I write and lecture often about the risks of an unhealthy or toxic culture. Last year, I was honored to partner with longtime friend Cynthia Cooper to publish research undertaken for AuditBoard on “Internal Audit’s Role in Unlocking Culture as a Catalyst and 21^st Century Differentiator.”

One of our findings was that boards are generally not seen as having a significant influence on the culture of the organizations they oversee. In fact, the board ranked a distant fourth when respondents identified entities that do influence organizational culture. As we observed in the report:

“The fact that boards may not be seen as having substantial influence on culture may stem from findings that they do not focus extensively on the topic as part of their oversight role. EY’s 2021 The Board Imperative survey found that 27% of boards never or rarely discuss the culture needed to support organizational strategy, and only 22% of board members ‘expect that a misaligned culture will more than moderately impact their business in the next 12 months.’ The survey also offers an enlightening comparison of ‘leading’ vs. ‘developing’ boards relative to how often they discuss talent- and culture-related topics, showing a significant gap in many areas.”

That boards don’t focus extensively on their organization’s culture is cause for concern. But what about the culture of the board itself? History is replete with companies/organizations that experienced major, culture-induced failures that their boards never saw coming. Were the boards caught by surprise because they weren’t focused on the company’s culture or because they weren’t focused on the culture of the board itself?  

As BoardSource, a nonprofit organization that supports board effectiveness, notes:

“Whether you know it or not, your board has an internal culture. How your board members communicate with each other, work as a team, and make decisions all define the culture of your board. And the nature of that board culture has a significant influence on the way your board carries out its work and shapes your board’s performance.”

PwC, in a recent article, goes further in dissecting board culture: “In practice, no boardroom culture is perfect. Every board is plagued by derailed discussions, dismissed opinions, side conversations, directors who dominate, and those who seem to be biting their tongue.”

I have served on behalf of or on a number of boards in my career. Let me say right up front that members of these boards were almost always dedicated, conscientious and hard-working. But the culture of some of the boards was seriously flawed – leading to suboptimal oversight or worse. From my experience, a weak or toxic culture on a board of directors can manifest and have significant, negative impacts on an organization.

Here are some signs, and the consequences I have observed, of a poor board culture:

1. Lack of diversity. I suspect that manyof us have seen boards in which everyone looks, thinks, acts and even dresses alike. A homogenous board, lacking diversity in terms of gender, race, age, experience or perspective, can lead to narrow viewpoints and decision-making. As Ideals Board noted in an article last year: “A lack of diversity on boards of directors impedes the cultivation of ideas and practices that might help a company’s overall growth. There’s a reason that businesses with diverse leadership teams have 19% higher revenue than those without.”
2. Lack of candor and courage. As I observed in a 2018 blog: “I often wonder if there may simply be too much civility in the boardroom. I am not suggesting the boardroom equivalent of a “food fight,” but board members have an obligation to bring professional skepticism to their roles. They must be willing to ask probing questions, challenge management assumptions, rock the boat, if necessary, and, frankly, risk their future on the board.” Sadly, I have observed a few instances where boards made or endorsed decisions that I knew some members objected to vehemently. In my opinion, those members simply didn’t have the courage to speak up during the deliberative process. Just as a “speak up” culture is important in organizations, it’s even more critical on a board.
3. Conflict and lack of cohesion. The flip side of too much civility/comradery on a board is the lack thereof. Frequent conflicts, visible cliques or a lack of cooperation among board members can hinder effective governance. Behind-the-scenes politics on boards distract them from their true mission – effective governance.
4. Unwillingness to challenge the C-suite: Often, board members select the CEO of their organization – or the CEO has a hand in selecting them. That can make it difficult for board members to challenge the decisions of their CEO and others in the C-suite. This “halo effect” is too often alive and well, leaving boards unable or unwilling to exercise their oversight responsibilities. This culture can be particularly challenging for the organization’s internal auditors, who must walk a fine line when communicating ineffective management performance with the board.
5. Lack of accountability. A desire to maintain collegial and civil relationships with fellow board members can have disastrous consequences. This is particularly true for not-for-profit boards. I have seen several instances when board members were unwilling to scrutinize the actions of a volunteer treasurer on the board, only to learn that major frauds were being committed right under their noses.
6. Authority bias. In its observations, PwC offered, “The boardroom needs experts. Directors are, of course, recruited for their skill sets and expertise. But as with the 30-year cybersecurity veteran who is automatically deferred to whenever anything related to cybersecurity or digital strategy comes up during a meeting, boards may rely too much on one director’s experience or opinion.”The same can hold true when experts from the management team speak. Board members tend to defer to their expertise, dismissing what others have to say or abdicating their own responsibility to weigh in.
7. Short-term focus. Just as short-termism is an indicator of a toxic enterprise culture, it can seriously undermine a board’s effectiveness. If board members define success simply in terms of next year’s company performance, management will give them what they want. Afterall, “what gets measured gets done.” Far too many corporate scandals are rooted in management striving to meet market cap goals or analysts’ expectations. Prioritizing short-term gains over long-term sustainability can jeopardize the future health of the organization.

In my opinion, board culture is an overlooked risk to organizational effectiveness. Even when the culture reflects glaring weaknesses, management, internal auditors and others may be unable or unwilling to call it out. Given the board’s place in the governance hierarchy, it falls squarely on the board’s members to take a hard look at their own culture and advocate for and drive change.

Addressing these issues can require a concerted effort to change the board’s composition, structure, processes and, ultimately, its culture. A weak culture not only impacts a board’s effectiveness, but it can trickle down to impact the overall performance and health of the organization.

I welcome your thoughts on LinkedIn or X. Or drop me an email at blogs@richardchambers.com.