First Among Equals: How Effective Chairs Build Inclusive Boards [Egon Zehnder]

What makes a board truly effective? Beyond resumes and expertise, it comes down to how directors interact, challenge each other, and make decisions together. In this episode, Chuck Gray and Pam Warren of Egon Zehnder share insights from their work with boards around the world, focusing on the cultural foundations that drive performance.

They discuss the importance of intentional leadership, the nuances of leading peers rather than subordinates, and the practices that help boards operate as cohesive groups rather than collections of individuals. From agenda-setting to feedback loops and inclusive participation, this conversation offers a detailed look at how strong board cultures are built, and what happens when they’re not.

What you'll learn:

• How to navigate the leadership transition from a command-and-control CEO mindset to a "first among equals" board chair style that prioritizes leading peers through shared ownership rather than mandate
• Practical techniques for "energy management" and intentional agenda setting to create a focused "container" for high-stakes decision-making, including the use of pre-meeting one-on-ones to ground every director
• How to apply the "constellation" framework to diagnose dysfunctional board patterns to improve collective performance without making individual directors defensive
• Strategies for moving beyond "press release" diversity to foster true inclusivity by intentionally integrating "only" or "unique" voices into deliberations so their specialized expertise is fully leveraged
• Why deep, confidential referencing is essential for board recruitment to identify how a candidate "shows up in the room" and avoid the "ball watching" dynamic where a board becomes passive spectators to a dominant duo

To learn more & get resources:

• Podcast & episodes: www.publiccompanyseries.com
• Download the book: www.nyse.com/pcs

Subscribe now to hear insights from the most respected voices in corporate law and governance.

Transcript

[00:00:00] Doug Chia: Welcome to the Public Company Series Podcast, I'm your host, Doug Chia. This podcast series is designed to give corporate directors, executives, and governance professionals the insights and tools they need to build boards that are agile, resilient, and prepared for the future.

[00:00:33] Doug Chia: It's based on the book Board Structure and Composition, which is part of the Public Company Series published by the New York Stock Exchange and JP Morgan. My guests for today's episode are Chuck Gray and Pam Warren, both partners at Egon Zehnder. Pam and Chuck authored the chapter of the book entitled Unlock Your Board's Full Potential: [00:01:00] Why Culture Is the Key to a High-Performing Board.

[00:01:04] Doug Chia: Chuck and Pam, welcome to the show. 

[00:01:08] Pamela Warren: Thank you. 

[00:01:09] Chuck Gray: Hello, thanks for having us here. 

[00:01:11] Doug Chia: So I'll set the context for today's discussion and then we'll get into it. Culture eats strategy for breakfast. This is a quote that I think we've all heard and it's widely attributed to Peter Drucker. My research says it's not, it was either Steve Jobs or Jack Welch, but regardless who said it first, they were talking about corporate culture.

[00:01:39] Doug Chia: Today there's been a lot more discussion about board culture, and I think chuck and Pam say it best "While individual directors, experiences and contributions matter, it's the collective board culture that truly determines board effectiveness. Just as organizational [00:02:00] culture shapes the day-to-day environment for employees, board culture profoundly influences how directors interact and make decisions, ultimately impacting how the organization performs."

[00:02:14] Doug Chia: So the underlying challenge for boards that Chuck and Pam address in their chapter of the book is building and maintaining a robust board culture, which takes time, effort, and intentionality. The alternative can lead to poor decision making and less effective governance overall. And the ones most responsible for establishing the right kind of board culture are the board's leaders.

[00:02:43] Doug Chia: It is essential for them to set the tone for that to happen. In their chapter, Chuck and Pam examine three board culture issues, effective versus ineffective board leadership, the importance of [00:03:00] operating as a group and not as a collection of individuals and onboarding and integrating new board members.

[00:03:10] Doug Chia: Chuck and Pam's chapter explore strategy to diagnose and address these issues to ultimately guide the board towards fostering a stronger culture. And so with that, let's dive in. Chuck and Pam, the first thing you talk about in your chapter is you point out a number of common problems that you, you've seen. Ineffective leadership from the chair or lead director, is one of them. And you say that a strong hallmark of an effective chair is an environment where every director feels safe to communicate openly and the collective is able to make balanced decisions. Boards with ineffective leadership often exhibit uncertainty about direction, lack of open feedback [00:04:00] exchange, and even poor decision making.

[00:04:03] Doug Chia: So in terms of this culture, how do you establish this? Or how does a board chair establish this? 

[00:04:13] Pamela Warren: First of all, thank you for having us. Um, uh, it, it really starts with the fact that directors only gather 4 to 6 times a year. Maybe it's 7 or 8, if there's a particularly crunchy matter before them.

[00:04:27] Pamela Warren: So as you open, intentionality really matters. Kind of every minute matters to create the container that will allow for great decision making. So I think it starts with that. Uh, I think when you talk about effective leadership, one of the things that really comes to mind is why is someone taking on the leadership role?

[00:04:48] Pamela Warren: So what is their calling or purpose for taking on that leadership role? And I think when we look at great leadership at boards, it's usually because there is a very rich or deep [00:05:00] connection to the purpose of the organization or what the company is trying to achieve or its mission at that particular point in its journey.

[00:05:08] Pamela Warren: And, it's not just filling time, it's not just because I have time or I'm trying to kind of find my, my own personal purpose in retirement life. It's actually a connection to the company that they're joining. And, you know, a story comes to mind that I was recently chatting with an individual that took on a leadership role at Boeing, uh, following the whole recent crisis.

[00:05:34] Pamela Warren: And when we asked him why did he take it on, it was a pretty crunchy matter, he said, I'm not here to, to fill a board portfolio, he said, I'm really connected to the national and economic significance of this company. And you know, that is why I'm here and I believe I can make a difference. And I think if you start from that kind of place of connection to the purpose of the [00:06:00] organization, you will have much more intentional leadership.

[00:06:04] Chuck Gray: We didn't necessarily call this out on our article, but one of the things that we're noticing is if you think about the person leading the board, let's say it's an independent chair, oftentimes it's a former CEO, and there's needs to be a recognition that it's a different type of leadership role. So if you're a CEO of a company, everybody reports to you, everybody answers to you.

[00:06:25] Chuck Gray: You don't really have a peer in the organization when you're leading a board it is a very different leadership structure since you're leading a group of individuals who are peers. So it requires a different mindset and some chairs take time to understand that they have to approach leadership and they, by the way, they may have been a very successful CEO who worked at a company for 40 years, but they may have to say, okay, you know, in this situation I have operate a little bit differently.

[00:06:54] Chuck Gray: Sometimes there's an adjustment process there as well. 

[00:06:57] Doug Chia: Yeah, it's very much the concept of, you know, [00:07:00] knights of the round table first among equals uh, position.

[00:07:04] Doug Chia: In our field, we talk a lot about if you wanna establish good culture, it's important to set the tone at the top, and that that's used in many contexts and in the boardroom as well.

[00:07:16] Doug Chia: What doesn't get talked about is, okay, how do you do that? What specific actions can you take to establish good tone at the top? What have you seen that's, that's really, that leads to, you know, effectiveness there? 

[00:07:33] Pamela Warren: You know, I think I would start with being centered and present and, you know, when someone is busy and rushing and hasn't put the time in to shape the agenda for a great conversation, you feel it.

[00:07:46] Pamela Warren: You feel it instantly. So I think there is this, it starts by having someone who has kind of created the space to be very centered and present and self-aware about what's going on with themselves and what's going [00:08:00] on with the collection of people around them. Um, so I, I think that's thing one. And I would also say, just because I mentioned agenda setting, I think agenda setting, agenda setting, agenda setting is really, really, really important and creating the space to talk about what is most important.

[00:08:18] Pamela Warren: Creating a space upfront to ground everybody else in that sense of centeredness and presence and what are we here to do and what's most important in front of us, and then also at the end. So I, I think sometimes there's just a rush to get through everything. And so I would say it starts from the person leading the process and kind of putting the energy out there that everybody else feels and follows.

[00:08:44] Chuck Gray: You want people to want to follow you versus feeling they have to follow you. Not only because you have that title, of course, the natural leadership position, you're the chair. I mean, it's structured that way. But if you go with the mindset of, you know, Pam's point being [00:09:00] centered and understand, okay, I, I need folks to want to follow me, versus leading by mandate.

[00:09:06] Chuck Gray: So even things like the agenda, making sure that you get enough impact input. The different directors as part of their process is a way of getting them to feel like they have shared ownership, and that's not all on you. 

[00:09:18] Pamela Warren: Maybe I'll, I'll add one more practice that I've observed, um, is what happens before the meeting?

[00:09:24] Pamela Warren: You know, I think sometimes everyone's so focused on the meeting, but there's really important time before and after a meeting that helps the meeting itself be very successful. And, you know, there is one, uh, practice that I've observed that the chair that calls really every director ahead of the meeting, which takes time.

[00:09:44] Pamela Warren: Uh, and people always think is that practical? Uh, but we'll say, here are the three things that I think are most or four or five, or whatever it is, things that are most important for us to talk about coming up. And I'd really like to hear your voice on this or that. [00:10:00] And I think it's the setting of the context of what we're about to do that sometimes kind of sets the container for everyone coming knowing that they have a voice to bring forward and that they're prepared to talk about the things that are most important. So I, I, I would linger in that as a better practice. 

[00:10:20] Doug Chia: Yeah, no, that, that's interesting. And you, you know, you talk about how effective chairs can nurture and maintain the board culture by requesting and being open to critical feedback and engaging in reflection after every meeting.

[00:10:35] Doug Chia: And so you've talked about calling people before and after every meeting. I mean, that is a ton of work. Is that something that's a pretty rare instance, or do most chairs that you've worked with try to do, you know, something like that? Maybe not as comprehensive about as a one-on-one with each person,

[00:10:56] Doug Chia: 'cause they're probably like 11 or 12 other people. [00:11:00] But yeah, what are some things you've seen in terms of this, try to get individual feedback before and or after, um, at the meeting? 

[00:11:09] Pamela Warren: I mean, I think the table stakes, uh, move is at the end of each meeting, after the in-camera, just carving out some time with just the directors to talk about how the meeting went.

[00:11:25] Pamela Warren: You don't need to kind of focus on everything, but just, you know, did we use our time well? Did we talk about the most pressing and strategic issues? Was the quality of debate good? And what should you do better next time if you did nothing else but use the end of the last kind of posting camera session, uh, to just talk about those items,

[00:11:51] Pamela Warren: I think you've already started to get some feedback and created a a, an environment where directors are invited to kind of critique and [00:12:00] build forward. So I think that's a minimum. And I would also say, you know, if you're not gonna talk to every director after every meeting, which I understand, you know, you may think at least of talking to your committee chairs and the remaining directors twice a year.

[00:12:15] Pamela Warren: You know, pick when, but, uh, usually following a meeting so that you can get the, the richness of what happened as specific feedback in the meeting. 

[00:12:25] Chuck Gray: Agree with everything my colleagues said. I would just add a couple things that I would say. One, making sure that you definitely get feedback from the CEO as part of their process.

[00:12:32] Chuck Gray: So assuming you have an independent chair and an independent CEO, there are two separate roles. Definitely making sure that is a constant open dialogue. And then I would just say making sure there's at least somebody on the board who's not the CEO, who can tell the truth to you. You know, sometimes in these situations, even one-on-one, depending on the perceived power dynamic, not everyone is comfortable sharing their thoughts wide open, they kind of sometimes hold things [00:13:00] back. And just making sure you've got someone on the board who you respect who you trust, who will pull you aside either during the meeting or after the meeting and say, "Hey, you may want to think about this in a different way."

[00:13:10] Chuck Gray: I would say that is a bare minimum, something you should have. 

[00:13:13] Doug Chia: Yeah, you need a friend like that, that might be the best friend you have who can really just level with you and say, "Hey, look, you know, you're really, you know, doing something dumb here." But I think that, you know, what you've been talking about is fascinating because.

[00:13:29] Doug Chia: You hear investors and you know, critics talk about, "Well, why do you have this person on the board?" Or "Why is this person the chair?" You know? "It doesn't seem like they have the resume for it." And it's like, well, if you've been in the boardroom, you see it's not just about, you know, what company this person ran or something like that.

[00:13:50] Doug Chia: There are all kinds of intangibles and, kind of EQ and these qualities of how you run the board, how you run the meeting, that [00:14:00] can really establish things that people on the outside just don't see. And you can't put that in disclosure, you know, you can't write about that. 

[00:14:09] Pamela Warren: And, and Doug, we shouldn't, shouldn't miss the fact that formal, uh, annual board reviews can look at you know, the stuff that you imagine is always looked at, right? The quality of the materials and the quality of the discussion and so forth, both from the board and the management's perspective. But I, I think it's the, it's the more, kind of in the moment stuff that can allow the, the fine tuning happen as kind of a continuous improvement exercise.

[00:14:36] Doug Chia: Yeah. While it's still fresh kind of, uh, practice. Yeah. Um, but you also point out that in some instances, a board chair is not open to receiving feedback, and as a result, they're not gonna adapt to make the necessary changes to lead to a, a good board culture. And so [00:15:00] what happens then? I, I'm sure this happens more than people realize.

[00:15:05] Doug Chia: Hopefully not, but you know, I'm sure we've all seen this. So, yeah, what do you do? 

[00:15:12] Pamela Warren: Well, I think this is where you better have a really good, uh, chair of nom gov or a really strong lead independent director because their role becomes, uh, even more important. You know, again, maybe I could share a story, but there was a situation where we had a technology company and the chair was almost absentee.

[00:15:34] Pamela Warren: The chair of nom gov, uh, didn't really know how to handle it, and so engaged a new approach to a board effectiveness review, which is something we talk about in the article. And in that board effectiveness review, we spoke to every director and it was clear that every director felt the chair really wasn't sitting in their seat fully. And so it was incumbent upon us to put that elephant in front of the [00:16:00] chair and talk about what's missing. Um, and I, and I think, you know, frankly, that led to a chair, uh, succession and it gave the chair of the nom gov the important data that they required to do that type of succession work in a thoughtful way.

[00:16:15] Pamela Warren: And kind of gave them the license that they needed. So I, I do think it happens, and I think the, the role of your committee leadership or your lead independent becomes really, really important to, to call out what other people are really sensing and feeling. 

[00:16:30] Chuck Gray: One specific situation that happens quite often is that you, you have a CEO who retires, the CEO. And then steps into the chair role, and then a new CEO takes the CEO role obviously.

[00:16:44] Chuck Gray: That's oftentimes where you have situations where that chair, who is the former CEO, has a listening issue. It often comes up. We see this all the time. The good news is that one of the ways you can handle that is to make sure there's a very defined time, and this is pretty standard, right? A very [00:17:00] defined time period where that person is in the seat.

[00:17:03] Chuck Gray: We've seen this, I've seen that they have really a recent example where the person was, the CEO became chair, a new CEO started. The person didn't work out. They had to step back into the CEO role. They thankfully found a good CEO. That person stepped into role and the, and the person has kinda lingered on the board.

[00:17:21] Chuck Gray: It's created a lot of friction, a lot of tension. The board loved the fact that the chair was on the board because they always felt they had an emergency successor in place. Uh, but it's gotten to a point now where they said, okay, look, this just doesn't work. And I know this is pretty standard practice, but I've seen some companies let that timing slip for when that chair is gonna roll out of that role. So that's the situation where you say, look, just make sure you have a defined time period and stick to that defined time period unless there's just some emergency that you can't get around. 

[00:17:51] Doug Chia: That's a great point. I always get queasy when I see this, you know, the old person's gonna stay on for, uh, you know, [00:18:00] unspecified time period, and it's like, oh geez, that's not a good signal, I think. But what is a good signal that you point out is this practice of, you know, having someone come in to do this board evaluation review. And just by virtue of the fact that the board did that, it kind of shows that they're enlightened, that they're bringing someone in to do this review, which means they're not afraid of what they're gonna hear.

[00:18:32] Doug Chia: So I think that's also a signal that, you know, I tell investors, look, if you see that in the proxy state and that already tells you something about that board. 

[00:18:42] Chuck Gray: When we get hired to do a board review, um, usually we're hired by the chair of the board or the lead director as part of that process. The dirty little secret, uh, that we don't talk about a lot is that we do that work and go through that process and you start to identify, okay, what are the [00:19:00] issues holding this board back from being the best version of itself?

[00:19:02] Chuck Gray: It's oftentimes the leadership of the chair. So sometimes what happens is the chair thinks that he or she is very aware of the good, the challenges, what they're doing well, etcetera, and sometimes they actually don't realize that the issue is them, until after they go through this process. So to the point earlier, it is good when a person is open to doing that, but sometimes they do that because they think it's somebody else that's the issue and they don't really realize that it's them or that person that's the issue. 

[00:19:33] Doug Chia: Does having the CEO serving as the chair make this a little bit more difficult? If that chair who is also a CEO is not receptive to feedback? 

[00:19:46] Chuck Gray: I think we sometimes get caught up in title versus people and the direction of travel right now is separating the chair and the CEO, having two different people for both roles.

[00:19:58] Chuck Gray: It's been that way pretty much in [00:20:00] every other part of the world except the US for decades. US is now starting to develop that more and more start to adopt that more and more, but you still have a lot of chairs and CEOs who are the same person. Now, I have never seen any analysis, and by way there is, please send it to me that says:

[00:20:17] Chuck Gray: companies which have a separate chair and CEO perform better, have better board culture, have better company culture. I've never seen any analysis on that, any empirical evidence on that. So I'm, I'm not sure it's the combining of the roles. I think it's really about the people in the roles. And I have met some CEOs and chairs and there's some chairs out there who are independent who think their job is to manage the CEO.

[00:20:46] Chuck Gray: So they feel like they're the CEO's boss, which creates a lot of friction because the boss of the CEO is really the board itself, it's not one person. But there's some chairs who adopt that mentality. So that's one way where it goes in the wrong direction. I've also seen [00:21:00] situations where you have a separate chair and lead director, or separate a combined chair and CEO and the lead director, and that lead director is very independent, very strong personality, very respected by the board, not afraid to challenge the chair and CEO and is actually a peer with the chair developing the agenda of the board meetings every single time. So I really think it depends on the people and the roles versus the roles itself. So that's where I'm a little bit, counter-cultural on that one. 

[00:21:31] Doug Chia: Yeah, I'm, I'm right there with you.

[00:21:33] Doug Chia: Uh, you know, uh, you've articulated perfectly what I try to tell other people in terms of this form over substance, you know, thinking. 

[00:21:42] Pamela Warren: I think it's more sensitive. I think you just have to, um, be even more thoughtful about the who. There's a practice that I, I believe is really important, which is the chair and the CEO kind of connect every two weeks in this just talk.

[00:21:59] Pamela Warren: [00:22:00] Right? And I think that same practice can be, uh, held between the, uh, chair, CEO with the lid or the lead independent. And I think it's really, really important to kind of understand the strength of the lead independent in that case. Um, and to have a really deep container of trust between those two people so that you're having the richness of challenge, um, and the richness of exchange that is required in that situation.

[00:22:28] Pamela Warren: When things get tough, right? They're particularly tested in pressure situations. But I agree with both of you that the individual and the substance of the individual really is important. 

[00:22:39] Doug Chia: There's a line in your chapter, "Increased diversified representation of boards has made creating an inclusive culture more imperative. Cultivating inclusivity requires intention and practice." Now, you know, those two sentences use two words that have become very [00:23:00] sensitive subjects, and frankly, I don't think that's new, I think that's always been the case, but there is a way to talk about these concepts without getting into some kind of ideological argument.

[00:23:13] Doug Chia: There's a very practical element to that. How are you looking at that and what is that look like in terms of this diversified representation and inclusive culture? 

[00:23:28] Pamela Warren: I think it's creating the space for someone to feel like they belong, right? At an in its highest level I think that's what it is. And I was observing a board meeting relatively recently, and there is one new director.

[00:23:41] Pamela Warren: So again, when we talk about kind of the one, the only, the unique voice. That's even more opportunity for someone to feel like they're on the outside, not on the inside of something. Um, and they had recruited a new female, uh, director. Not that gender mattered in this case, but she was the, um, [00:24:00] former, uh, newly retired president of a drug innovation company and she had joined a health services board.

[00:24:07] Pamela Warren: It was quite interesting 'cause on this health services board there was, she's the only one that had this kind of pharma drug development, uh, background. And I watched the whole board meeting happen. She was the, she was, it was her first board meeting. We were almost to the conclusion of this board day.

[00:24:27] Pamela Warren: And really she was just observing quietly until kind of, you know, almost the, someone must have elbowed the chair. And he said, my goodness, I'm so sorry. What do you think about all this? Can you talk about your experience as it pertains to this and brought her into the conversation to kind of show that she was coming from a platform of, of real understanding of something that they did not have.

[00:24:52] Pamela Warren: And I think it was that mulling that kind of kept on the outside the whole time, but, but opened a door for her to feel [00:25:00] connected to this group. Um, and I think so often, you know, why did that happen at the end? I don't know. You know, but how do we create the conditions for someone's voice to come in, in a meaningful way while they're learning everything else about the company that they're, they're new to.

[00:25:18] Pamela Warren: So, I, I think sometimes when you're an only, um, or when you're new, uh, only in terms of sectoral experience or anything else. How do we create the conditions for them to feel connected? Otherwise, you're losing the value. Why did you bring the person onto the board in the first place? 

[00:25:33] Doug Chia: Chuck, I don't know what you think on this one.

[00:25:36] Chuck Gray: This is a passion of mine. Um, I have had roles in the firm like Pam, where we've led our diversity practice within the firm. Uh, a lot of our board work over the years has been focused on diversity, but I want to just be clear about this. This isn't just diversity as far as what a person looks like. All right?

[00:25:54] Chuck Gray: It's really diversity of thought, perspective, background, [00:26:00] and you, you've seen boards over the last decade, you'd be much more intentional about bringing people outside of the industry to maybe bring a different type of functional expertise to the board. And I think to Pam's point, like you're bringing people who bring something different that you believe needs to be in the room, and you're not getting those contributions and you're losing out on something.

[00:26:19] Chuck Gray: And so, you know, as boards have done this work over the last years, which has been, we've been great to increase the diversified voices in the room, it is really important to make sure everybody's heard. 

[00:26:30] Pamela Warren: If we wanted to kind of play along the spicier edges, and Chuck you tell me what you think. But there were a number of years there where we were very focused on helping boards build their representation, both of gender and ethnicity.

[00:26:43] Pamela Warren: Um, I would say that the more common request we have right now is around really finding, uh, proven CEOs or proven operators. And so the, you know, the dominant conversation [00:27:00] we're having in North America is around helping the client find, uh, recently retired, sitting, uh, not overly boarded, proven CEOs because what happened in that diverse, that move towards diversification of gender and ethnicity is, uh, CEOs are not feeling that they have enough CEO sounding board at the board level.

[00:27:26] Pamela Warren: And I think that's the kind of current conversation. Now, I would say that even though the conversation has changed, there is still a strong uh, connection to ensuring that interviewing slates are well balanced, both in terms of gender and ethnicity. I don't know if Chucky would disagree, but, but I think the tone of conversation is really focused on the operator and the approach that we bring is still to show balanced slates in terms of gender and ethnicity, knowing that there's [00:28:00] fewer, uh, CEOs in those categories.

[00:28:04] Doug Chia: It's harder. The pools shrink. Yeah. 

[00:28:06] Chuck Gray: Yeah. I mean, look, the math doesn't, the math is tricky, right? I mean, if they're, if you're looking at CEOs in the fortune 500, 10% are women, roughly, plus or minus. So by definition, when you're looking at that population, it's not gonna be very diverse. 

[00:28:21] Doug Chia: Yeah. So I, I mean, I think the way we talked about it, you know, before is I, I thought that was exactly what I thought was, you know, not threading the needle exactly, you know, necessarily, but kind of talking about the concept of diversity inclusion in ways that are, are more practical as opposed to kind of some kind of, uh, you know, advocacy type thing. But Pam, I really like your approach of talking about if you are the first or you're the only, and no matter what that is, that that [00:29:00] presents a challenge for that director and the whole board to integrate that person and, and you know, just get the value of why you brought that person in the first place. 

[00:29:13] Pamela Warren: Doug, I love it when our clients end up recruiting two directors, not one into a particular class, I'll call it, because it just creates a whole, like the whole board is attuned to, Hey, we have these two new people, and how are we engaging them versus just swinging in one new voice. So I think that creates a, a lovelier dynamic. 

[00:29:34] Doug Chia: Okay. Well, let's move on to the next topic.

[00:29:38] Doug Chia: You really hit hard on this concept of board operating as a group, not as a col, not just a collection of individuals of, okay, let's just put 12 people together. You say that boards often fail to invest adequately in building their ability to function as a cohesive unit rather [00:30:00] than a group of individuals.

[00:30:03] Doug Chia: You suggest viewing the board as a constellation where the board is, has independent, yet interconnected collection of members that together form this cohesive and balanced whole to improve the dynamic. So. I think that's a great concept of Constellation. Maybe you wanna talk a little bit more about how you, you know, how you really kind of shaped that out.

[00:30:32] Pamela Warren: I think first of all, we started with the group could be more powerful than a collection of individuals if if the effort is put into kind of thinking about that group dynamic, we took a concept that we worked with on individual coaching, which came from, it was rooted in Dick Schwartz's Internal Family Systems work, and we thought about, well, how does this work for groups of individuals and we think it's pretty powerful because it helps us get [00:31:00] up, what, what I'll say kind of on a, on a balcony to look down onto what's happening from, uh, a patterns standpoint. Looking at kind of the way this group works as it relates to patterns, habits, um, and just ways of functioning together. And it helps kind of illuminate opportunities that are for improvement that are not based on the person.

[00:31:25] Pamela Warren: So it kind of removes you from someone being too defensive about the feedback and instead looks at the patterns of behavior and what's behind the patterns of behavior. Um, so rather than saying, gosh, Bob is a bad director, it's, you know, Bob seems to be very defensive about something. What is he protecting?

[00:31:44] Pamela Warren: How do we get behind that? Is there something there that we need to understand more deeply? And so it's kind of going a little bit deeper to look at patterns of behavior and how we can think about improving them. So that's kind of what the, the theory is. [00:32:00] And there's four, you know, principles that we look at, which is: purpose.

[00:32:05] Pamela Warren: You know, are we all connected to the purpose. Order. Do things happen in a logical and relatable fashion? The perfect example on order is, is your chair fully leading or your committee chairs fully leading? Exchange. So are we having a good quality of exchange? When you think about the board versus management or the board and management dynamic, is it in balance or is it out of balance in some way?

[00:32:33] Pamela Warren: And then what we talked about just recently, connection and inclusion. So do we know one another? Do we understand one another? Are all voices brought forward in the table? And so that's what this is and it helps us look at things as a group to open up opportunity for how we collectively work together better.

[00:32:53] Chuck Gray: This is not easy. I mean, I just wanna just make this clear. This is not an easy thing to do. It's very, it's very tricky to pull off. [00:33:00] We do believe it's worth investing in it, um, because we do think you can have, you know, better outcomes. 

[00:33:06] Pamela Warren: And, and the way you get this, Doug, would be, if you think about board effectiveness reviews.

[00:33:11] Pamela Warren: How do we do a board effectiveness review that looks at patterns of behavior along those four principle areas that we talked about, and it's very easy to do and to kind of highlight those patterns of behavior so that folks can kind of see the way that they are interacting in new ways. So, and again, it becomes something that's, that helps improve the quality of decision making,

[00:33:39] Pamela Warren: typically under pressure. 'cause under pressure, everybody resorts to their, their, their own personal patterns of whether it's control, right? The chair grabbing control, enforcing decision. Um, rather than kind of showing the chair what's happening under pressure and how can he or she kind of check [00:34:00] themselves in that moment to, to, to think about different ways of operating.

[00:34:04] Doug Chia: You talk about Dr. Dick Schwartz, um, the Internal Family System model, that's, that's kind of what you're basing this on. So I, I looked up, I wasn't familiar with his work, so I looked up and you know, the first thing it says is this Internal Family Systems model is a non pathologizing psychotherapy used in clinical settings.

[00:34:28] Doug Chia: And I was like, whoa, okay. Um, but 

[00:34:32] Pamela Warren: these folks are crazy. 

[00:34:34] Doug Chia: And now I was like, I was like, okay, are they talking about like group therapy here? And now I get it. I get it in terms of, it's not group therapy, but it's looking at the kind of things that group therapy draws out in terms of, you know, dynamics communicating with each other.

[00:34:54] Doug Chia: Is there a communication breakdown somewhere? And I think, you know, in corporate [00:35:00] governance world, we talk a lot about collegiality and some people think collegiality is a bad word, but I think you really nailed it in terms of this constellation concept. It's more that than collegiality of just everybody kind of goes along to get along and this way of looking at it can really make you see like when, when things are out of sync.

[00:35:27] Doug Chia: And I don't know, are there some like tell tale signs that you know, you can see, okay, this is really dysfunctional at this point. 

[00:35:38] Pamela Warren: Well, you know, if we think about kind of standard board effectiveness reviews. Folks will be getting feedback that they have improved from a 3.8 to a 3.9 on committee dynamics.

[00:35:52] Pamela Warren: What do they do with that? It's very amorphous. So how do you help them tangibly see how things [00:36:00] could be opportunities for improvement? For example, one of the feat, so the Constellation Board Effectiveness Review really aims to give you rich insight on patterns that you instinctively go to that you could bring by bringing some awareness to that pattern, you can correct or change it. Like for, for example, one board we worked with recently, the feedback that was abundantly clear was the chair always went to their two or three, uh, favorites, right? They had two or three that they always called in the heat of the moment and said, what should I be doing on this?

[00:36:35] Pamela Warren: And, and everybody knew it. 

[00:36:38] Doug Chia: Yeah. 

[00:36:38] Pamela Warren: And so they automatically kind of went to a backseat to just say, well, you know, the chair's already gonna go talk to those two or three people and they're gonna get it figured out. So where's my voice? If we could kind of just bring that forward, which we did, and said, it's, it's very obvious you're gonna probably do it anyway, but how can you incorporate other [00:37:00] voices?

[00:37:00] Pamela Warren: How can you challenge your thinking? How can you help create a container where people feel like they're really shaping things along with you? And, and that was refreshing. 

[00:37:09] Doug Chia: You do see this a lot. The chair relies heavily on these two other people. And, but the problem is that the rest of the directors are like, okay, yeah, we're a board, but everybody knows who runs this thing.

[00:37:23] Doug Chia: It's those three people and they're like the board within the board. But you're saying, okay, human nature says that that's gonna happen no matter what, but there's a way to be self-aware about it and kind of just, alright, this is gonna happen, but we can use this in a way that doesn't make everyone else feel that their voices don't matter.

[00:37:46] Doug Chia: Again, it comes down to this EQ concept. Having diversity of thought definitely helps this avoids group think, and the group think often comes from, you know, a couple [00:38:00] people leading everybody and everybody's like, okay, yeah. You know, they kind of run the place. 

[00:38:06] Pamela Warren: The other way to think about this kind of constellation work is it is a tool for energy management.

[00:38:13] Pamela Warren: If you think about that for just a moment, it is both about kind of sensing, so suppressing instinctive reactions to be aware of what's happening and managing your action mode in order to listen first and observe so that collective energy is in the right place. Right? And, and so that's maybe a way to think about it.

[00:38:39] Chuck Gray: I wanna say one other really quick thing, which is, you know, talk a little bit about where a positive can also be a bit of a negative in this situation. So, you know, one of the things that sometimes is a friction point is the chair and the CEOs, imagine they're two different people. There's sometimes friction there.

[00:38:56] Chuck Gray: We had a client where we did the work and on a five point [00:39:00] scale about relationship, the chair and the CEO dynamic was a 5.0. I mean, every single person on the board thought it was a five, which we rarely see. There was no, no underlying conflict there at all, and the first reaction was, wow, this is absolutely amazing.

[00:39:15] Chuck Gray: But what happened is that those two were so good that other people didn't feel that they had much to add because those people were so good. I, I call, I'm a person of a certain age was there, it was a little bit like the Chicago Bulls in the nineties, they had Michael Jordan and Scottie Pippen, and they were so good.

[00:39:31] Chuck Gray: Sometimes their teammates would watch them play. 

[00:39:34] Doug Chia: Yeah. 

[00:39:34] Chuck Gray: As the crowd is watching them play because they're so good. And you would, they would do what we call ball watching. Right? And so this created an interesting dynamic in the board where the board kind of was like a passenger watching these two play off of each other.

[00:39:46] Chuck Gray: They had to be more thoughtful as they go forward about making sure they bring all the other people in the room on board. And it wasn't intentional. It's just because they just had such great chemistry and they were so, they were so good. [00:40:00] People just said, okay, you guys got it. 

[00:40:02] Doug Chia: Yeah, that, that's really an interesting observation, kind of this, those two are just so good,

[00:40:09] Doug Chia: that we're just gonna sit back and be kind of spectators because we know there's no way we can be that good. So let's just let them carry the load. Um, I think that that's a really. Fascinating observation and yes, I do remember the Bulls beating up on the Knicks quite a bit and looking at, I was like, okay, this, this isn't fair.

[00:40:34] Doug Chia: They have those two guys. Let's move to onboarding. You say this is critical on onboarding. There are all kinds of things that you have to do, and it's a process that doesn't begin when the person joins. It's a long process. And so, you know, you talk about some of the signs of poor onboarding and integration, and [00:41:00] so talk a little bit about that in terms of what you know, what do you see when it's signs of, Ooh, okay, they're not quite working.

[00:41:09] Chuck Gray: I mean, look there we, we've talked a little bit about this. There are situations where I know the person isn't speaking at all. They just joined the board. That's not a good situation when you bring on a new person and they aren't speaking on the board. There's also situations where people come on board and they talk too much.

[00:41:25] Chuck Gray: That's also a situation where you can tell it's not working. Sometimes there are decisions that have been made before that person joins, and ideas have already been, these ideas have already been discussed and solved. It doesn't mean that you can't bring it up as a new person, but sometimes you don't have a history of what's already been discussed.

[00:41:46] Chuck Gray: So you're taking the conversation in a different direction and they literally just covered that in the prior board meeting as an example. And maybe you could have dealt with that before they joined the board versus dealing with that in the situation. Um. There are also situations [00:42:00] where, I mean, just I'll give you a classic example of, let's say you bring on somebody who has a qualified financial expert background as an example.

[00:42:08] Chuck Gray: We would say that a good practice is that that person should be getting to know the CFO before they join the board. But when that doesn't happen, they're leading, they may be leading the audit committee or a major voice audit committee. The CFO was obviously in those discussions and there's just, there's just no understanding of how this actually operates.

[00:42:26] Chuck Gray: So you can, you can sort of tell even by what you see or even by what you feel, you feel the ambience is off and we've often heard a lot of our clients say, you know, you had this room of 10 or 11 or 12 people. If you bring on one person and the cultural fit is a bit off, it actually changed the whole dynamic in the room.

[00:42:49] Chuck Gray: So sometimes there's a view of one person, what can one person really do? There's actually a lot of studies we've done that says actually one person can really change the dynamic and you can feel it when you go from one meeting to another. Like, [00:43:00] Hey, just something feels off. 

[00:43:01] Doug Chia: Yeah. Pam, what have you seen kind of along the same, you know, on the same subject here? 

[00:43:08] Pamela Warren: I'm thinking more about things that really help onboarding.

[00:43:12] Pamela Warren: Um, I mean, I have seen one very, very challenging, uh, situation where a new director joined. It was an energy utility board and you know, she was a bold director and in her first meeting, you know, in front of management, suggested maybe selling off a bunch of assets. And she was like, you know, uh, a bit bold was her first meeting.

[00:43:35] Pamela Warren: She didn't really understand the context and she said it in front of management. Well, you, you can imagine it didn't go over well, right? 

[00:43:43] Doug Chia: Yeah. 

[00:43:43] Pamela Warren: And so it was kind of like, wow. Uh, uh, in a case like that, um, which was a bit shocking, it was incumbent upon the chair to pull her aside and say, listen, you know, take, take a breath.

[00:43:59] Pamela Warren: Get to know [00:44:00] us. Please don't say that in front of management, right? Like, let's 

[00:44:04] Doug Chia: read the room. Right? 

[00:44:04] Pamela Warren: Read the room, right. So there, there's a bit of a deeper concern perhaps there. Um, I actually, you know, when I think about kind of better stories, I, I think of one where the chair took a new director aside and said, I wanna tell you about our worst moment as a board.

[00:44:24] Pamela Warren: This is why it was bad and this is the way we behaved and this is the way we don't, we don't wanna go back there. Right? This is what I'm not proud of. And here's another example by contrast of something that I'm really quite proud of, and this is when our board really was able to shine. And I think that contrast, that openness, the humility of sharing those stories.

[00:44:46] Pamela Warren: It was really kind of an invitation to say, we're looking to be critical of the way we perform as a group, and we're inviting you into this container where we don't wanna go one direction, we would like to go the other. [00:45:00] And I think it was just a really kind of a lovely invitation to be critical as a group and kind of inviting humility into the the exchange as well.

[00:45:11] Doug Chia: Yeah. No, that's, that's fantastic. Um, that's a very special, uh, special person that can do that. Let's pan out back to the overall subject of board culture and how leaders can, you know, either create that or improve that. And in the chapter you give some examples, not, not naming names of companies, but you know, you talk about a company and what are some of the things they did or what the leader did to improve the board culture. 

[00:45:47] Pamela Warren: Um, I, I mean, I can jump in here to just to say that we lead intimate chair retreats probably two or three times a year. They're global. They're about, you know, anywhere from kind of a dozen to a dozen and a half [00:46:00] chairs of different companies gather.

[00:46:02] Pamela Warren: And in that we talk about, uh, the board's alignment to the company's purpose. Um, and what I would say to you is it's more common than not when we ask that question that they do not know the purpose. Or they're not able to quickly kind of share the purpose of the organization for which they chair. 

[00:46:26] Doug Chia: Wow.

[00:46:27] Pamela Warren: And, and that's an interesting thing, and it's quite surprising what they kind of said with humility. My goodness. I, I, I'm not sure I could name it. And so, uh, you know, a story that we share in the chapter is one, uh, chair of an oil and gas company. Um, and he really was, uh, taken with kind of the quality.

[00:46:47] Pamela Warren: And so the, the, the organization had been through some difficult times and they had a purpose around delivering energy in a safe manner. Um, and so he started every meeting with a safety story. He [00:47:00] realized that everyone had kinda lost the, the connection to that part of their purpose. And so he opened every meeting with a safety story and invited

[00:47:09] Pamela Warren: directors to bring a safety story from their organizations forward to just kind of anchor them, uh, in the purpose of delivering energy in a safe manner. And I, I think that, um, kind of connection to opening meetings with a sense of the organizational purpose could be stronger for, for most organizations.

[00:47:29] Doug Chia: Yeah. And that goes back to intentionality. That, that's, that's no, this person has, you know, chosen to do this. As a way to set the tone for every meeting. 

[00:47:42] Chuck Gray: One of the things we don't talk a lot about is, um, sometimes you want to get it right when you recruit people. And we often have clients, some go a little bit of this, a little bit of a di different direction, but sometimes clients we joke are trying to win the press release game.

[00:47:58] Chuck Gray: Okay? So we announced this [00:48:00] person is joining the board and it gets a lot of applause because of the press release. We spend a lot of time with clients, um, really referencing that person. We try to get references that that person gives us. We try to reference maybe confidentially people they don't give us, and really wanna understand how does that person show up in the room?

[00:48:19] Chuck Gray: And then we play that to the client and we tell the client, look, no one is perfect and everybody has their development areas, but how this person shows up. Are you okay with that? And, and maybe you want to go in a different direction from a cultural perspective on your board, because maybe I'm making this up.

[00:48:37] Chuck Gray: You're going through a really big transformation of changes then, and so you need a different type of voice in the room. But sometimes getting that as right as you can to before the person joins is an understated part of this. Because so many clients, they wanna win the press release game. They wanna skip past references, they wanna skip past the background checks.

[00:48:56] Chuck Gray: They wanna just pull this great CEO on the board. And [00:49:00] there's an old saying that, you know, oftentimes the best director is a CEO and the worst director is a CEO. 

[00:49:04] Doug Chia: Yeah, yeah, exactly. 

[00:49:05] Chuck Gray: And you can get very, very wildly divergent outcomes depending on the person doing that board. 

[00:49:10] Doug Chia: Well, I think that's a, a good place to wrap.

[00:49:13] Doug Chia: Chuck and Pam, thanks so much for joining me today. I learned a ton here and you helped evolve my thinking, a lot of a lot of things, so thank you. Um, and so that concludes this episode of The Public Company Series Podcast, powered by OnBoard. I'd like to thank again, Chuck Gray and Pam Warren from Egon Zehnder for sharing their insights on board culture, and I encourage you to read their chapter, Unlock Your Board's Full Potential: Why Culture Is the Key to a High-Performing Board.

[00:49:48] Doug Chia: You can find that in the book Board Structure and Composition part of the Public Company Series published by the New York Stock Exchange and JPMorgan. And you can read and download the [00:50:00] entire book at www.nyse.com/pcs. For additional resources and episodes, visit www.publiccompanyseries.com.

[00:50:16] Doug Chia: And don't forget to subscribe to receive all new episodes of the Public Company Series Podcast. And please rate us and leave a review. I'm Doug Chia, and we'll see you next time.