ABSTRACT
This chapter describes established theories on the role of boards, especially in strategy, and poses a challenge to these conventions. In particular, it challenges the ‘under-socialised’ explanations that these theories promote, suggesting that they tell us little about how boards really function and even less about how the decision culture of boards can be strengthened. Drawing from extensive research conducted by the author, the chapter contrasts theory with reality that shows a wide variation in how NEDs involve themselves in strategy and the extent to which they engage in a genuinely co-creative process of determining strategy with management. In doing so, it reveals the exercising of board accountability as a relational process. For example, while NEDs might share similar beliefs about board accountability, they differ behaviourally in how they go about exercising this accountability.
Despite this, accountability is often viewed in organisations as a hierarchical process or tool for economic or operational control, and formal instruments of accountability, such as mandates, codes and charters, are often referred to when describing board accountability. This chapter challenges this conventional view that assumes agency prescribed definitions of shareholder rights and claims. A more nuanced view, recognising that boards are highly complex social systems and the process of accountability is contextual and socially accomplished through role expectation, routines and interactions between members of a given group, is presented in this chapter. Additionally, new research shows that a director’s motivation for joining a board is relevant and provides powerful insight into how they might individually approach the exercising of their accountabilities.
The chapter concludes with actionable strategies that boards, and especially chairs and subcommittee chairs, can take to ensure that there is real clarity about NEDs’ roles in developing and determining strategy, paying special attention to the social dimension in how accountability for strategy is exercised.
