Boardroom Diplomacy: Mastering the Art of Difficult Conversations

As sociopolitical fault lines deepen across America, directors are confronted with controversial topics that could have massive effects on the companies they guide—and the boards they serve. Boards today navigate sensitive discussions previously considered taboo in the boardroom, such as those related to politics, race, religion, and other often divisive matters.

Directors must be cognizant of their own personal beliefs and biases while prioritizing the best interests of the company and its stakeholders. While accustomed to being experts with strong business acumen, directors may find themselves without all the answers and uncertain of how to best facilitate neutral discussions.

Research suggests that the public finds businesses to be more trustworthy and competent than government, putting pressure on companies to not only perform well but also to benefit society. Boards are finding it more challenging than ever to avoid social and political topics—even inaction is considered a statement by some stakeholders. These subjects can be emotionally charged and can quickly devolve into uncomfortable situations.

Increasing political polarization is causing many Americans to feel that the country is more divided than united. These cultural divides are widening in the wake of new and controversial state laws banning diversity programs and landmark Supreme Court decisions, such as the Dobbs v. Jackson decision that overturned Roe v. Wade, which had guaranteed a constitutional right to an abortion.

The impacts of these developments require board consideration, given their implications for a business’s operations, regulatory compliance, human capital, reputation, and market stability, among other considerations. Regardless of individual directors’ personal views, the board must focus on what is best for the long-term value of the company and its various stakeholders. As these issues arise, directors must consider how to mitigate any risks they pose or rewards they may promise. While difficult, engaging in these challenging discussions can lead to more informed decisions that consider a broader range of perspectives, potential impacts, and new opportunities for the business.

In recent years, boards have become less homogenous as directors representing different races, genders, generations, and sexual orientations have entered the boardroom. Boards seats are being filled by directors with diverse skill sets, backgrounds, and perspectives. Their journey to the boardroom—and overall life experiences and views—may differ from that of an individual who “fits” the traditional director profile. As boards interact relatively infrequently, it can be difficult for these groups to develop strong working relationships. Each member enters the boardroom with deeply rooted values, beliefs, and biases, which can influence their decision-making.

When it is “business as usual,” boardrooms can function with a sense of comfortable familiarity and unity. Now more than ever, however, directors must intentionally engage in open, honest dialogue about topics that may be less familiar to them and potentially more alienating. These boardroom conversations  must allow for diverse perspectives, encouraging respectful debate and a willingness to challenge assumptions, yet enable the board to come to a consensus on issues facing the organization. By prioritizing inclusive decision-making that incorporates a wide range of viewpoints, boards can develop more robust strategies to address these complexities.

Difficult Conversations in the Boardroom

Below are examples of topics that may spark difficult conversations around the boardroom table:

• Politics: The boardroom is not immune to the current hyper-polarization of American society, and given the high stakes of the November 2024 elections and their aftermath, directors may find it more challenging to find points of agreement than it has been in previous years. A recent Pew Research Center survey underscores the political divide, finding that fewer than half of Americans say there is common ground between Democrats and Republicans.
  
  Studies have shown that people tend to prefer those who share their ideals and often dislike others with differing political ideologies, including in business environments. A University of Notre Dame study found that directors are more likely to remain on a company’s board if they share political views with an incoming CEO and leave the board if their ideologies clash. The study also found that directors may be more averse to an incoming CEO with opposing political views than drawn to one with similar beliefs.
  
  In any election year, there will inevitably be impacts to business strategy and operations, no matter who wins the presidential and congressional elections, and boards must prepare to grapple with the potential for significant policy shifts, regulatory changes, and market volatility.

• Diversity, Equity, and Inclusion (DE&I): Following a surge in support following the 2020 murder of George Floyd, enthusiasm for DE&I efforts seems to be waning. Along with this shift in sentiment was the 2023 Supreme Court decision banning affirmative action in college admissions, which, while not directly impacting companies, has businesses and boards bracing for potential legal ramifications.
  
  Accusations of so called "reverse discrimination"—that is, discrimination against a majority group—are on the rise. Support of DE&I is increasingly politicized, largely falling along party lines. In fact, in a Marist National Poll, 92 percent of Democrats say that diversity makes the country stronger, while 69 percent of Republicans said the same.
  
  Further, conservative activists are challenging the legality of DE&I programs, alleging that they are a form of discrimination, particularly those that link executive compensation to diversity goals in hiring and promotion. This legal uncertainty forces boards to reevaluate their DE&I initiatives to ensure compliance with existing civil rights law.

• Geopolitics: Conflicts such as the Israel-Hamas and Russia-Ukraine wars can spark intense debate in corporate boardrooms. Directors must grapple with complex ethical and financial considerations and impacts to stakeholders. For example, maintaining operations in war zones can expose employees to danger and raise ethical concerns, but pulling out entirely could disrupt supply chains and damage the company's reputation for reliability. Similarly, a decision to sell off stock holdings or drop suppliers for geopolitical reasons can affect company finances and disrupt operations. These tough decisions can lead to disagreements as directors weigh the risks and potential rewards of continuing business and investment as usual in the face of geopolitical uncertainty while holding their own personal views about the conflict in question.

Strategies for Boardroom Diplomacy

Boardroom diplomacy is an essential skill set for individual directors and boards as a whole. By fostering open communication, actively listening to varied perspectives, and seeking common ground, directors can approach discussions with respect while acknowledging opposing viewpoints and focusing on the best interests of the organization.

Prepare the Board’s Culture for Difficult Discussions

• Board leadership should ensure that behavioral norms and ground rules have been agreed upon by all directors. The health of the board’s culture impacts directors’ interactions, relationship with management, and decision-making. Boards may find it helpful to implement protocols to quickly adjust any behaviors that are detrimental to the discussion.

Before the Meeting: Preparing for the Discussion

• Clarify goals: Articulating the purpose of the discussion, key points to be addressed, and desired outcomes sets the stage for the conversation. Board decision-making may fall anywhere along the spectrum ranging from strong group unity, characterized by conformity, to deep group divides powering tense, gridlocked discussions. Board leadership should emphasize the importance of collaborative decision-making while acknowledging that unanimity may not always be reached.
• Choose the discussion leader: Consider the specific needs of the discussion when selecting a leader, such as expertise in the topic or experience in facilitating productive conversations. External resources, such as industry experts, mediators, or consultants, can provide valuable insights, as they have the benefit of objectivity.
• Gain understanding: Directors who arrive at the discussion informed on all aspects of the matter at hand are better equipped to navigate varying views. Each director should thoroughly read the board materials provided by management; gather other relevant data, facts, and background; and seek to understand implications. Directors may not be the experts in these instances and may consider leveraging the knowledge of management, such as that of the chief human resources officer.
• Anticipate objections: Effective pre-meeting preparation includes anticipating fellow directors’ different points of view. This allows the discussion leader to gather supportive data, consider alternatives, and proactively address concerns.
• Determine timing: Boards may schedule initial discussions at the committee level to allow for in-depth deliberations and the opportunity to help make directors well-versed on the topic. During the full-board meeting, the discussion leader should ensure that the topic is given sufficient time.

During the Conversation: Facilitating a Respectful and Productive Dialogue

• “Check your jersey at the door.”: In sports, players are expected to prioritize the team’s success over personal preferences, checking their “jersey” at the door. No matter their background, all people rely on their inherent biases to make judgments and decisions, often unconsciously. Directors must set aside their affiliations and biases and focus on the board’s collective objectives before entering the boardroom. Focusing on the company's mission, long-term goals, and impact on shareholders and other stakeholders, such as employees and customers, can help maintain a neutral, productive perspective (see “Managing Biases to Improve Board Culture”).
• Set the stage: The discussion leader can encourage active participation and remind the board of the established ground rules, acknowledging that this may be a difficult or emotionally charged topic. The questions can be framed in a way that is informative, respectful, and nonjudgmental.  
• Listen actively and respectfully: The collective perspectives, experiences, and ideas of the board lead to more innovative and effective solutions and acceptance of the outcomes. Directors must pay attention without interrupting, acknowledging the right of other directors to have differing opinions; ask open-ended questions to better understand reasoning and motivations; and seek to find common ground with their fellow directors.
• Objectively consider implications: As with other initiatives, boards must adopt a strategic mindset, considering the potential opportunities and weighing the risks of each potential action that the board may take following their discussion.

After the Conversation: Making Decisions and Moving Forward

• Seek consensus: In discussing controversial issues, directors must focus on problem-solving versus winning the argument. If needed, the discussion leader may clearly define areas where the board can “agree to disagree” to reinforce a healthy culture of debate.
• Recognize when to conclude: Allowing the conversation to spiral into unproductive territory can be detrimental. Repeated arguments, raised voices, or a lack of new perspectives might indicate that it is time to take a pause. This does not mean shutting down conversation entirely, but instead strategically choosing a stopping point to regroup, gathering additional information, or proposing a structured, follow-up discussion.
• Measure progress: Boards should track outcomes through a combination of quantitative and qualitative measures and readjust as new information emerges or events occur. This data-driven approach ensures informed decision-making and allows the board to gauge the overall health and direction of the organization.
• Monitor board culture: As the culture carrier, the board chair or lead independent director should determine any negative impacts of the discussion. Feedback on the conversation can be solicited individually from any directors who expressed strong opinions or may have been upset by the discussion, or from the full board during the next executive session.

Conclusion

While often uncomfortable—or even assiduously avoided—difficult conversations can catalyze positive change and innovation. By confronting underlying issues and exposing diverse perspectives, these discussions can spark creativity and challenge the status quo. This discomfort can lead to a deeper understanding of problems and a more comprehensive exploration of potential conflicts and solutions. Ultimately, accepting—and even embracing—difficult conversations can pave the way for significant advancements to the company’s strategic vision and foster a more resilient and adaptable board and organization.

Lana Dargan is senior content analyst—DE&I, and Mallory Bucher is associate director, Corporate Governance Content, at the National Association of Corporate Directors (NACD). NACD thanks Jocelyn Carter-Miller, vice chair of the NACD Center for Inclusive Governance®, for sharing her insights.

About the NACD Center for Inclusive Governance^®

NACD believes that it, its members, and partners have a unique opportunity to bring together their expertise, resources, and influence to create systemic change that will shape the American boardroom. The Center for Inclusive Governance® (the Center) is based on a shared understanding that a diverse and inclusive board is critical to long-term value creation for every organization and to society more broadly. The Center aims to create pathways for diverse talent, build a more inclusive boardroom, and convene members, regulators, corporations, and other partners to execute our commitment to boardroom diversity.

To learn more about the Center for Inclusive Governance^® visit inclusion.nacdonline.org.