Majority rule is no longer the best way to run a board meeting. Randall Peterson writes in his article ‘It’s Time to vote Majority Rule off the Company Board’ (click on the link to read) mounts the case that the simple majority potentially makes a worse decision when they ignore the views of people appointed to the board because of their specialized knowledge. With more directors being appointed because of their specialist as well as general knowledge, boards need to ensure they are listening to those view.
For example, as Peterson notes, “majority-rule voting actually fails when the will of the majority is used to silence legitimate and specialist minority voices. What is right for the many ought to prevail, but not at the expense of the rights and specialist knowledge of a minority.” A healthy board culture exists where such a minority director can challenge their boardroom colleagues, and be given a fair hearing.
Peterson makes the distinction between a suboptimal decision, and a decision that the board member believes to be totally wrong. The expression used is to develop qualified consensus. This occurs when a majority are in favour, and no one believes the decision is fundamentally wrong.
The article notes soon to be published research that reports 64% of board directors in a global study reported misunderstandings in the boardroom to be commonplace, and one-third reported the need to revisit decisions! Providing some tips on how to improve this, Peterson suggests:
- Get the right team on the board and prioritize their learning – that is, specialist directors have a role in teaching and advising fellow directors, not making decisions solo.
- Encourage trust and ‘psychological safety” among team members
- Openly share information to create understanding of the problem – that is, before suggestion solution, work out what you do and don’t know about the problem.
- Highlight specialist knowledge in the team from the start
This is a very quick summary of a very challenging idea – one whose time has probably come – in changing the culture of boards to better utilize the specialist knowledge it contains. If you would like assistance with your board, contact Avondale Business School (ABS) at [email protected].