A bonus release from the Inner Circle feed, made available to all listeners. Weekly article readings are normally reserved for Inner Circle members; this is one of the occasional pieces opened more widely. Join the Inner Circle at robert.winter.ink

The most dangerous failure in corporate governance is rarely the rogue executive or the captured auditor. It is the quieter pattern of a board of intelligent, well-credentialled directors collectively unable to act on what each of them already privately suspects. This week's article works through how that silence forms, why governance codes cannot legislate against it, and what a chair can do about it before the crisis breaks rather than after.

In This Article

• Board failure usually looks ordinary. The dramatic governance scandal is rarer than the Monday meeting at which a softening result is referred to the next strategy session and nothing follows.
• Pluralistic ignorance, not lack of information, is the principal mechanism. Directors privately hold concerns they fail to voice because they assume their colleagues do not share them.
• Governance codes describe the architecture of a boardroom but say very little about its inhabiting. A board with every box ticked can still fail at the task its structure exists to enable.
• Burke's 1774 distinction between trustee and delegate, addressed to the electors of Bristol, defines the office of director more accurately than any code currently on the books.
• The markers of a healthy board are not exotic. They are visible to anyone who attends one for an hour, and the conditions for them are established years before any crisis arrives.

A Thought With Which To Sit

The director is a trustee of the company's long-term interest, not a delegate of the room's mood. Boards forget this and call the forgetting collegiality.

Further Reading

• Janis, I. L. — Victims of Groupthink (1972)
• Westphal, J. D., & Bednar, M. K. — Pluralistic Ignorance in Corporate Boards, Administrative Science Quarterly (2005)
• Sonnenfeld, J. A. — What Makes Great Boards Great, Harvard Business Review (2002)
• Burke, E. — Speech to the Electors of Bristol (1774)