Author: Peter Bloom

The Bottom Line Expert Opinion: How to Manage a Boardroom

Updated Thursday, 28th January 2016
How do corporations make decisions and what is the relationship between executives and shareholders? Peter Bloom explores the impact that the boardroom can have on a company.

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Businesspeople in the boardroom Corporations continue to dominate headlines – for seemingly both good and bad reasons. Yet there remains much mystery about how companies are actually run from the top and who they are really run by. These questions are especially important in light of recent corporate scandals and continuing public concern over executive pay as well as corporate influence. So how can a corporation “manage the boardroom”?

There have always been debates about what is the best way to manage a boardroom. Executives and shareholders are constantly trying to improve how they operate and relate so as to improve decision-making and profits.  Crucial to such improvement is devising strategies for actually creating a better and more efficient boardroom meeting. This can include making sure there are “no surprises”, cultivating an ethos of listening and creating a clear list of tasks that must be accomplished. Josh Linkner outlines his “7 Tips To Run Better Board Meetings” in an article full of useful strategies.

Yet running a boardroom is by no means easy – and it appears that modern executives have it particularly tough. The spectre of corporate scandals and a global financial crisis have created new demands for public accountability and visibility of CEOs. Further more, due to globalization they must now learn to operate across a range of international and cultural contexts. With the decrease in middle management, they are also more directly responsible for organisational decisions. Moreover, as the pace of innovation quickens, so too must their strategising. These factors all make managing the contemporary boardroom very tough indeed, as The Economist discusses in their article “Tough at the top”.

"While The Apprentice presents a boardroom dominated by a strong leader, in actuality boardrooms are commonly populated by a range of opinions and opinion-makers." Despite these difficulties, the public remains fascinated by boardroom culture and executives. The hit reality show The Apprentice provides audiences with a supposed window into the dynamic, exciting and sometimes cutthroat world of business at the top level. However, just how realistic is this depiction and popular perceptions that arise from the show? Arguably not very realistic at all. While the programme presents a boardroom dominated by a strong leader, in actuality boardrooms are commonly populated by a range of opinions and opinion-makers. Further, they are less rational and more influenced by the effects of bias linked to the pre-conceived assumptions of the company’s culture or some of its more powerful members. Finally, whereas the show offers a view of boardrooms as having racial and gender diversity, this is far from the reality. In an article for The Conversation, Marie Griffiths, David Kreps and Maria Kutar try to answer the question “How realistic is The Apprentice boardroom?”

In recent times there have been a growing number of attempts to address this lack of diversity in the boardroom. Top among these solutions is implementing quotas for female executives. This would, it is argued, ensure gender parity and create for a more innovative and open boardroom culture. However, critics point out that studies are ambiguous as to whether such quotas actually increase a company’s success.  Perhaps even more worrying is that these efforts are quite narrowly focused – speaking only to the empowerment of elite women, and not to the general problems facing the vast majority of working women. For a critical examination of these issues, read “The race for Boardroom diversity is falling at the first hurdle” by Alison Wolf.

Corporate boardrooms and their management have been under renewed scrutiny due to recent scandals. It is believed that if only executives and directors ran the company better from the top, then these incidents of misconduct would never have occurred – or at the very least the rate of their happening would be substantially minimized. However, this perspective misses a perhaps more fundamental problem. Corporate scandals are only the tip of the proverbial iceberg that masks structural economic and political problems linked to the rise of corporate power. The focus of boardrooms on maximizing their shareholder’s profit has led to lost jobs, a decline in ethics, corporate bodies advocating for weakened regulation and the prioritization of short term gains over long term innovation and sustainability. For further reading, see Steven Pearlstein's “How the cult of shareholder value wrecked American business” for an investigation of these problems.

This article was written to accompany the Winter 2015-16 series of The Bottom Line.
For more information on the series, visit the series page.




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