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Chartered Director

Governance Perspectives: How do boards navigate social change agendas?

25 Jun 2020

Much has been written about how boards lead their organisations through the current global pandemic #COVID 19. There is a less being articulated on how boards navigate their organisational agendas on the other current global movement #BLM. This is, perhaps, because the latter requires boards to deliberate on racial, political, historical, social, religious and wider ideological matters which all have an emotive personal element that no society has managed to completely reconcile. For boards then, the question is to what extent should they involve the organisation in any political, social or religious agenda that is not core to their organisation’s purpose?

To answer this boards have to start with their core purpose and be mindful that any decision could at the very least indirectly impact the organisation’s reputation and stakeholder perceptions but equally it could set an expectation of organisational purpose and an expectation on future agenda’s.

In some ways this is not a new challenge.  

Managing conflicting needs and stakeholder requirements has long been a balancing act for boards. Increased scrutiny of a company’s Environmental Social and Governance frameworks by investors, regulators and wider stakeholders has already introduced an ethical dimension to the boardroom agenda. However, these frameworks were evolutionary in nature and refined over years. In the current situation there are certain dynamics that make the climate in which boards are being required to make decisions more revolutionary.

Firstly, social and economic imbalance between rich and poor and those in power versus those not, has led to deep divisions in society and a distrust of leadership. Each time a corporate scandal happens, business leaders are seen as perpetuating this imbalance. Many board decisions are therefore viewed suspiciously. Many organisations, for example, issued support messages for BLM and even produced new branded materials. The criticism levelled against them was that this was marketing to gain or retain a black customer base.

There is also a sensitivity as to who makes these statements. Boards with little diversity and, in particular, no black people on their boards are fearful of the language they use and backlash from those that see this as mere lip service. But they also fear that silence will give rise to accusations that they are complicit. The answer to this conundrum is neither simple nor quick.

Boards have to build trust and a reputation for walking the talk. This requires a commitment to developing the right mindset amongst all stakeholders. Boards need to be realistic of which stakeholders they can influence and education in society is essential to better articulate the role of corporate entities. The question for society then, is do we really want boardrooms to be agents of moral change on issues that even philosophers, politicians, historians, priests and people generally can’t agree on?

The other dynamics making board decisions on this issue more difficult is lockdown.  Much of the debate is taking place virtually through the proliferation of voices on social media platforms. Boards too are making decisions in a virtual environment. This combination has meant a radical change in the way which boards would normally make decisions and polarisation of people into groups (sometimes based on 280 characters, emotive hashtags, headlines and media footage).

Ironically though, the pandemic has actually given us time. Board members should use this time to think and enquire. This is a time to free yourself from the tyranny of the urgent.

In the last few months, I have done just that. I have used the time to collate observations from a diverse global group of colleagues and friends. Experts, academics, entrepreneurs, investors, business advisers, stakeholders, policy makers and victims of social injustices have shared stories and practices. Whilst none provided a magic solution, these conversations helped me formulate some ground rules:

  • Define organisational core values and purpose. These are then barometers as to why and how decisions are made.
  • Spend time to learn the context as rarely is a problem one-dimensional.
  • Be deliberate in not getting carried away by emotion, the loudest or first voice.
  • Seek out facts and views that come from those that don’t have the same background as you. Analyse opposing viewpoints and consider the validity of personal beliefs and interests based on the situation.
  • Consider how the decision will look in 3 to 5 years’ time.
  • Encourage all to invest time in enquiry.Collaborative and critical thinking may be more painful in the short term, but it leads to better decisions in the long term.
  • Build trust and relationships through your actions rather than rhetoric.

A board’s role is to ensure equity rather than equality. There is a subtle but important difference. A boards duty is to act fairly requiring a long term, consistent and transparent approach. My earnest hope is that boards use the current social change agenda to re-evaluate their values and processes with the aim of having long term meaningful impact rather than short term popularity.

Janhavi Dadarkar is an IoD Course Leader