What Private-Company Boards Need More Than Public-Company Boards
While there is significant overlap in responsibilities, serving on a private-company board often presents different and more challenging circumstances than faced by public-company directors.
What generates those challenges? A most basic ingredient of every human endeavor—emotion.
Public-company boards have more structure and requirements around accounting, reporting, disclosure, compensation, related-party relationships, and general governance. And there are many interested outside parties—shareholders, reporters, activist investors, and others—watching over the board. These factors are less prevalent in private companies—and in some, largely absent.
Further, private-company boards are often founder and family-led or controlled. There is a back story of emotions, relationships, and history. Often, the board of private companies may be advisory only. Advisory boards have less responsibility and authority compared to public company fiduciary boards.
Thus, private-company directors need to learn how to create stronger connections among themselves in the absence of important “governance guard rails.” By being more connected, with greater emotional connectivity and trust, you can help your board—and ultimately, the company—become less stressed and more productive.
My friend and the founder of “EmC Leaders,” Lola Gershfeld, shared with me three simple phrases that you can use to improve your board’s emotional intelligence, trust, and connectivity:
1. I hear you. This lets the other person know that you are listening to them, which calms them down. When you say this phrase, you also remind yourself to be an active listener.
2. This sounds very stressful. When you say this phrase, you communicate empathy. You acknowledge that the other person feels stressed, and this also calms them down.
3. I can see how much this matters to you. Even if you disagree with the other person’s point of view, you can still affirm then when you say one of these phrases. The reason they are expressing their opinion so forcefully is that it matters to them.
When you engage with these three phrases, you can more readily navigate through difficult conversations and get back to the emotional balance where you can be more open to engaging, collaborating, and creating value.
These phrases create emotional responsiveness, a key to creating trust, emotional safety, and security to lay the foundation for positive connections. This is critical in all boards, and especially for private boards. which operate without the public board “governance guard rails.”
As conflicts or disconnects are bound to happen when passionate people are engaged in a common endeavor, an emotional connection around trust can help you to engage in a new way. You create safety for people to share vulnerabilities and be emotionally engaged, which typically results in deeper, more meaningful conversations that help move the company forward.
It seems that emotional connectivity allows people to feel stronger as individuals, be more resilient to stress, are less likely to become anxious or depressed, and are better able to navigate an ever-changing environment.
Private-company directors can acknowledge and address their underlying emotions, which can help them overcome differences and reconnect together, creating a healthy and positive emotionally bound board.
Gershfeld has developed the EmC process that provides the roadmap for private-company boards to create stronger connectivity among members, resulting in transparent, compelling, and experiential work.
In the absence of the required public-company board governance guard rails, private-company directors are well served to cultivate soft skills. You can begin by sharing with one another this article and the phrases above to start the conversation.