Wearing Two Hats in the Boardroom will lead to a dysfunctional Board

We are still getting to grips with governance and what it means in Ireland for boards and directors. We have a lot to learn given that our first code was only developed in 2009. 

I wonder how many people say yes to being on a board without thinking about their roles and responsibilities and what they need to know to carry out their job.

Once on a board, the new director can be overwhelmed by the breath of knowledge that is required.  This could include the Companies Act 2014, tax law, finance, health and safety, the relevant code if there is one, let alone understanding how a board works.

The key challenge is understanding how I….. as new board member can contribute.  Good induction can help, nevertheless the early days can be intimidating for the new board member.

It can be easy to just listen and be silent.  A good chair will try to encourage new members to engage and give their views. Indeed, it may take some time before a new board member is comfortable contributing on a spontaneous basis and in the process perhaps upsetting the status quo. 

Whether one is silent or not, one still has the same collective responsibilities as all the other board members.

Many directors do not know that the board is collectively responsible for all its decisions.  This means that even if a member disagrees with a particular decision where the majority are in favor, they must respect the decision and support it outside the board room.  This can be hard for some board members if they are there are in a representative capacity, such as for a VC fund or for a province of a sports organisation where they sit on the national board.  Remember, next time round somebody else may be the lone voice! 

If a board member is in constant disagreement with the decision of the board, then they should consider resignation.

One must remember that a director can only wear one hat in the boardroom and that is the hat of the board they sit on.  If they are there in a representative or other capacity, they need to leave that hat at the door. If they can’t then, the board will become dysfunctional.  Board members elected in a representative capacity will find this challenging. 

So.…..speak up and only wear one hat!

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David W Duffy FCA is the Founder and CEO of the Governance Company and the author of “A Practical Guide to Corporate Governance” published by Chartered Accountants Ireland.

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