Women directors urged to rock the boat

Women may ask questions in a different way, and the very fact that we‘re asking a question rocks the boat

A woman director has called on fellow women directors to “rock the boat” when the situation calls for it.

Jan Babiak who has served on board in five countries noted that in a previous board on which she served, dominated by male CEOs, they would not ask questions that they would not want to be asked themselves in their own boardroom.

“In this kind of situation, directors are more likely to have consensus and collaboration, and they also think alike.

“Women may ask questions in a different way, and the very fact that we‘re asking a question rocks the boat and sometimes makes people uncomfortable with us,” she said.

Babiak, a director at Walgreens Boots Alliance Inc and Bank of Montreal, did provide a word of caution: “It’s very important that we disagree without being disagreeable. A woman director, kind of, has to be the ‘velvet hammer’ in that she really has to make her point, but do it in a consensus-building way.”

This was one of the issues that cropped up at a discussion session organised by the Women Corporate Directors Foundation (WCD).

The board briefing series, entitled “Managing Tough Issues in the Boardroom”, was attended by directors and executives from companies ranging from Walgreens Boots Alliance to JPMorgan Chase & Co, sharing governance strategies around complex board events.

Among the other topics addressed were navigating conflict of interest situations around director investments, how independent directors play a vital role in surfacing issues, protecting board deliberations in an era of increasing demands for transparency, and getting creative around board structure to meet specific situations.

WCD claims to be the largest organisation of women board members worldwide.

Conflict of Interest

In a post-briefing report, it noted that boards can also use special committees to provide a forum to explore options around critical strategic challenges, but they also need strong, independent voices that are not afraid to ask questions.

Eunice Nyala

I was not a shareholder, and I asked about everything. Because of this, my vote was very critical, very much needed to balance things out, says Nyala

Kenyan-based Etiquette Xllent Co Ltd CEO Eunice Nyala shared an experience about a previous board on which she served as an independent director, in a major real estate company in Africa, also based in Kenya.

“The company was forming a strategic partnership with another firm, a ‘marriage’ with one providing the financial backing and the other providing the know-how.”

But the other company began buying up interests in companies that competed with its partner, and there was a breach on the shareholder agreement, she explained. Projects started delaying, and funding was not coming through when it should have.

“As the independent director, I had to be bold and get in there and ask the tough questions,” said Nyala. “What was happening? Why were things not moving along as they should?

“Other board members were all shareholders, and were very selective in what they would ask and not ask. I was not a shareholder, and I asked about everything. Because of this, my vote was very critical, very much needed to balance things out.

“What I brought to the board was diversity,” said Nyala. “The company needed my competence due to my background and wealth of experience in financial services, and having worked within multinational organisations, as well as the ethnic balance and gender balance I brought to the board. These were additional factors that drove my role in asking the questions that needed to be asked.”

Transparency

The process by which the board makes its decisions around tough issues can be just as important as the decision itself, the report added.

While successful boards protect their deliberations, allowing directors to express dissent and take a deeper look at issues that need examining, this must be weighed by a careful adherence to and documentation of the deliberative process.

On this matter, Swiss-based conglomerate ABB Ltd general counsel and secretary Diane de Saint Victor said at the end of the day, it boils down to two fairly basic questions.

“Can we live with it? ‘It’ being the outcome, and can we live with the decision-making process that led to this conclusion? We have to assume that it will become public, and we have to feel comfortable that if it does become public, we’re fine.

“Transparency has dramatically changed the overall dynamics in the boardroom. Transparency ends up driving honesty, and the overall outcome is probably better,” she said.