This study explores how non-executive directors are challenged by management while they seek to improve the effectiveness of supervisory boards in the Netherlands. A combination of semi-structured interviews and a questionnaire among non-executive directors indicates that supervisory board members mainly experience boardroom challenges in three core areas: the ability of non-executive directors to ask management critical questions, information asymmetries between the management and supervisory boards and the management of the relationship between individual executive and non-executive directors. The qualitative in-depth analysis reveals the complexity of the main contributing factors to problems in the boardroom as well as the range of process and social interventions non-executive directors use to address boardroom issues. The findings highlight the need to better understand boardroom processes and the need of non-executive directors to carefully manage relationships in and around the boardroom.
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Triggered by highly publicised corporate scandals, changing societal expectations and the collapse of financial markets, the roles of boards of directors have changed significantly in safeguarding the interest of shareholders and other stakeholders. Yet, relatively little is known about contemporary challenges non–executive directors face and whether their boards are well–equipped for their new tasks. Based on self–assessment reports by supervisory boards, a survey and interviews with supervisory board members, this paper investigates the challenges non–executive directors face in the Netherlands, particularly after a decade of corporate governance reform. Non–executive directors' inadequate role in scrutinising executive directors' performance, information asymmetries and dysfunctional working relationships between executive and non–executive directors are among the greatest challenges indicated by non–executive directors on Dutch supervisory boards. The paper discusses several implications for scholars and practitioners and provides a unique insight in boardroom dynamics.
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Purpose – This study seeks to explore how non-executive directors address governance problems on Dutch two-tier boards. Within this board model, challenges might be particularly difficult to address due to the formal separation of management boards' decision-management from supervisory boards' decision-control roles. Design/methodology/approach – Semi-structured interviews and a questionnaire among non-executive directors provide unique insights into three major challenges in the boardrooms of two-tier boards in The Netherlands. Findings – The study indicates that non-executive directors mainly experience challenges in three areas: the ability to ask management critical questions, information asymmetries between the management and supervisory boards and the management of the relationship between individual executive and non-executive directors. The qualitative in-depth analysis reveals the complexity of the contributing factors to problems in the boardroom and the range of process and social interventions non-executive directors use to address boardroom issues with management and the organization of the board. Practical implications – While policy makers have been largely occupied with the “right” board composition, the results highlight the importance of adequately addressing operational challenges in the boardroom. The results emphasize the importance of a better understanding of board processes and the need of non-executive directors to carefully manage relationships in and around the boardroom. Originality/value – Whereas most studies have focussed on regulatory initiatives to improve the functioning of boards (e.g. the independence of the board), this study explores how non-executive directors attempt to enhance the effectiveness of boards on which they serve.
