Judgement + character + humility = Board wisdom | Business Standard Column

The year 2019 was full of boardroom debacles. Usually, we all tend to live in the uplands of activity obsession. The lull during the holiday season offered me a quiet period when I retreated with my books into the valley of humility. I realised that what company directors owe to their board is wisdom, soaked in a sauce of judgement, character and humility. Wisdom means that not only should a decision be wise but its implementation should also be wise.

This is soft stuff, surely not a conference subject. After all, how much can law mandate? It is a good time for India Inc to contemplate how to get more wisdom into the boardroom. Several powerful individuals are good beings and not inherently immoral or degraded. In the quagmire of conflicting demands, such an individual could act in an aberrant and seemingly immoral way. It is at that moment when there is a temporary loss of judgement that one needs the crutch of wisdom to be around. Wise directors are a huge help.

Wisdom is born in the crucibles of experience and humility. You cannot be trained to be wise, you must learn to be wise. Wisdom comes from failure, more than from success. A wise person possesses character and judgement that bring about better outcomes.

Character: David Brooks’ book, The Road to Character, is a fabulous read. We live in an “I” world rather than a “We” world. There is research evidence on how social and corporate culture has shifted — from people regarding themselves with humility in the 1950s to thinking of themselves being at the centre of the universe nowadays. He suggests that there is a You (Image) and a You (Real).

You (Image) is competitive; you clamour long to promote yourself — being better than others, highly regarded, acquiring accolades, and advancing.

You (Real) witnesses your vulnerabilities. It builds your character by winning against yourself, by focusing on your weaknesses and demanding improvement.

Non-executive directors should be at a life stage when their thinking is dominated more by You (Real) rather than You (Image). They should be dependable, both ethically and professionally. After all, who can be sure when a board colleague could lose balance!

Judgement: Harvard Business Review of January/February 2020 carries two relevant articles, one by Andrew Likierman and the other by Mariam Kouchaki & Isaac Smith. We must recognise that we all have the potential to transgress our own standard of morality. Good judgement comes out of (i) managerial experience, (ii) active listening, and (iii) welcoming diverse viewpoints.

Managerial experience may be function-rich, relationship-rich or domain-rich. Active listening means you argue as though you are right but listen as though you are wrong. Welcoming diverse views is as tough as active listening because leaders have touchy egos — they get accustomed to perfunctory discussions and quick convergence to a decision.

Wisdom: This is born out of both explicit knowledge as well as intuition. Intuition comes out of experience and people-connectedness. Suspicious, aloof and untrusting leaders have difficulty in acquiring and demonstrating their intuition.

Bundle these characteristics together: Real (You) + managerial experience + active listening + welcoming diverse viewpoints, and you get the job description for a wise director. It is demanding, but worthy as an aspiration. Remember that a competent director is not necessarily wise.

i. A board has legal rights, for instance, to approve an acquisition or dismiss an existing CEO, but the implementation must meet the test of morality. A director is not supposed to vote on a resolution that she does not subscribe to. Comprehension, competence, compliance and conscience must all be tightly interwoven. The corporation should have a clear delineation of roles among owners, board and management.

A shareholder can and should act only through the board. Board directors should place the interest of the company ahead of themselves or the dominant shareholder.

ii. When a leader moves from being CEO to non-executive chairman, one must modify the style from being directorial to observing and advising; this demands a conscious effort on how to change and making the change. Marico’s Harsh Mariwala has approached this transition quite well. Directors should not leave taking the “final” decision on a family person.

iii. A brouhaha is brewing about an impending requirement to separate the roles of chairman and CEO. Wisdom suggests that it should not be controversial. Of course, where niyat and niti are not in place, there will be resistance.

Temporary loss of judgement can produce unexpectedly harsh consequences. The valiant Alexander was gracious to those whom he overcame. However, when the local chief of Gaza, Batis, refused to give up the fight or bend his knee, an infuriated Alexander slaughtered Batis ruthlessly and dragged his body around the city. In the Mahabharata, when the valiant Abhimanyu entered the Kaurava formation of Chakravyuha, he was isolated from Pandavas by Jayadratha; thereafter, several Kauravas mercilessly killed Abhimanyu.

May the new year nurture wise directors.

The writer is an author and corporate advisor. He is distinguished professor of IIT Kharagpur. During his career, he was a director of Tata Sons and vice-chairman of Hindustan Unilever.

Email: rgopal@themindworks.me

via Judgement + character + humility = Board wisdom | Business Standard Column

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