A recent Fortune magazine included a story on staggered boards. Board stuff is the professional purview of my friend Peter, but there was something in the article that caught my attention from the perspective of teams. Boards of directors are a team of sorts, although managing the “team” dynamics in such situations is fraught with complexity.
The article talked about the use of staggered boards versus non-staggered ones. A staggered board means that only a portion of the directors are up for election every year. In a non-staggered board, every seat is up for election every year. Here’s the lines that caught my attention:
- … the use of “staggered”boards of directors … can help protect business leaders from the pressures of reform-minded investors.
- By the early 2010s, shareholder-rights advocates were lobbying against staggering, on the grounds that it hurt value by shielding bad managers.
- What makes staggering a secret sauce? It appears to make it easier for good managers to innovate, free of outside pressure. Wang’s research found that businesses that spend heavily on R&D tend to perform better under [staggered] boards.
There’s the general principle: continuity in composition protects what’s happening, whether good or bad. If people are doing good work, swapping out a few people on the team won’t destroy performance, because there remains a quorum of people to carry forward the current work ethos and style. New people will become enculturated into the existing team structure and approach. Ditto if it’s an under-performing team – merely swapping out a few people while leaving the majority of team members in place won’t be enough to dislodge the bad practices. On the other hand, disestablishing the team entirely – firing every single team member and bringing in a completely new group of people – will force a renegotiation of everything. What’s important. What’s not. What should be continued. What should be stopped.
The Fortune article made me think of a blog post I wrote almost a decade ago on group design. It, too, looked at the performance benefits of partial changes in team composition, although while not in exactly the same way, similar enough to be interesting in terms of protecting what’s already happening (or in the case of musical productions, what’s possible with the current team members).
Categories: Effective Teams