Most people equate backbiting and backstabbing as the sole milieu of politicians, especially during what is often considered the ‘political silly season’. Examples of such behaviour are awash among the 70 political parties contesting the 29 May 2024 elections in South Africa. Unsurprisingly, this behaviour often rears its ugly head in corporate boardrooms, harming their stakeholders. This article looks at this destructive phenomenon in the C-suites and boards, serving as a cautionary tale for us all.
In a complex and interconnected business, the relationships between executives, board members, staff, management, and shareholders are more crucial than ever. Trust and mutual respect within the executive and boardroom ranks form the bedrock upon which successful stakeholder relationships are built. A company’s long-term success is in good shape with these foundational elements. It’s up to all of us to understand why trust and respect are vital and to learn from real-world examples—good and bad—of companies that have either upheld or failed this ideal.
The Importance of Executive and Boardroom Trust and Mutual Respect
1. Promoting Transparency: A culture of trust fosters transparency. When executives and board members trust each other, they are more willing to share critical information, facilitating better decision-making.
2. Aligning Strategic Objectives: Mutual respect ensures that strategic objectives align with the company’s vision and mission. Boardroom cohesion around strategy translates into consistent messaging to stakeholders.
3. Encouraging Innovation: Trust encourages a willingness to take calculated risks, which is vital for innovation. When leadership feels supported, it is more likely to pursue new, value-adding initiatives.
4. Reducing Turnover and Enhancing Loyalty: A respectful and trusting board-executive relationship reduces turnover, leading to higher morale and loyalty among employees, management, and shareholders.
5. Preventing Conflicts: Mutual respect allows disagreements to be addressed constructively rather than destructively. This reduces the risk of detrimental infighting and public conflicts that could harm the company’s reputation.
Real-Life Good Examples of Trust and Mutual Respect
1. Microsoft: Under Satya Nadella’s leadership, Microsoft transformed its internal culture by emphasising empathy, trust, and mutual respect at all levels. Nadella’s approach revitalised the executive-board dynamic, aligning strategic goals with the company’s mission. The result has been unprecedented growth in market capitalisation, improved stakeholder relationships, and a renewed reputation as a tech leader.
2. Unilever: Paul Polman’s tenure as CEO exemplified the power of trust and respect. He shifted Unilever’s focus toward sustainability, aligning the board’s strategic vision with stakeholder interests. The board’s trust in Polman allowed him to implement the Unilever Sustainable Living Plan, which helped the company grow while reducing its environmental impact.
3. Salesforce: Marc Benioff, Salesforce’s CEO, has consistently emphasised trust as the core value driving boardroom and executive relationships. The company’s “Ohana” culture (meaning family in Hawaiian) fosters inclusivity, mutual respect, and transparency. This has helped Salesforce consistently rank high on “best companies to work for” lists, enhancing stakeholder relationships.
Real-Life Bad Examples of Lack of Trust and Respect
1. Uber: Under former CEO Travis Kalanick, Uber was plagued by a toxic culture stemming from mistrust and disrespect at the executive level. Kalanick’s aggressive management style and fractured boardroom dynamic led to controversies and legal issues, severely harming Uber’s reputation among stakeholders, including drivers, employees, and investors.
2. WeWork: WeWork’s failed IPO in 2019 was primarily attributed to the governance issues arising from a lack of boardroom trust and respect. CEO Adam Neumann’s eccentric leadership style and unilateral decision-making led to conflicts with board members and created an unstable executive environment, ultimately costing investors billions.
3. Theranos: Theranos’s downfall was primarily due to a lack of transparency and trust at the executive and board levels. CEO Elizabeth Holmes and President Sunny Balwani withheld critical information from board members, resulting in misguided strategic decisions that defrauded investors and destroyed the company.
Building Trust and Respect in the Boardroom: Key Takeaways
1. Foster Open Communication: Create an environment where open and honest communication is encouraged and valued at all levels.
2. Lead by Example: Executives and board members should model the behaviour they expect from others, demonstrating integrity and transparency.
3. Address Conflicts Early: Implement mechanisms to identify and resolve conflicts before they escalate.
4. Align on Strategic Vision: Ensure all board members and executives understand and support the strategic objectives.
5. Build a Diverse Board: Include board members with diverse backgrounds and perspectives to enhance decision-making.
In conclusion, executive and boardroom trust and mutual respect are crucial in establishing healthy stakeholder relationships. When these values are upheld, companies can foster innovation, align strategic goals, and build strong relationships with staff, management, and shareholders. However, as illustrated by real-world failures, neglecting these ideals can lead to reputational damage, loss of stakeholder confidence, and, ultimately, business decline.
How is your company fostering trust and mutual respect at the executive level to strengthen stakeholder relationships?
Thabang Chiloane can be reached at thabang@tc74.co.za.
Related
Discover more from KYC Stakeholder Relations
Subscribe to get the latest posts sent to your email.