Board directors are becoming increasingly sensitive to their own and other’s social status, says Professor Nada Kakabadse of Henley Business School.
She continues: “The higher an individual’s significance is seen to be, the more it affects decision-making, interaction and even influences who is invited to join the board in the first place.
“Consider the following recent examples of high social status in action:
The Institute of Directors is accused of failing to conduct a fair investigation into allegations that its former chair, Barbara Judge, was a racist bully. Judge’s subsequent resignation begs the question ‘why wait for the 41st allegation of such behaviour before action was taken?’
The outcry over the UK’s highest-paid vice-chancellor at the University of Bath, Dame Glynis Breakwell, didn’t just spontaneously happen overnight. How did the university council chair and remuneration committee arrive at such an unusually high figure?
Why was Charlie Rose, creative and commercial lead at Pixar, able to take an extended leave of absence amid claims of misconduct and harassment going back several years before being fired?
“Board directors with high social status also enjoy enhanced networks, prestige and financial resources, making them more attractive to those from similar backgrounds. This translates into higher compensation as an acknowledgement of social rank.
“It is not always directors’ expertise that drives influence within the board, but rather how competent they appear in the eyes of other directors. Patterns of influence emerge, along with a deference to a director’s social status. An expert director with less social status than his colleagues is not always heard in a boardroom.
“This perspective suggests that organisations benefit by being associated with those who have high social recognition. Directors with high status influence perception, and individuals tend to be attracted to organisations made up of people with similar social characteristics.
“This leads to the question ‘how confident do colleagues feel about raising their concerns?’ Do boards have a culture where colleagues feel safe and confident enough to tackle contentious issues? Alternatively is director social status and conformity a deciding factor within the board and the dominant way things are done?
“Our studies confirm that directors do not feel safe to speak up or challenge traditional ways of doing things. In particular ethical issues need careful and sensitive questioning as they test our moral identity, which makes us more emotional, less effective and vulnerable to self-delusion.
“It has been reported that if one attempts to challenge these norms then they may be seen as not fitting into the board. Certain directors are reticent to talk about ideas for improving products, processes, or performance, or questioning the culture of the board and organisation.
“Most often this is a result of self-preservation. While it is obvious employees fear bringing up certain issues, such as whistle-blowing, our work has found that directors have a protective instinct that is so powerful, it also inhibits questioning of what is clearly intended to help the board and organisation.
“Our studies show that the perceived risks of speaking up are felt to be very personal and immediate to directors, despite the potential benefits. Directors often instinctively play it safe by keeping quiet. This is particularly true when a board has been operating for a long time and any uninvited questioning is automatically perceived as an attack.
“Our findings suggest that encouraging others to speak up means that directors need to feel secure enough to be able to usefully contribute.
“This single important point requires deep cultural change at board level. Nothing will improve until people are better able to address their concerns and
place future benefits to the board and organisation before any worries about personal reputation.
“To encourage this the chair must explicitly invite and acknowledge others’ ideas, while the CEO needs to actively challenge myths and assumptions that reinforce silence. Ideas are most helpful when they are openly discussed in the boardroom, allowing other directors to help develop them.”