Board Dynamics: The Soft Underbelly of Corporate Governance

In spite of the abundance of corporate governance codes, as well as legislation to ensure compliance and stock exchange reporting requirements, corporate failures still persist because of poor governance. It can argued that though the "rules of the road" - codes and legislation - are in place, the chances of governance failure will remain high if explicit attention is not given to the "software" of governance - i.e., board dynamics. Board dynamics remains the soft underbelly of governance, the "black box of what happens behind the Boardroom door". The aim of this paper is to address the variables affecting board dynamics, and board performance - "soft" governance - with its consequential implication for corporate governance. A conceptual framework for soft governance will be proposed through which board dynamics can be explored and studied. The paper addresses the following topics: firstly, the unique character and features of the board as a group which needs to become a team in order to be effective as a board; secondly, a proposed map of the performance "space" of the Board in terms of: (i) the board set-up - the task (the "Hardware") and dynamics (the "Software") dimensions of the board - to create favourable performance conditions, (ii) the evolutionary life cycle stages of board dynamics, (iii) the task and process board performance dimensions; and (iv) board performance outcomes; and, thirdly, the make-up of the aforementioned elements of the board's performance space as seen from the vantage point of board dynamics.