice-President, Governance and Corporate Secretary, The Co-operators Group Limited; and Brigitte Catellier, Vice President, Corporate Governance, Meridian Credit Union, will address The Challenges of Board and Director Recruitment relevant to co-operatives and credit unions.
Discussed will be how having the right people in your boardroom enhances the quality of major decisions and, by extension, the value created for your members. As well as the importance of optimizing the composition of your board which requires balancing professional skills, diversity of perspectives, personalities and more.
For more information visit: https://gpcanada.org/event-3631920
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