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Board relations

How to see and say what really matters.

Talking to the board

Jeff Davis learned early in his GC career the subtleties needed to navigate in that precarious space between an organization’s governing board and its management team.

It was his first year as GC at a financial organization, and there was a problem with one of its portfolio companies that had raised the board’s concern, and the directors were grilling management about the episode. The chair of the board’s investment committee turned her attention to Davis and asked what he thought went wrong.

He glanced briefly at the CEO, returned his attention to the board and proceeded to answer the question. After the meeting, the director pulled him aside and told him his answer was “great.” However, she chided him for pausing and looking over at the CEO before responding, warning him it was “dangerous to do” because it looked like he was seeking the CEO’s approval for what he was about to tell the board. That, she advised, could cause directors to doubt his independence as legal advisor.

It was a valuable lesson, he says, and he thanked the director for her sage advice. “I still think of that moment,” says Davis, who is now Chief Legal and Corporate Affairs Officer at the Ontario Teachers’ Pension Plan.

This is an example of how social or soft skills, such as communication and body language, play a role when it comes to managing strife between a board and management—particularly in a crisis. Director Maryse Bertrand, a former GC at CBC/Radio-Canada who sits on the board at PSP Investments and is Vice-Chair of the McGill University Board of Governors, says soft skills are “hugely important and an often-overlooked area.”

Karin McCaskill, who recently retired as Senior Vice-President, GC and Secretary of Empire Co. Ltd/Sobeys Inc., notes that by the time in-house counsel reach the level of GC, they have a “good set of hard skills,” but it is the soft skills that can set them apart. “They are really important,” she explains.

Sonica Mouton, an organizational psychologist in South Africa who works with lawyers on developing soft skills, says lawyers tend to be analytical and technical. That’s good for answering legal questions, but “they also have to have people skills and work day-to-day with people who are not lawyers.” That’s where emotional intelligence—which comprises self-awareness, self-regulation, social skills, empathy and motivation—takes over.

The good news is soft skills “can be developed,” she says, and people can become “more resilient and self-confident.” However, she warns, “it’s a challenge and takes time. Some [soft skills] are not inherent. People must see the value in it and want to do it. It takes intentional effort.”

The pay off, she explains, is that you’ll be better prepared to deal with the complexity of board-management relations, where there are often competing “opinions and perspectives. It’s important for [GCs] to listen carefully…and get the right solutions for the company.”

Here are five tips to navigating the space between a board and management.

Understand board dynamics

Put yourself in the shoes of a director and understand the dynamic at play on a board. This requires you to be perceptive and empathic, and develop strong communication skills.

Susan Hackett, CEO of Legal Executive Leadership LLC, a Maryland-based consulting business that advises legal departments on strategy, leadership and operations, says “look at things from the perspective of a board member, who has a fiduciary responsibility and a fiduciary liability [for the decision the board makes].”

One way to relate is get a taste of what it’s like to sit on a board and face those same legal responsibilities. Hackett did just that and says her experience as a director before moving in-house was invaluable when it came time to deal with board issues.

Also, understand the inherent dynamics common to most boards. Bertrand says CEOs, like GCs, often lack board experience and do not understand what boards want. They see board demands as intruding on management’s turf. Contrast this to directors, who generally have experience in management and struggle with micromanagement.

Osgoode Hall Law Professor Poonam Puri, a corporate governance expert, says compounding that is the fact that directors “don’t have the same knowledge or background” in the company as management. However, the “governance model we have requires the board to do their due diligence before they make a decision,” so they are obliged to challenge and ask questions.

That is why information flow between management and the board is crucial. What management excludes in a report can be as important as what it includes. Simply knowing management canvassed an issue and rejected it can relieve director concerns.

Build relationships

Boards are about relationships, so don’t miss opportunities to build them. When Bertrand arrived at CBC, she considered restructuring the legal department, jettisoning her involvement as board secretary because was too administrative. Her chief of staff advised against it because he “understood the importance of the role of corporate secretary.” That’s where in-house counsel get to know directors and establish relationships, as well as get exposed to the board’s agenda and direction.

Onboarding, the task of educating a new director, is a golden opportunity for GCs, says McCaskill. “That’s one thing I always liked to do, talk with a new director about how the board works [and build rapport]. It can be really valuable.”

Trust is key

It is also the first step in building a trusted relationship. Davis believes empathy is key to finding common ground and building trust. “You’re trying to put yourself in the position of the people in the room.” Your interviewing and listening skills need to shine.

Ask questions in a non-judgmental way, he advises, and understand how directors feel about a matter. Acknowledge their responses and “play back” their answers to show you hear them and understand their position. Be open and “try to understand their perception.”

Davis goes further than most when looking to build trust. He also relies on vulnerability. “There is no quicker way to gain trust than to share vulnerability,” he says, calling it the “gateway to trust” and the “cornerstone to human connections.” He notes that everyone has “imperfections,” and by sharing or acknowledging a vulnerability, it shows your human side and people relate to you.

Maintain neutrality and credibility

A constant challenge GCs face is maintaining neutrality and credibility. This is where self-awareness plays a big role. You can’t be seen to be the mouthpiece of management. Nor can you be seen as the board’s spy. It’s more like a neutral Swiss diplomat, whose ultimate loyalty is to the corporation.

“You need to find a spot where you can preserve your independence, while still being viewed as a valuable member of the executive,” says McCaskill. “You need to figure out what works in your environment.”

When it comes to building credibly, she adds, the most important thing to do is “park your ego at the door. It shouldn’t be about you.”

McCaskill says that GCs must establish credibility and trust with not only the CEO but also the board chair. That can be tricky to manage because at some point you might find yourself privy to information from the chair that the CEO doesn’t—and can’t—know about. “You’ve got to navigate through that minefield in a way that preserves your credibility and ends up being in the best interest of the company,” she explains.

Practise soothsayer skills

GCs need to have an innate sense of impending doom and be part mentalist and soothsayer. “You have to be perceptive. You have to have your eyes and ears open, and see issues before they become too big to solve,” McCaskill says. This is where listening, communications and awareness skills dominate. You need to constantly monitor what executives and directors are saying and watch for lack of alignment, she notes.

It is unlikely that GCs will ever eliminate tension between board and management. Nor would you necessarily want to, notes Puri. “A bit of healthy tension is a good thing. Good decisions get made when you don’t all think alike around the table.”

Nonetheless, it’s not always a bed of roses, notes McCaskill. If a serious issue arises between a board and a CEO, it might not be salvageable. In that case, she says, you will “have to make a big judgment call, and it might just be to get out of the way.”

This article was initially featured in the Fall 2019 issue of CCCA Magazine.