Each parent with children remembers the time their offspring always asked the question “Why”. The “why” question is the most important question in our existence, I believe. If you ask “why”, the conversation immediately reaches a higher level, a so-called meta-level.

It no longer concerns the mere facts, but the story behind it. The underlying idea becomes visible. The idea then becomes the topic of the conversation instead of the bare facts. Pay attention: every time someone asks the “why” question, we are immediately interested. Our eyed widen and we become alert. Children feel that very clearly, however young they are. Once they have discovered it, this attention, you will always get this “why” question. Guaranteed attention from your parents!

In the Board Room, the “why” question is also the most important question. Moreover, it is the most effective question. This is why. Supervisory directors and supervisors have a supervisory and advising function. Sometimes they have to redirect, and they always have to provide inspiration and perspective to the managing directors. Exercising control and providing perspective are contradictory functions, in a sense. You are not very willing to take advice from someone who sometimes holds you back and hinders you. The “why” question can provide a solution for everyone in that case.

By asking the right questions, as supervisor you can very effectively redirect and at the same time provide perspective. The “why” question is a non-offensive way to exercise control, so to speak. Suppose the management board wants to carry out an alteration costing over ANG 300,000. The permission of the supervisory board is required for this purpose. The management board does not want a public tender. For contractor A has offered a very good price and can begin immediately. The supervisory board does want a public tender. For all tenders have to be public. The supervisory board can now very simply dismiss the request for permission with a good argument. End of story. The supervisory board can also ask why the management board does not want a public tender. At that moment, a dialogue with various dimensions begins.

Four dimensions
The first dimension is that of the actual information itself. The supervisory board can form an idea of the background of the desire of the management board not to hold a tender by asking the “why” question, without directly adopting the position that it is or is not appropriate. The second dimension is at management board level. The management board understands from the question that it is not self-evident to the supervisory board that one can refrain from a public tendering procedure. The management board will then wonder again whether it is wise in the given circumstances, and whether the arguments are strong enough to support this desire. The third dimension is at the level of the relations. Both the management board and the supervisory board experience by the discussion created by the question and answer game that the basis for the decision-making is substantiated better. The arguments are literally listed. The fourth and most important dimension, finally, is that the supervisory board does not veto the management board’s decision and thus emphasizes that it has some power over the management board, but that the supervisory board, by asking the right questions, can induce the management board to decide itself that it might be better to have a public tendering procedure after all. Good supervision goes much further than saying “no”. Why? The “why” question can ultimately have the same consequence as saying “no”, but with a much better joint result for the management board and the supervisory board.

Do you have a question about corporate governance yourself? Please e-mail it to governance@vaneps.com and perhaps your question will be discussed in the next column!