Boards Behaving Badly

A look at different types of problem directors, and how to deal with them before they disrupt the entire governance process and infect the whole board

by Beverly Behan

Do you have a problem director on your board? There are many different types of problem directors, including:

• The Pet Rock: a director who hasn't said anything at the board table in months, maybe years;

• The Windbag: a director who dominates boardroom discussion, pontificating on nearly every agenda item and frustrating other board members who can't get a word in edgewise;

• The Deer in the Headlights: a director who lacks the experience, skills, or business acumen to understand the complexities of the company's business and struggles with the issues on the board agenda; and

• The Pit Bull: the most toxic of all problem directors, these directors adopt a hostile, aggressive, or bullying style with company executives, fellow directors, or both.

Historically, boards have been reluctant to deal with issues of director performance. Even today, most use director retirement ages or term limits as a means of easing underperforming directors off the board. The trouble with age and term limits is that they can cut both ways: Both underperforming and high-performing board members are governed by the rule. Moreover, age limits (which typically are 70 to 75 years) don't help when the problem director is 50.

In recent years, however, boards have shown an increased willingness to deal with the thorny issue of director performance. There are two main reasons for this change:

1) The boardroom of 2008 is not the club that many boards were in the 1990s and before. Boards today are under unprecedented scrutiny and are working harder than ever. When eight hardworking directors see that the ninth is simply not carrying his or her weight or, worse, feel that the ninth is taking the meeting off track with a personal agenda or off-the-wall questions, they are far less tolerant.

2) The emergence of lead directors (BusinessWeek.com, 1/18/08) or presiding directors—now found at nearly half of the boards of the Standard & Poor's 1500-stock index and mostly appointed in 2003 or later (according to research from the Corporate Library)—means there is a go-to person to deal with director performance issues. Such a person didn't exist in the boardrooms of yesteryear. It's tough, after all, for a CEO to have performance conversations with members of the board, even if the CEO is also chairman.

Nonetheless, addressing the situation remains awkward: How to deal with a problem director who is nonetheless an accomplished and esteemed leader in the business community?

Don't ignore the problem. If the problem is acute, such as rudeness to executives and fellow directors or taking board meetings off track, it needs to be addressed sooner rather than later. Most boards can forgive a director having a bad day but if he or she continues the hostile or difficult behavior over the course of several meetings, it's better to deal with the problem before it becomes a pattern. Often new directors who are insecure adopt such tactics and need to be told that this isn't the way to gain acceptance or credibility.

Give the director a second chance. The lead director should bring the problem to the director's attention and give him or her a chance to fix it. While some boardroom shortcomings just can't be mended, in other cases the director may be oblivious to the problem and both willing and able to make necessary changes once it's brought to his or her attention. Either way, when dealing with the sensitive topic of director performance it's important to be fair, particularly because how this problem is addressed often has a significant impact on the overall level of trust and openness in board dynamics.

Consider a peer review. Conducting a peer review, which involves collecting feedback on individual director performance from and for all board members, can be particularly helpful in a problem director situation for two reasons: First, it will serve to confirm whether there really is a problem. Sometimes the "problem director" is viewed as such by no one except the CEO or perhaps one other director with whom he has a personality conflict. If the problem is noted by nearly all members of the board, it gives the lead director confidence that he is speaking with the "voice of the board" when confronting the problem.

Second, a peer review can be particularly helpful to a lead director preparing to have the awkward conversation. Done properly, a peer review process should examine positive contributions as well as shortcomings of all directors, enabling the lead director to have a balanced conversation about strengths and weaknesses. It should also provide concrete examples of the problem and how its impact on the board's effectiveness, which is particularly helpful in framing the conversation with the problem director in a constructive manner.

Dealing with problem directors is never easy. But boards that are truly committed to a high level of performance are increasingly stepping up to this issue in a fair and constructive way.

Beverly Behan is the managing director of the Board Effectiveness Practice of the Hay Group and co-author of Building Better Boards: A Blueprint for Effective Governance. She writes "The Boardroom" for BusinessWeek.com/Managing/.