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The Importance of Boardroom Dynamics

Boardroom dynamics, as the term suggests are an intricate web of behaviors that influence and interact with one another. As they get more and more popular, they are being recognized as a crucial component of successful governance. Regulators, behavioural researchers and governance specialists as well as boards themselves are increasingly recognising that the softer aspects of the boardroom’s behaviour, as opposed to structures and boxes that are ticked, make a an important difference to a board’s effectiveness.

The decision-making process of a board may be compromised when members are influenced by their superiors to put their personal interests over the interests of the company and the company’s stakeholders. Spring loading is a concern that needs to be addressed by promoting transparency, accountability, and an environment of open communication. Open communication channels, strong governance structures, diversity and ongoing education and training for board members are proven methods to limit spring loading.

Boards should also participate in lively debates and encourage constructive conflict when making decisions or dealing with controversial topics. This will help prevent groupthink, when the board fails to consider all possibilities and makes the wrong decision for the company. Boards should also make use of their independent third-party advisers and the corporate secretary to establish the structure of discussions, challenge assumptions and play devil’s advocate.

April 1, 2024

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