Board dysfunction: Why it happens and how to fix it fast
Key takeaways
- At least 25% of boards globally suffer from dysfunction, often unnoticed until it’s too late.
- Governance issues often stem from weak leadership, unclear roles, and a lack of diversity, with only 58% of boards meeting diversity benchmarks.
- A culture of fear and limited oversight can prevent boards from addressing key risks, with 57% missing a robust ESG plan.
- Strengthening leadership and conducting regular board reviews can drive improvement, yet only 42% of boards conduct these assessments.
- Boards prioritising teamwork and accountability see better results, with 87% of high-performing boards excelling in collaboration.
Unpacking board dysfunction: A global challenge
Board dysfunction is a quiet crisis gripping governance worldwide. Board Benchmarking’s insights from over 600 board reviews reveal a stark truth: at least 25% of boards are dysfunctional, wrestling with issues that erode their effectiveness. The causes are as varied as they are pervasive. Directors often lack clarity on their roles, meddling in operations or acting as overseers rather than strategists. Relationships fracture into silos or cliques, and priorities drift out of sync. Worse, many boards don’t even spot the trouble, and complacency blinds them until performance craters.
Picture a mid-sized retailer we encountered: its board squabbled over trivialities while sales tanked, all because no one knew who owned the strategy. This problem isn’t rare; only 34% of boards have solid succession plans, leaving leadership gaps unchecked. Fear plays a starring role, too, with directors dodging tough calls or hiding weaknesses, a cultural rot that stifles progress. This is a universal challenge for governance professionals everywhere: Dysfunction isn’t a glitch; it’s a systemic risk demanding attention.
The cost of dysfunction: Lessons from the field
When boards falter, the damage cascades. Dysfunction doesn’t just slow decisions; it costs organisations their edge. Weak chairs fail to steer, a stark contrast to the 86% of directors who rate effective ones as pivotal to success. Diversity lags, too, with only 58% of boards reflecting varied perspectives, breeding groupthink that misses risks like cybersecurity or ESG gaps (57% lack strong oversight here). Poor dynamics—think unchecked egos or timid dissent—sap trust, with just 87% of top boards mastering teamwork to rise above.
Take an Australian nonprofit we observed: an overbearing CEO ran unchecked, and its board was too passive to intervene. The result? Strategic drift and staff disillusionment, a textbook case of dysfunction’s toll. Compare that to Unilever, where a board attuned to culture and sustainability drives global resilience. The stakes are high. Without regular evaluations, weaknesses go unnoticed, yet only 42% of boards assess directors consistently. For organisations worldwide, dysfunction isn’t a minor hiccup; it’s a threat to survival, draining value and morale alike.
Fixing dysfunction: Practical steps to rebuild
Reversing dysfunction isn’t a pipe dream; it’s a choice. With the right moves, boards can transform in as little as 12 months. One tech firm chair we advised faced a board halted by infighting. A hard reset—mapping roles, slashing overlap—cut the chaos in months. Step one is clarity: directors govern, management executes, and training cements this divide. Step two is leadership: chairs earning 86% trust set the pace, fostering focus and candour.
Regular reviews are non-negotiable, yet only 42% of boards assess individuals, leaving gaps unseen. Culture demands a reboot, too: replace fear with safety, where dissent sharpens rather than divides. Succession planning is lagging at 34% and needs urgency. Boards must develop leaders, not scramble later. For directors globally, the playbook is clear: clarify roles, empower leaders, and confront weaknesses. With 87% of top boards thriving through teamwork, success awaits those who act.
Board dysfunction can be difficult to spot from the inside, but its impact is felt across the organisation. A lack of clarity, ineffective leadership, and poor board culture can all make it harder to make good decisions and provide strong governance.
Improvement takes time. However, small, deliberate changes, such as clearer role definitions, more regular board reviews, and a focus on fostering open discussions, can make a significant difference. Boards that invest in their effectiveness are better equipped to guide their organisations forward, ensuring they remain resilient and focused on long-term success.
Data source: Insights from Board Benchmarking’s analysis of over 600 board reviews.
