Management board and supervisory board: how to negotiate and defend decisions (without conflict and without losing influence)
The relationship between the management board and the supervisory board is one of the least understood areas of an organization's functioning. On the one hand, the management board is responsible for running the company, while on the other, the board has a duty to control, assess risk, and look after the interests of the owners.
In theory, it sounds simple. In practice, it is an arena of intense strategic negotiations, where the stakes are:
investment decisions,
the company's development directions,
budgets,
growth rates,
risk,
trust,
and often also the position and autonomy of the management board.
This article shows how to negotiate effectively with the supervisory board, how to defend decisions, and how to build influence in a relationship that can be difficult, yet crucial to the stability of the organization.
1. The supervisory board is not an opponent — it is a party to the negotiations
The biggest mistake many management boards make is treating the supervisory board as:
a "brake,"
an institution blocking development,
a group of people who need to be "explained" something.
However, the board does not have to be your opponent, but it will always be a party to the conversation, with its own goals and responsibilities.
The supervisory board:
is evaluated on the basis of supervision and risk reduction,
feels the weight of legal and reputational responsibility,
defends the interests of owners (sometimes several, sometimes conflicting),
usually has a lower risk tolerance than the management board.
Management, on the other hand,
is held accountable for results,
has to make decisions despite uncertainty,
operates in short operating cycles,
bears the costs of "unmade decisions."
Therefore, the relationship between management and the board is largely a negotiation over the level of risk, pace of action, and scope of autonomy.
2. Source of conflict: different definitions of a "safe decision"
Management often says, "It's a good business decision."
The board responds: "It's risky."
And both sides are right, because they are talking about two different things.
For the management, a good decision is one that:
increases revenue or market share,
gives a strategic advantage,
strengthens the company's position,
is quick and pragmatic.
For the board, a good decision is one that:
limits legal/financial risk,
has formal and procedural justification,
is secured by scenarios,
does not expose the company to reputational risk.
In practice, this means that management must learn to present decisions not only in terms of "why it pays off," but also "why it is safe and controllable."
3. Negotiations with the supervisory board begin before the meeting
Many members of the management board try to "win" the discussion at the board meeting. This is a mistake.
In reality, negotiations with the supervisory board take place in three stages:
Preparing arguments and risks
Building support and understanding (before the meeting)
Only then does the formal discussion take place
If the topic is strategic (e.g., investment, acquisition, restructuring), the best practice is as follows:
identify 2-3 people on the board who have the most influence,
consult scenarios in advance,
identify concerns,
refine the narrative and safeguards.
This is not "political gamesmanship." It is professional stakeholder management.
4. How to defend decisions: the board needs risk, numbers, and a plan B
The most common argumentative mistake made by management boards is that they present a decision in the form of:
an idea,
a vision,
direction.
But the board expects a decision-making structure.
An effective defense of a decision should contain five elements:
1) Business objective
What do we want to achieve? (result, market, margin, share)
2) Justification
Why now? Why is it necessary?
3) Risks
What are the operational, financial, legal, and reputational risks?
4) Risk control
How do we mitigate them? What are the safeguards?
5) Plan B (and scenarios)
What do we do if the market changes / the project is delayed / costs increase?
For the supervisory board, plan B is often more important than plan A.
Because everyone has a plan A. But a plan B shows managerial maturity.
5. Internal consistency of the management board = greater negotiating power
The easiest situation to "block" a decision is when the board sees that the management is not in agreement.
Signs of weakness that the board picks up on immediately:
board members present different figures,
the CFO says something different than the CEO,
the topic is "pushed" by one person,
there is no common position.
Therefore, the board should treat preparation for the board meeting as preparation for negotiations:
agree on a single message,
determine the role of the conversation leader,
prepare difficult questions,
divide the answers among the board members.
In practice, management board cohesion is a bargaining chip.
6. The supervisory board tests the management board — not just the decision
This is a very important aspect that few people talk about openly.
When the board asks difficult questions, it is often not just about the decision. It is about testing:
whether the management board is in control of the situation,
does it know the data,
can it manage risk,
whether it acts impulsively,
can it defend its position without aggression?
In other words, the board assesses the competence of the management board, and the decision is only a pretext for assessing the quality of leadership.
7. The best negotiation technique: turn the board's resistance into co-ownership of the decision
Instead of fighting the board's objections, it is more effective to involve the board in the process.
An example mechanism:
the board raises concerns,
the management proposes options and safeguards,
the board selects its preferred option within the proposed model.
The result? The board ceases to be a "brake" and becomes a co-author of the terms of the decision. This radically changes the dynamics of the discussions.
This approach requires negotiation skills, emotional maturity, and very good communication, but it pays off enormously: it builds trust and increases the autonomy of the management board in the long term.
Summary: the supervisory board is not a problem. It is a key strategic stakeholder.
The management board does not have to "fight" with the board. It must learn to:
communicate decisions in the language of risk,
build arguments,
negotiate terms,
defend its position calmly and substantively,
build influence in relationships.
In practice, the supervisory board does not block companies that are well managed.
The board blocks companies where decisions are unprepared, risks are underestimated, and management is inconsistent.
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