THE VIEW FROM TAFT
Those who govern should always act wisely and not like fools.
ing, intimidating, or threatening manner in order to get his or her way.”
Consequently, a harmful side effect of infighting is that members who have legitimate questions hesitate to bring them up, fearing further escalation of interpersonal conflict. A false sense of consensus engulfs the board, and critical questions are no longer asked.
Kurt Eichenwald described the bad governance effect of infighting within Enron in his book entitled Conspiracy of fools: A true story. When Enron’s board audit committee, chaired by renowned accounting expert Robert Jaedicke, met to review possible accounting problems, they were assured by the external auditor that “Arthur Andersen’s financial statement opinion for 1999 will be unqualified. There were no significant audit adjustments, or disagreements with management, or other significant difficulties.” Earlier questions about the company’s conflicted accounting and compensation practices critically raised by both Enron insiders and external auditors were not discussed. Worse, no questions were asked by the audit committee members. Jaedicke would later claim during a congressional investigation that Enron management hid information from the board.
If boards are to function properly, the roots of dysfunctional interpersonal conflict must be addressed. Kissman suggests that a possible first step in managing a troublesome board director is for the board chair to initiate a conversation with the director to clarify perceptions, to develop options for resolution, and to solicit the board member’s understanding and agreement to a course of action and a plan for follow- up to ensure successful resolution for all.
For the board as a whole, Kissman recommends that directors be oriented on the importance of working as a team and on board meeting etiquette. Board job descriptions and annual teambuilding and leadership development exercises should also be helpful.
The board is ultimately responsible for the prudent direction and oversight of the corporation. All directors, led by the chair, must work collegially to work through substantive conflicts while getting interpersonal conflicts out of the way. Those who govern should always act wisely and not like fools.