Corporate Concinnity in the Boardroom

Nancy Falls: Certainly. It absolutely is a word and the most wonderful word at that. The word "concinnity" dates back to the 16th century, actually, and means the skillful and harmonious fitting together of the different parts of something. Well, it's not part of everyday lexicon, at least not yet; it is commonly used in literature and music. If you think about it, nobody likes a book where the beginning, middle and end don't hang together, or you can imagine how unpleasant a musical score or tune would be where the percussion, strings and winds don't come together in a harmonious and timely way.

The word "concinnity" conveys an elegance of arranging things that are different but, when put together skillfully, work well.

Rachel Salaman: So with that in mind, what does your book "Corporate Concinnity in the Boardroom" set out to achieve?

Nancy Falls: The reality is those of us who lead and govern in companies really need a new way of thinking about how we do our work. Environments are changing so rapidly. There's more risk out there, and we really need to approach it differently. And I think what we have done is we've begun to change what I call the what and the who of leading and governing. We appreciate that we have to be focused on different things, and that we need different players to help us do that, but the reality is, when you bring all these different players together, they sometimes have trouble working well together because they are different and that's where we really need to work on the how of our work together, and that's what the book is really focused about.

So getting people to work well, those people who are different, getting to work well together is really hard, and that's what my book is about. And this word "concinnity" really gives in a word a goal for people to work towards together. In the context of business, this word represents both the concept and a goal, and that is one of constructive harmony and pulling diverse players, diverse agendas together. And the book also builds a framework around this and this framework is a great defense against what I have found to be the most common leadership and governance mistakes that happen in and around the boardroom and the c-suite.

And the cool thing is people who work with one another in these companies that embrace concinnity find the work actually becomes easier and it becomes more fun and life's actually changed for the better, and that's what excites me. And in my work, I can only go one company at a time but, hopefully, through a book like this, which is what we're trying to do, it allows more people to be impacted for the better.

Rachel Salaman: So could you remind us what we mean by some of these terms that you've mentioned and that will come up through this podcast? What's a board exactly and what duties do directors have? And what's their relationship with the company's senior management, which as you've already said, is sometimes referred to as the C-suite?

Nancy Falls: Boards govern, managements lead. Leading and governing are two things and they are two different things, both of which must be done well for companies to thrive. Corporate governance is a term which defines what boards do, so the role of a board is to help a company achieve its goals and objectives while, at the same time, ensuring that it meets its obligations to a whole variety of stakeholders, and corporate governance is the framework through which they do that.

Boards should be very focused on companies and their strategies. Hopefully they come to the table knowing their company as well as anyone else, except those inside the organization, and they should be actively involved in strategy, they should be actively involved in risk, and their goal is to ensure that the company is led well. They do take responsibility in governing boards for hiring the CEO, who then hires the rest of the company leadership.

Rachel Salaman: And is a directorship a full-time position or does it tend to be part-time?

Nancy Falls: It tends to be a part time position for independent directors. It has become a far more time-consuming job: research shows that board directors are spending more time than ever on their directorships.

Rachel Salaman: And how are they recruited? Is it people who match the goals of the company or just people who know someone in the company?

Nancy Falls: Well, that's a very interesting question and we're really in the midst of a great deal of change in terms of how we select our board directors. Historically, it has been far more who you knew. It was really a relationship gain and there are lots of good reasons why it worked that way, because CEOs wanted to have people that they knew and they knew they could work with around the table when they're helping lead and govern these organizations. But what happened was, over time, you got a whole lot more groupthink and you did not get the diversity around the table that's really needed to survive in a diverse world.

So that's sort of what I call the who of governance work that has begun to change. We appreciate that we need broader views around the table, so what that has resulted in is a more formal approach that involves very often headhunters, an approach to recruiting new board members, and we have gotten a lot more deliberate, I would say, about the skills and the qualities that we need around the boardroom table for this particular company. A board member that would be great for company A might not necessarily be for company B.

Rachel Salaman: You said that the role of the board was to govern and the role of senior management was to lead. Could you just tell us what the difference is between governing and leading?

Nancy Falls: Leading a company is really leading its operations and the company management is on the ground, in the company, full time, day to day, which the board is not. As we talked about, it's more of a part-time role for them and it's important to be a good director to realize where the line is between what you do and what management does.

It's hard to stay enough above an organization if you actually get involved in day-to-day management at the organization, that's really the job of the company's management. The board is to be outside of that day-to-day activity, to have a broader perspective, a broader view – that's where it can add its most value.

It's best if it appreciates where its job ends and that of the CEO and the C-suite begins.

Rachel Salaman: Your book offers 10 tips, or imperatives as you call them, which can be used to achieve corporate concinnity. The first of these is draw a line in the sand. So tell us about that.

Nancy Falls: Draw a line in the sand is what the board must do with the CEO to be clear about their respective roles and responsibilities, which are very different.

In reality, a lot of people don't even know that there's a line. Let's envision a board member that doesn't know that there are things that he or she shouldn't do day-to-day that are the job of the CEO, and what they do is they cross this line, and they get into the business, into the area of responsibility of the CEO. And that creates a lot of confusion, not just for the board member and the CEO but for other people in the organization affected by that. They disrespect that line and create dysfunction, which is very bad for organizations.

Sometimes they know there's a line, but they don't know where that line is and they're so afraid of crossing it that they stay way away from it and they actually don't contribute as fully as they should because of that.

So, just by setting that line, and it's a process that boards of directors and CEOs must do together, for my size company, for where I am, how involved do I want my board to be on certain things, how involved do they need to be. And clarifying that is really critical, and that's probably the most common error that I see people make that is really avoidable.

Rachel Salaman: So, how useful is it to draw the same kinds of lines further down the company too?

Nancy Falls: It's very useful. Having clarity between roles and responsibilities of groups of people who lead together is as important as you go down into the organization as it is at the board level. It's critical to know what's your job and what's not your job and how that dovetails with the work that your colleagues are doing. And I actually think not only is it useful down in the organization, there are parts of organizations that actually have gotten so good at this I hold them up as a model in my book to boards of directors. Project management is one area in companies that has gotten to be very good at this and there are some tools, some responsibility tracking tools; one I like is called the RACI matrix. RACI stands for responsible, accountable, consulted, or informed, and having this tool actually lets managers know when they need to lead and when they need to step back and let somebody else lead and they are just to advise or to be informed. It lets everybody know exactly what to do and what not to do, which is really critical to being very efficient.

Rachel Salaman: Your second imperative is don't go overboard, which could also have been entitled get it just right, and here you list your top 10 board mistakes. We won't go through all of them, but could you share a few of those?

Nancy Falls: I think that as you seek, I like to call it the Goldilocks of boards, the board that is just not too large, not too small, not too tough, not too passive. As you seek the Goldilocks of boards, one of the most important mistakes to avoid is this issue of homogeneity of composition and thereby thinking you really have to have board diversity. But once you have this diversity, as I speak a lot about, people think differently and it's a little harder to work together.

So I think you have to really work on mutual trust and respect and really good process. So I would say the sort of things that have to be gotten right are this nice balance of diversity and trust and respect and good process.

It's easy to conceptually say I want to be diverse, but then you really have to insist on a process and a way of working together where different ideas are well heard and different opinions are listened to. Boards really need to seek to understand and intentionally consider views different from their own. That's where you really get the power of a diverse group of people and diverse ideas, and I think it's the only insurance policy against this rapidly changing world and anticipating what is coming down the pipe.

Rachel Salaman: So if a board has recognized that they are perhaps not getting it right, would you advise them to dissolve themselves completely and start again from scratch in order to get it right, or is it a gradual process of tweaking and working with what you've got?

Nancy Falls: It's a great question. I have to admit there have been a couple of times, when I've worked with boards, I thought, "You guys should just all go home." But, in reality, few boards are that dysfunctional and most people who are there bring incredible resources to the table.

Sometimes the who and the what need to be tweaked, but usually they're stuck on this how, how they work together, and they need help to do that. And if they appreciate that and set an intention to change the how, they really can become effective. A framework really helps. Somebody from the outside really helps as well because, sometimes, it's very hard to see this on your own.

Rachel Salaman: You mentioned stakeholders earlier and another of your imperatives is mind the stakeholder gap. What kind of stakeholders are you talking about here?

Nancy Falls: What we're talking about, really, is all the particular stakeholders for a given company and sometimes it's helpful to think about it as a balanced scale. One the one hand, you've got such goals and objectives of a company like profitability, such as growth, the kinds of things that matter a great deal to shareholders, to management. I would also put on that side of the scale self-determination because it's very often important to leadership management teams.

So that's on one side of the scale and, if you will, on the other side, I would put interesting goals that might seem counter to those goals, and that would be increasing labor costs, that would be higher environmental costs, that would be anti-trust regulatory expenses or trends that affect your ability to grow as you will. Those things may seem counter to what's on the other side of the scale, but they are things that are very important to a whole other set of stakeholders, such as employees, such as regulators, such as the communities in which we operate.

So the board has a very primary role in ensuring that that scale is kept balanced. It's not all about the bottom line. It's not all about growth. It's about all of these other stakeholders and there is a gap that must be managed, and that's one of the most important roles of a board of directors. It's to help a company with that.

Rachel Salaman: How could a manager lower down the hierarchy apply that tip?

Nancy Falls: In terms of managing stakeholders, if you will, that's something that is actually as important, if not more important, down through the organization. Everybody has got a boss that has to be kept happy and managers appreciate that. Good managers learn that it's about a whole lot more than just keeping their bosses happy. They don't achieve what they achieve alone. They do it with their peers, they do it with their colleagues and their subordinates, so these are all stakeholders in their lives and, down in the organization, it's helpful almost instead of just thinking about a balanced scale to think about 360 degrees of stakeholders that are impacted by what you do. And that's really critical and this concept of leading and governing well in a way that really harnesses all of these different agendas actually helps you be more effective.

So, down in the organization, what must be done is the same thing that must be done at the top of the organization, juggling these different stakeholders and, in a way, it's a lot less theoretical for the line manager. I would say it's also important for people down in entry- and mid-level management to really think about the company stakeholders that may be outside of their worlds. They may not interact every day with the shareholders, they may interact every day with customers if they are on the production line, but how those people feel about how you may do your job day-to-day really does matter. That's a stakeholder that matters.

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Rachel Salaman: Let's talk about culture change now because this is something that affects everyone in the company, and one of your imperatives in the book is be prepared. Culture and change readiness, you call it. So how can the board and senior executives be prepared?

Nancy Falls: The first thing that boards need to do is to appreciate that culture is part of their responsibility. I think that it's not something they presume is their job, in many cases. They think that's the role of management. That's certainly the role of the CEO but, in as much as they are hiring CEOs, this is the tone at the top kind of thing which boards must embrace as also a part of their job. And my point, as I talk about culture, is really that of change management and do you have a culture that encourages that.

So boards first of all need to appreciate that it is their responsibility. They need to ask the question,"What is our culture?" and a surprising number don't really have a feel for that or have a feel that actually turns out not to be quite right. And they have to be honest and say, "What aspects of our culture are constructive and what are not? Which really help us change and which do not?"

There are lots of organizations that really have a culture that they don't want to change and adapting to this rapidly and changing environment really requires it. So how do you create a culture that embraces constructive change? How do you drive it? How do you respect the old as you embrace the new? How much change can your organization take at any one point in time, and who should drive that change? And the driving of it is really the responsibility of the CEO. Boards have to respect that, but this is something that they need to be very aware of and actively working with their CEOs and C-suites on.

And this is also an area where an independent party can play a huge role. Someone who comes in from the outside who doesn't have a dog in the hunt, doesn't have an agenda or a turf to protect, can actually see and, if you will, call out observations about the culture that insiders either can't, or can't safely, do.

Rachel Salaman: What about lower down the organization? What's the role of lower level managers in culture and change readiness?

Nancy Falls: I think that entry- and mid-level managers have a huge role to play in culture and change readiness because they are the ones who really have their hand on the pulse. And it's critical for senior leadership in boards, as they are up there at the top of the house doing what they do, to have a process and a channel to actually know what's going on on the line. I would offer that up to mid-level and entry-level managers as a part of their responsibility that they should embrace.

And it's not easy. It requires being committed to doing it. It requires having a process for gathering those perspectives and views. And it requires a lot of skill to communicate things that might not always be positive. But it is critical because the organization's culture doesn't live in the boardroom or in the C-suite just at the top of the house. A company's culture lives from the front line, from the first-level job, all the way through to the boardroom.

Rachel Salaman: Could you talk a bit about expectation asymmetry, which comes up in your book at all levels of leadership? What is it and how can we avoid it?

Nancy Falls: Expectation asymmetry is a term that I use to describe when various people in the organization have a different view of where it is we're going and exactly how we will get there, and therefore that affects how I do what I do and what the expectation is for me. And, really, the only way to avoid it is to communicate about it, and lots of communications among and between internal stakeholders about those very things, "Where are we going? How are we going to get there? How is this change that we've got to embrace and make in the next year or 18 months going to happen?"

And this ties back to the sort of culture and change readiness too, because healthy cultures really communicate a lot and, because they do, they avoid this expectation asymmetry and they are more able to change in a way that they need to.

Rachel Salaman: Another imperative in your book is off-board well, which is about directors and C-level executives leaving the company. What kinds of difficulties arise with this and how can they be avoided?

Nancy Falls: Well, the impact of a badly managed departure can be really huge, including creating rifts in the boardroom itself. And this imperative for off-boarding well is valid in the boardroom, in the C-suite, but it's really valid throughout the organization, and I would expect most of your listeners are involved in off-boarding all the time.

It's a regular way of business in life today. It's one of the hardest things I think we as managers have to do. I think it's actually another area where the experts give us some of the worst advice that we hear, and I think off-boarding poorly is actually one of the saddest things that I see companies do.

We've all heard about those dramatic off-boarding situations that are filled with rancor, or the executive is ushered out in handcuffs by uniformed officers, or an employee is taken out by the security guard. These are tragic departures, but that's not the only definition of off-boarding poorly. I think any departure that results in a severing of a relationship with the outgoing person is a bad departure and, when departures are managed badly, it's a negative experience, not just for the person leaving. It's very negative for culture. It speaks volumes about your culture, the ways in which you off-board people. People within are adversely affected as well. We have to remember that, just because someone is leaving the company, doesn't mean that everybody who used to work with them doesn't like them any more. They do, so the people on the inside who stay are affected as well, and bad departures can create enemies outside who may still be stakeholders after they leave.

So I argue that this is an area where we should listen to the experts, but the most important thing is to check your gut about basic human kindness and dignity and consideration as you prepare for an exit conversation. We need to think about the future relationships we hope to have with this person, once the dust of hurt settles. We really need to think beyond this event and envision the long game, and that is a way to think about departures that can create better off-boarding.

Rachel Salaman: Your last imperative is cultivate wisdom and, in the book, you reflect on what wisdom means. What is it for you and how does it fit into this discussion?

Nancy Falls: That's exactly the right way to ask the question, because you go to the dictionary for a definition of wisdom and it says to act wisely. So what's important for leaders, I think, is to ask themselves, "What does wisdom mean to me?" I believe that it means the how really matters and I love it, actually, that just 13 years after Machiavelli wrote that the ends justified the means, somebody decided that Machiavelli was wrong and came up with a competing idea that the how really very much matters, and came up with a word for it, and that word is concinnity.

So, for me, the wise person is very aware of the how. They're aware of the impact of what they do on their organizations and people. And I think that the wise person has a different relationship with the results, because they are thinking about the how. Because, as they think about the how and the impact there, they sometimes are going to have to give up on the results, or at least part of the results, to avoid damage that would be created otherwise.

The wise leader thinks very critically about their actions and very broadly about the implications in a compassionate way. I like to think of wisdom not just as the tenth imperative, but really the duct tape in the corporate concinnity toolkit. It's what holds all the others together.

Rachel Salaman: So how can people at all levels of the hierarchy cultivate wisdom?

Nancy Falls: It's never too early to cultivate wisdom. Early in our careers, we're in so much of a hurry, I know I was, we don't take time to think about the how of what we do. We don't think to reflect and I think cultivating wisdom requires slowing down long enough to be reflective and to think broadly about the how. I know I would have been a better manager if I had slowed down and thought about it, and I think people early in their careers can do this. It is also very helpful to think about who wise people are and how can you find someone who is wise to be a guide for you, to observe and to learn from that person.

Rachel Salaman: We've covered a lot of ground in this discussion. What are your top three takeaways for anyone who wants to be a better leader, whatever their place in their hierarchy?

Nancy Falls: I think the first takeaway for me is that anybody who wants to be a better leader should really embrace concinnity as a goal and a concept. We need to ask ourselves, "How are we bringing together the various players, attitudes, opinions, stakeholders that we work with every day? Are we thinking about the impact of how we do what we do?" Secondly, we should embrace this word ourselves and find ways to bring it into our organizations, where we can make a powerful difference. And the third thing I would say is cultivate wisdom. Think about what being wise means to you and who can guide you.

Rachel Salaman: Nancy Falls, thanks very much for joining me today.

Nancy Falls: My pleasure. Thank you for having me.

Rachel Salaman: The name of Nancy's book again is "Corporate Concinnity in the Boardroom: 10 Imperatives to Drive High Performing Companies." You can find out more about her and her work at www.theconcinnitycompany.com and it's spelt concinnity. I'll be back in a few weeks with another Expert Interview. Until then, goodbye.