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The Key to a Better Board: Team Dynamics
Research into what actually makes for a better board remains surprisingly scant. Consequently, many boards fall back on recruiting friends and associates who they believe have the necessary experience and expertise. However, there may be a better way of not only screening for appropriate directors, but also managing the board's interactions to generate optimal economic value. The article's author, Charas Consulting Inc. President Solange Charas, focused on corporate boards, but many of her recommendations apply to nonprofit associations.

One of her earlier studies found that directors who did not know each other prior to joining the board were more likely to engage in productive conflict. Charas' latest research also provides evidence that "cultural intelligence" of individual directors, or their predisposition to work well in teams, is critical in generating high-quality team dynamics. In addition, boards that are able to function effectively as a team have a whopping 800-percent greater impact on profitability than any one well-qualified board member. Basically, the whole is greater than the sum of the parts.

In her latest research, Charas measured board dynamics with a new, 30-item Team Dynamic assessment tool developed by Tony Lingham, an associate professor at Case Western Reserve University's Weatherhead School of Management. She polled more than 180 randomly selected directors who, between them, have served on the boards of 572 U.S. companies and had an average of 12 years of board experience. Charas asked them to rate their board's interactions along 10 behavioral attributes, ranging from engagement, active listening and solidarity to planning, action and influence. She then asked what their boards' interactions in those areas would have to be like for them to be maximally effective. "The diagnostic tool measured the gap between those two scores," she writes, "and I found that boards with smaller gaps between the current dynamic and the maximally effective dynamic were more effective and their companies more profitable than those boards where the gap between current and desired dynamic is high." By focusing on team dynamics, boards can improve their performance. "Transforming a weak board to a strong board is not investment-intensive," Charas concludes, "and the benefits are significant."
Harvard Business Review (01/14) Charas, Solange
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MARCH 2014 EDITION
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