Navigating Effective Decision-Making in the Boardroom: Insights from a Highly Experienced Board Director — in conversation with Liz Lempres
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In the intricate world of corporate governance, where the destinies of companies are shaped and strategies are crafted, the role of a board director is one of paramount significance. These individuals are tasked with steering organizations through a maze of pivotal decisions, from mergers and acquisitions to CEO successions, all while ensuring the long-term success of the businesses they serve. The delicate balance between risk and reward, innovation and tradition, and the interests of stakeholders and shareholders is their canvas.
We are in conversation with Liz Lempres, an experienced board director. In this interview, we delve into the rich tapestry of board leadership and decision-making, guided by her insights and experiences.
Throughout your career as a board director, you’ve undoubtedly encountered both successful and challenging board experiences.What, in your opinion, contributed to the board’s success in that decision or action? On the flip side, can you talk about situations where the board faced difficulty? What lessons did you personally draw from that experience, and how do those experiences inform your approach to guiding boards in what they should and should not do to achieve success?
Boards make difficult decisions regularly. While many are routine, most have a significant impact on the company, its employees, and customers. Over the last several years, boards seem to be faced with more decisions that aren’t routine- whether due to the pandemic, social concerns, or geopolitical issues to name just a few. Now more than ever, it’s important to have a clear framework for making decisions, one that’s agreed to by the board and management.
That framework starts with a common grounding in the company’s values. What do we stand for? What do our employees and customers expect from us? Boeing’s customers expect safety first. Full stop. Starbucks’s customers want more than coffee; they expect an experience that is welcoming and increasingly reflects their own values. Sometimes, values can (or can appear to be) in conflict. Universities are currently weighing their commitment to academic independence and freedom of speech with their responsibilities to protect the rights of all community members and ensure their safety. These discussions can be tricky but are essential to ensuring the board has a north star to guide its discussions.
Against that backdrop, there are several tactics boards can employ to make decisions effectively.
First, build trust among board members. It enables open dialogue and allows dissenting views to be expressed. Building deep relationships is essential, whether through in-person meetings, dinners, or retreats. This is particularly important- and hard to do- in today’s world where many boards are still doing at least some meetings virtually.
Second, ensure clarity on the essential questions the board needs to answer. Cutting through the noise and focusing on the key issues that matter to the decision- and ensuring you have the information to address them- is critical. It is the responsibility of the CEO and chair (or Lead Director) to ensure that the board stays on track and has the “soft and hard” data it needs to make a decision. It’s also their role to ensure the board doesn’t venture into decisions that are better made by management.
Third, tap into the unique expertise of every board member. No member should be overlooked, and their distinct experiences must be considered. Avoiding a “pecking order” mindset ensures a comprehensive evaluation of the situation.
Fourth, exercise dispassion. This can be particularly challenging in situations like CEO succession, where personal relationships can impact judgment, or when an activist is making assertions publicly in an effort to undermine the board or individual members. The board’s primary responsibility is to make decisions in the best interest of the company and its stakeholders.
It sounds straight forward but the real world is more complicated. Sometimes boards can feel pressured by a concern that their decision will e.g., cause key executives to leave, provoke a large shareholder, feed into an activist’s narrative- the list goes on and on. These are all relevant considerations in decision-making but should not be the primary drivers.
If you start with a shared understanding of what the organization stands for and stick to the four elements I described earlier, you are in a much better position to make good decisions even in the face of all the other factors boards face day to day.
Thank you for sharing, Liz.
A seasoned professional with a multifaceted career, Liz Lempres is currently a dedicated Board Director, specializing in cultivating resilient consumer businesses at scale. As a Senior Partner Emeritus at McKinsey & Co., her expertise in strategy, organization, and board governance is widely acknowledged. With a global footprint spanning over 20 countries, her international exposure has enriched her perspective, enabling effective collaboration across diverse cultural and business landscapes. Renowned for assuming pivotal roles in audit, governance, compensation, and CEO succession, she brings a wealth of experience to every boardroom.
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