The Fish Stinks from its Head: When Boards of Directors Cause More Harm Than Good

The fish stinks from its head. A sentence describing that issues in a business can usually be traced back to the executive table. And that’s what typically happens. We’re quick to blame executives for a lack of leadership, a lack of business strategy, a lack of setting the tone for the desired culture.

The reality is often more nuanced, and the stink comes from the board room. Poor governance can ruin a business. But it’s often executives that get the beating when things go sideways. Here are a few recent board failures I observed:

Lack of strategic oversight

The board fails to understand the business landscape, doesn’t acknowledge realities, focused on pet projects, or simply lacks strategic skills.
As a result they cannot secure the long term strategic trajectory.

Systemic failure

When board directors are elected by members that don’t have a minimum understanding of the business‘s needs to execute their voting right, disaster is often inevitable.
Boards end up with directors that really don’t have any governance expertise.
And executives spend more time educating the board than with what they’re supposed to do.

Self serving boards

When boards consist of directors representing other organizations with conflicting needs, they either paralyze or overburden the business.
Their oversight can turn into a self-serving exploitation of the business’s resources. It’s often the employees that pay the prize.
They deal with unclear strategy, shifting priorities, pressure, and toxic culture.

Ego-driven directors

Failure to put the organization’s interest front and center puts the business in danger.
Especially in M&A situations too big an ego of board directors can cause failures, eg when they fear their own board seat won’t survive an acquisition.

Boards are as critical for organizations as executive leadership and management. They can hinder or expedite success. Make sure you hire board directors accordingly.

Main image by Jakub Kapusnak