February 15, 2023 | By Craig Zawada, K.C

Board governance is hard to do well, and filled with misconceptions. Even the term “governance” itself is often mischaracterized as involving only legal rules like bylaws and corporate articles. In reality, governance is all about sustaining a high-performance organization, and touches almost every aspect of the entity.

But one element of board dynamics is commonly mistaken, either because of a lack of good governance knowledge or otherwise. It is the concept of board unity, sometimes described as “the board speaks with one voice.” When this core principle is disregarded, it can be absolutely poisonous to the board and the organization as a whole.

To understand why this principle is so important, let’s just state it baldly: a decision of the board which is legal and decided under appropriate procedures must be accepted and supported by all directors, whether they voted for it or not.

There are some words and phrases to unpack there. The word “must” is intentional. It is not “should,” or “ideally,” or anything else less than mandatory. There might be vigorous debate before a decision, and there may be a sizeable minority who voted against it, but once the dust clears and the motion is passed, EVERYBODY must support it. If they cannot, well, we will get to that.

Another key word in that statement is “legal”. Hopefully a board is not making decisions which are against the law. Since this can create liability for individual directors, those people are entitled to take steps to protect themselves. That might require, at a minimum, for them to distance themselves from the decision. Those kinds of decisions are outside the realm of speaking with one voice.

As well, we must assume the board used “appropriate procedures” when making its decision. That is a wide spectrum. It could include things like failure to provide enough time to speak to an issue at the meeting, or more serious procedural flaws like lack of adequate notice of the meeting itself. Sometimes these can be ignored. Some may require further discussion with other directors and the Chair. For these purposes, let us assume there were no serious procedural flaws in the decision-making process.

The problem arises when a director is on the losing side of a decision but cannot let it go. They might talk to outsiders and continue to disagree with the decision. If they represent a specific constituency on the board, they might go back to that group and complain.

That last point raises further issues. Say the director gained their board seat directly or indirectly through an election, perhaps from a certain geographic area. There is a powerful tendency for the director to say and do what their constituents want. That might include voting against things. They want to get re-elected, after all. But this is at odds with proper governance practices in almost any case. For instance, virtually every piece of corporate enabling legislation in Canada, whether for-profit, non-profit, societies, co-ops, and others, requires directors to act in the best interest of the organization. NOT the best interest of whomever appointed them to the board. This is something which is often violated, and will probably be the topic for a future article. It is a vital characteristic, and a legal obligation.

Back to speaking with one voice. Whether one is aligned with a constituency or the organization, board unity is mandatory. A board must be able to depend on everyone supporting a valid decision once it is made, and the most dissenters can say (subject to board confidentiality) is “Yes, I voted against that decision but I now support it along with the board.”

If you lose a vote and cannot support it, your options are limited, and sometimes harsh. Again, leave aside illegality, which is a special case. If you think the board missed something, you may be able to discuss it internally with other directors and/or the Chair to see if things can be reassessed. New information may have arisen, and there is nothing to say a board cannot change its mind based on changing circumstances.

But absent that, if you truly cannot support a decision which has been made, your only remedy may be to resign from the board. This is drastic, obviously, and before you do it, you need to think things through. Are you thinking objectively, and in the best interests of the organization? Might you be wrong? Can you live with the decision? We are never going to get our way 100% of the time in anything in life, including board decisions, so there is no shame in vigorously debating and opposing a measure, even if you are unsuccessful. But if you lose, you must accept it. Or leave. It is an unforgiving choice, so make sure you are considering everything.

Some directors think it is their duty to continue to object to a decision they did not support, especially when they are appointed by a particular group. That is incorrect. Boards must be united for many reasons, particularly because their stakeholders expect and rely on it. Employees and shareholders are just two groups who must have certainty on the direction of the board. Constant complaining and undermining of decisions by a disaffected minority will contaminate the environment, and lead to everything from bad morale to cratering share prices. It is essential that the board maintains unity no matter how robust the debate is behind closed doors.

Boards have often been compared to other groups, like the Supreme Court (which also makes hard decisions), sports teams (which must work together despite personal differences), debating clubs (which consider all sides of an issue), and others. But as much as they may share some characteristics with these and other groups, boards are unique. The more education one can obtain in good governance and group dynamics, the better the organization is served. Be sure you are aware of these principles so you can be a better teammate.

Disclaimer

This publication is provided as an information service and may include items reported from other sources. We do not warrant its accuracy. This information is not meant as legal opinion or advice. Contact Procido LLP (www.procido.com) if you require legal advice on the topic discussed in this article.