Board dynamics and decision-making in turbulent times

Abstract

The board of directors’ role is evolving and becoming more important in the wake of corporate scandals resulting in the collapse of large corporations and losses to shareholders. Poor governance can lead to wrong decision-making, which might destroy organizations, particularly during times of environmental turbulence. The 2008 Global Financial Crises followed by the 2011 Arab Spring throughout the MENA region and then the 2019 pandemic situation are few of many factors that created a turbulent economic and political environment for organizations, highlighting the importance of excellent decision-making skills. However, there is limited research on boards’ decision-making during difficult times in the MENA region. The authors interviewed 26 board members of 21 companies operated under duress to examine the effects on boardroom level decision making of the magnified levels of duress and stress experienced during turbulent times. Key findings from the research include trends in emotional responses in relation to decision-making, changes in the decision-making process after crises, leadership positions, and board behavior. The authors recommend that boards incorporate diversity training and awareness into all levels of their decision-making process and to the board members’ selection process. Future research should expand to different regions and industries and examine the effects of board members’ personal traits and backgrounds on their quality of choices and decision-making

The Role of Board Dynamics in Organizational Transformation: A Corporate Governance Perspective

“…Governance structures encouraging stakeholder participation and considering diverse perspectives contribute to successful change management. An inclusive decision-making process, where stakeholders are consulted and their concerns are considered, enhances the legitimacy of change efforts (El Beshlawy & Ardroumli, 2021;Hamdo, 2021;Huse, 2018).…”

“…In the ever-changing business landscape, businesses are asked to comment on stances and policies about their values that might affect how they interact with stakeholders. More often than not, their boards are doing so (El Beshlawy & Ardroumli, 2021). Ensuring that the company's strategy, operations, and policies align with its declared purpose and values is a significant responsibility of the board.…”

“…Boards that encourage open dialogue, value diverse viewpoints, and foster an environment where challenging ideas are encouraged are better equipped to make informed decisions (El Beshlawy & Ardroumli, 2021). Successful transformations often arise from the crucible of robust debates within the board, where alternative strategies are explored, risks are weighed, and innovative solutions are unearthed (Tricker, 2019).…”

“…Sustaining a solid rapport with the management team is crucial to improving performance and trust (Alänge & Steiber, 2009). Finally, core conventional leadership characteristics and competencies, such as high ethics and integrity, thoroughness, and conscientiousness, an executive-level capacity for inspiring and empowering people, and a dedication to advancement, must be exhibited by effective board members (El Beshlawy & Ardroumli, 2021). Effective board members also aim to provide supervision, insight, and foresight on mission-critical issues, curiosity, an attitude of perpetual learning, and forward-looking entrepreneurial enthusiasm (Wiersema & Koo, 2022).…”

“…As boards grapple with complex decisions during organizational transformation, conflicts can arise. Divergent perspectives, varying risk appetites, and disagreements on the strategic direction can lead to internal strife (El Beshlawy & Ardroumli, 2021). If not managed effectively, conflict within the board can impede decision-making, undermine board cohesion, hinder progress, and potentially derail the transformation process.…”