1) Board leadership is responsible for diagnosing potential issues or "trouble" that may arise on the board. Small problems, if left unchecked, can grow into larger problems over time. 2) All boards experience changes that can challenge the existing board culture and dynamics. Early recognition of issues and corrective action is important to maintain a high-performing board. 3) The article provides a framework called "Diagnosing Board Trouble" to help board leadership identify early warning signs of potential problems within the board's culture, norms, relationships, processes and expectations. Addressing small problems proactively can help ensure smooth board functioning.

1. September, 2012
When a Board Strays Toward Trouble
The task of diagnosing looming trouble typically falls to board leadership.
Patrick R. Dailey
All boards go through rough patches. Change events always trigger reassessment of norms,
relationships, processes and expectations. Reassessment often happens individually and
subliminally. It is rarely verbalized at the outset but the gears are, no doubt, turning on the inside.
At some point, uncertainty, resistance, passive-aggressive behavior and corrosive forms of
dysfunctional behavior may emerge. Consequently, change always presents a challenge to the
prevailing board culture—colloquially, a challenge to the way we do things around here.
Patrick R. Dailey
If your board has experienced change, and whose hasn’t, then you have experienced the testing of
the cultural rules and dynamics by directors. Rough patches do emerge in the behavioral dynamics
of any board. These range from mild and virtually undetectable reactions to severe boil-ups. Early
recognition and corrective action are essential to preserve the work ethic and spirit of a high-
performing board, one that also must satisfy its directors’ expectations for professionalism,
adherence to sound governance practices and the protection of one’s personal reputation.

2. Large Problems Typically Begin as Small Problems
Typically, behavioral problems start small. And just as typical, these problems don’t just magically
disappear. Left unchecked, small issues tend to fester and morph into larger issues that become
more visible, more destabilizing to the conduct of a board, and more vexing to resolve—the ones
we read about in The Wall Street Journal such as Hewlett-Packard, Yahoo, Best Buy, Chesapeake
Energy or News Corp. Tackling small problems is easier than large ones.
Understanding Board Culture
Simply, culture implicitly communicates the rules for behaving in a team. Culture teaches the dos
and don’ts. And, culture will penalize those who fail to abide by the norms and unwritten rules.
Every board develops a unique culture and the ground rules are defined by the factors presented in
Figure 1, “The Board of Directors Culture Model.” The five factors capture the elements of board
culture which are most significant in defining the cultural ground rules of a board—these factors
represent the norms, standards and values that will be learned by newly appointed directors, played
out in the everyday functioning of a board, and those factors which will be tested during times of
change and re-assessment. For a full description of the board culture model see “Understanding
Your Board’s Culture“ (NACD Directorship, September 2011).
Diagnosing Trouble Ahead
Astute board leaders are sensitive to the early warning signals of trouble—those looming rough
patches. They have lots of help with best practices and professional advice. Notably, the National
Association of Corporate Directors publishes white papers and other resources that advocate good
governance practices. These papers are part of a library of recommendations for structuring boards,
operating with transparency and independence and renewing board competency. NACD’s Key
Agreed Principles to Strengthen Corporate Governance for U.S. Publicly Traded Companies is
important reading for chairs and all directors for building boards that work.

3. The task of diagnosing looming trouble typically falls to board leadership: the chairman, presiding
director or committee heads, but it is the task of all directors to be alert to matters that impact
governance, threaten their fiduciary responsibilities, their reputation and their personal satisfaction
from board service. No one wants to be on a lousy board.
“Diagnosing Board Trouble” (Table 1, below) is a reflection of the Key Agreed Principles filtered
through behavioral dimensions of the Board Culture Model. The diagnostic factors in the Table
present early indicators of behavioral dysfunction. Diagnosing Board Trouble was not created to
troubleshoot policy, regulatory or financial threats. The indicators are organized within the five
culture factors of the model to facilitate diagnosis and problem solving.

4. Addressing Problems
Individual Problems. The beauty of addressing problems while they are small is that the problem is
likely not entrenched, and a collegial chat from a designated and respected board colleague often
brings unwanted behavior and sentiment back within acceptable culture standards. The board
moves forward constructively.
Board Problems. Collective problems pose greater risk and challenge in how and when to bring a
matter up for discussion. Group dynamics will typically lead a board to discount or dismiss a
matter as untrue or irrelevant. Regrettably, formal board evaluation procedures don’t often put
much of a spotlight on the behavioral matters addressed in Table 1. So, the task falls to board
leadership for testing the waters and pushing forward to open the problematic indicators for
discussion. Some boards choose to hand out the Diagnosing Board Trouble chart and empower any
board member to bring forward concerns or the need for discussion. If the dysfunction is yet to be
ingrained, problem solving can operate without much resistance; if the dysfunction has become
ingrained in the culture, the challenge of change and making change stick is formidable. The board
must make a commitment to change and have milestones to gauge progress.
Attempting to Correct Individual Behavior Using Group Talk. In the spirit of collegiality and
perhaps tact, often the disruption or dysfunction a single director creates for the board is not
brought directly to the individual for correction. Instead, the problematic behavior is teed up and
discussed as a matter for the full board to correct as if the full board was the culprit—group talk.
Not isolating and correcting the problem with the individual will trigger resentment by those who
operated within the ground rules and are now puzzled at why they are being corrected. Best to treat
the problem director not the full board.
Recommendation
Develop an “Our Way” Statement. Because dealing with “soft issues” is often unfamiliar ground
for boards, it is valuable to author a one-page statement of the board’s culture—address beliefs,
attitudes and behavioral expectations for the way things should be done. Communicate differing
levels of intensity to signal what is of high importance and adherence. Importantly, identify those
behaviors that are contrary to the board’s expectations. This brief statement sets expectations for
how directors work together.
Tailor the Chart: Diagnosing Board Trouble. To reflect those unique and likely troublesome
matters occurring on your board, edit and adjust the diagnostic items in the chart. Discuss the
tailored chart and reach consensus among directors that the chart leads the board in the right
direction. This supplements the “Our Way” statement as a diagnostic tool. Add the tailored
diagnostic chart to your board’s annual board evaluation process.
Provide “Our Way” and the Diagnostic Chart to newly appointed directors. Have a board member
or someone from the nominating committee preview these documents with new directors.
Keep it Relevant. Periodically review “Our Way” to ensure it reflects the expected culture of your
board. Revise the Diagnostic Chart to enable small problems to be dealt with early on.
Patrick R. Dailey, Ph.D., is a partner in Board Quest LLC, a board of directors consultancy, and
serves on the board of the NACD Atlanta chapter. He can be reached at 310-400-9992 or
pdailey@boardquest.com.