Doctor Mustafa Semlali
Distance DBA (2021-2025)
Business Science Institute
Central to governance are men and women guided by laws and good practice. However, beyond these institutional protocols, it is the interactions that shape decision-making processes. The effectiveness of governance depends not only on conventional mechanisms, but also on the ‘interpersonal synergy’ (Semlali, 2024) in play between its participants.
Berle and Means’ seminal work, The Modern Corporation and Private Property (1932), which is nearly a century old, has had a profound impact on corporate governance. It has led to the emergence of various normative (shareholder, partnership) and theoretical (behavioural, cognitive) practices. However, corporate governance has often overlooked the interpersonal relationships between non-shareholder executives (NSEs) and shareholders. This gap prompted an exploration into how to cultivate the interpersonal relationship between these pivotal actors in governance. This Doctorate in Business Administration research addresses this critical issue within the context of French-speaking Swiss companies. It proposes a methodology for fostering relational development in management and offers recommendations for implementing relational governance.
Research impact(s)
Firstly, my research has facilitated the development of a structured process to foster quality interactions and thereby cultivate the interpersonal relationship between the non-shareholder executive (NSE) and the shareholder. This process is grounded in St-Arnaud’s (2003) model of professional interaction and is built on three primary pillars:
Establishing the Relational Foundations: The initial pillar concentrates on assessing and clarifying the mutual expectations of the NSE and the shareholder. The shareholder communicates a clear vision to the NSE.
Developing the Initial Relationship and Strengthening Interpersonal Skills: Upon establishing the initial relationship, the second pillar encompasses a 6-phase iterative process that lays the groundwork for development (e.g., communication, informal and formal interactions, relationship review, etc.), guided by the core values of transparency and respect. The continuous enhancement of this iterative process is ensured by a dedicated sub-process. The objective of this stage is to improve the NSE’s communication and interpersonal skills. This involves offering specific training that includes practical tools to improve dialogue and mutual understanding. This training covers attitude management, emotional intelligence, decision-making and its pitfalls (cognitive bias), interpersonal components (development factors), and communication (improving message transmission).
Management and Support: In this final pillar, we find the shareholder and the board of directors. Each has a steering and support role to play concerning the NSE, should the need arise. Stakeholders, including human resources, play a vital role in providing ongoing support to the NSE. They offer monitoring and guidance in the application of new skills, ensuring sustained and effective relational development.
The anticipated outcomes of this process (as depicted in Figure 1) involve a distinct improvement in the interpersonal relationship, a shared vision, common values, and heightened trust between NSEs and shareholders. This framework facilitates the transformation of interactions into harmonious and productive collaboration, which is indispensable for efficient corporate governance.
Figure 1 represents the schematic process in the art of relationship development in management. It illustrates the structured approach to fostering quality interactions and developing the interpersonal relationship between the non-shareholder executive and the shareholder, ultimately leading to improved corporate governance.
Figure 1: Diagrammatic Representation of the Process for Enhancing Interpersonal Relationships in Management
The NSE, when working alone, often faces challenges in fostering interpersonal relationships. This relationship development process can be made more effective and efficient with the active participation of other players in governance. In light of this, several additional recommendations have been proposed. Firstly, it is suggested that shareholders undergo training to develop their managerial skills, thereby transforming them into shareholder-managers (Action-man). The findings of my research indicated that the NSE and the shareholder often interact informally as part of the management structure. However, these exchanges do not always assist the NSE in addressing their daily challenges. Therefore, my second recommendation is to bring on board an external administrator equipped with technical skills. This addition can provide the necessary expertise and support to the NSE in their day-to-day operations. Lastly, I advocate for team-building activities to stimulate interaction and facilitate the progression of the relationship development process.
In relation to the Board of Directors, we recommend the formalisation of a relationship charter to guide the interactions between NSEs and shareholders. This type of document is poised to complement the Board’s articles of association, thereby providing a structured framework for interactions. Additionally, I suggest the incorporation of a ‘Round Table’. The principle behind this is to establish a sharing framework based on transparency and facts, while preventing emotions from taking over. The NSE manages the emotional dynamics among the participants and, if necessary, reschedules the meeting to a more suitable time. This form of exchange helps to balance the relationship between the concerned parties. Lastly, my final recommendation pertains to the management of potential conflicts through the implementation of tangible mediation mechanisms. Indeed, standard governance practices do not typically provide potential tools at the disposal of the Board of Directors. This recommendation aims to fill that gap and ensure a smooth and effective governance process.
Research foundations
Drawing inspiration from agency theory (Jensen and Meckling, 1976), the first pillar of this thesis is grounded in the normative and theoretical practices previously discussed. My interest was particularly piqued by the relational aspect of governance, with the objective of identifying factors that instigate conflict and the corresponding prevention strategies. This relational dimension has also been highlighted in the field of management science. Its role in improving interpersonal relations at work has been spotlighted in various studies (e.g., the critique of the Taylorian ‘one best way’ model, Likert, 1961; March and Simon, 1999, the significance of interpersonal skills across diverse fields of activity, Butler and Waldroop, 2004; the re-emphasis on interpersonal relations, Salomé, 2009 and interpersonal relations as a precursor to motivation, Andry, 2016).
The second pillar of my research is rooted in the fundamental concept of interpersonal relationships within the social sciences. A similar approach was adopted in identifying the factors that trigger conflicts and the preventive measures. Central to this pillar are interactions and dialogue, which are vital to the activities of participants and the formation of interpersonal relationships (Marc and Picard, 2020), thereby underscoring the escalating importance attributed to communication (Tengblad, 2006).
Research methodology
A total of 14 semi-structured interviews were carried out with NSEs from diverse sectors, including watchmaking, general mechanics, and aeronautics. The organizations involved were primarily SMEs (with fewer than 250 employees), supplemented by a few large companies. The interview guide was structured around four key themes: The context of the relationship; The interpersonal relationship; Communication; and Decision-making. In Switzerland, a culture of confidentiality is prevalent. Consequently, these interviews could only be procured through professional networks. Nonetheless, the openness of the participants facilitated a rich exchange of insights, contributing to the development of the process. The findings were derived using an open and abductive manual coding scheme.
Further reading
Berle A. A. et Means G. C, (1932), the modern corporation and private property, 2e edition, 1956, Mac Milan.
Allport G.W. (1935), Attitudes, in Murchison, Handbook of Social Psycholegy, Worcester, Mass, Clark Univ. Press.
St-Arnaud, Y. (2003). L’interaction professionnelle. Efficacité et coopération. Montréal : Les Presses de l’Université de Montréal.
Charreaux, G. (2011), « Quelle théorie pour la gouvernance ? De la gouvernance actionnariale à la gouvernance cognitive et comportementale », Cahier du FARGO, avril, n° 1110402, pp. 1-26.
Fischer, G. (2020). Chapitre 1. La psychologie sociale : approche et théories. Dans : G. Fischer, Les concepts fondamentaux de la psychologie sociale (pp. 15-39). Paris : Dunod.
Keywords: Interpersonal relationships, governance, communication, conflict, Switzerland.
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