Directors and supervisory directors face numerous small and often large dilemmas. Should we decide on this investment today, or can we wait another six months? Can we finance the proposed new development ourselves or should we approach a bank? Should we approve the layoff of twenty-five people or not? These are examples of organization-related dilemmas.
There are also dilemmas of a very different order. These involve the performances of the supervisory directors themselves. In this regard, Marilieke Engbers (VU Amsterdam, 2019) distinguishes four types of dilemmas. The first type is formed by the supervisory dilemmas. How far should my trust in the board of directors go? Should we let the board of directors set its own course or should we be involved in it more closely? How critical can we be without irreparably damaging the necessary trust between the board of directors and the board of supervisory directors? These are tricky questions. If you want to supervise too much then you actually send a signal to the board of directors that you do not trust the board of directors (and them personally) entirely. If you do not supervise enough then you run the risk of important derailments escaping your attention.
The second category is formed by the cooperation dilemmas. These involve, for example, the (legally enshrined) joint responsibility on the one hand and, on the other, the individual responsibility for certain portfolios. Can the supervisory director / legal counsel ‘simply’ rely on the opinion of the financial expert on the board of directors? How critical can / should they be in this respect? And what about, vice versa, their legal opinions? Each and every board of supervisory directors, if all goes well, is a combination of experts in different fields relevant to the organization. Yet all decisions are collective. Thus, the group must sometimes rely on the opinion of a single individual. Conversely, an expert on the board of supervisory directors may find that their opinion is overruled by people who may not have fully grasped the risks.
The third category consists of the decision-making dilemmas. Are we, as a board of supervisory directors, having enough substantive discussions? Is it possible to fundamentally disagree with each other and still maintain sufficient cohesion? This is another tricky one. Groups often have a tendency to agree. A board of supervisory directors should not be too quick to agree. On the contrary, you should deliberately provoke a discussion, even about issues that appear to be clear at first glance.
The fourth and final category is formed by the compliance dilemmas. How can we arrange our overflowing agenda in such a way that there is still enough time left to talk about substantive issues? Many boards of supervisory directors waste their time chatting about irrelevant formal matters. These can easily be dealt with in advance by email.
“You won’t see it until you realize it”, once spoke the great philosopher Johan Cruijff. That is right. A supervisory director can only recognize a dilemma as such if they are willing to see it. Many boards of supervisory directors do not see their internal dilemmas enough to see through them. They tend to focus exclusively on organization-related questions and dilemmas. They insufficiently realize that proper handling of organization-related dilemmas is only possible if you are willing to also (better yet: first) see and specify the supervisory dilemmas, cooperation dilemmas, decision-making dilemmas, and compliance dilemmas and to put them on the agenda. That is not easy.
The consequences of this blindness are significant. Nowadays, when things go wrong with an organization, the supervisory directors are also immediately targeted. Where were they? Were they asleep? Probably not. The chances are that those supervisory directors were working extremely hard to help solve all sorts of organization-related dilemmas. Hence, that is not enough. You have to look closely in order that you can see and grasp the correct dilemmas.