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Promoting Effective Board Communication

Communication and Decision Making in Corporate Boards, a forthcoming paper, seeks to identify the most effective board communication methods.  The paper finds that although good communication is critical to effective decision-making by corporate boards, a number of factors can interfere including limited time during board meetings for thorough discussions of issues.  In addition, board members may be reluctant to share information with their board colleagues for fear of either appearing incompetent or being perceived as a troublemaker.  The paper also suggests that sharing knowledge can be personally costly for an individual board member because effective communication requires preparation and effort.

The paper examines which board policies can be effective at overcoming the obstacles to effective communication.  The paper finds that open ballot voting (rather than voting in secret) can encourage directors to share their concerns about issues to avoid being outliers, thereby improving communication.  Additionally, the paper funds that a competing private interests may be effective at encouraging a biased director to share information because silence may be viewed harshly by the director’s colleagues.