Plans and preparations for my next set of international commitments are coming together well. I'll be on the road for two-thirds of November to fulfil five speaking engagements; attend two conferences; lead a one-day learning workshop; fulfil two advisory commitments; and, attend a miscellany of meetings. The key dates are:
A common theme runs through these commitments: the pursuit of high board performance.
The talks will explore several aspects of board practice including the board's role in strategy; emerging trends; the mechanism of corporate governance; and, the defining characteristics of an effective director and board. The learning workshop (entitled The effective director) is part of the Governance Institute of Australia's new capability development programme. The conferences are the European Institute of Advanced Studies in Management, in Brussels (I'm presenting a paper), and the Global Peter Drucker Forum, in Vienna.
In case you are wondering, I still have a few gaps in the schedule in each location for additional meetings. Please contact me if you would like to arrange a meeting while I'm in your area.
If you'd like to know more about any of contributions, please get in touch. (Note: As is my normal practice, conference summaries will be posted on this blog soon after each event, so do check back if you are interested).
Bob Tricker just did it again.
Long the doyen of corporate governance (Sir Adrian Cadbury used the term "father of corporate governance"), Tricker has just posted this article, a stinging critique of several emergent ideas that, through repetitive use, have permeated thinking and are becoming accepted as conventional wisdom. Risk, culture and diversity are singled out as populist memes. Yet robust evidence to support the notion that any of these memes are directly contributory to effective governance—let alone company performance—in any predictable manner is yet to emerge. Tricker's timing is, once again, exemplary.
Thankfully, Tricker offers far more than a straightforward critique. He reminds readers that the purpose of the board of directors is to govern:
The governance of a company includes overseeing the formulation of its strategy and policy making, supervision of executive performance, and ensuring corporate accountability.
The purpose of a profit-oriented company is also made clear (a point famously made by Friedman):
To create wealth, by providing employment, offering opportunities to suppliers, satisfying customers , and meeting shareholders' expectations.
In calling out this matter, Tricker has hit the nail on the head—the effect of which is to place those motivated by the promulgation of unfounded memes in a rather awkward position. I am with Tricker; our understanding of corporate governance needs to be reset. Rather than pursue new memes (a perfectly adequate definition was established over fifty years ago), boards need to discover how to practice corporate governance effectively. Tricker (Corporate governance: Principles, policies and practices), Garratt (The fish rots from the head) and a few others provide excellent guidance as to how this might be achieved.
(Disclosure: The two books named in this article are the ones that I refer to most often when working with boards. I commend them to you.)
The effectiveness of company boards has become a hot topic in recent years, especially as the general public has become aware of various failures, missteps, poor practice, hubris and ineptitude, but also as attention has increasingly moved from the chief executive to the boardroom in search of high company performance.
The role of the company director is not for the faint-hearted. Market forces, technical innovations and human factors all contribute to a complex and dynamic operating environment. Directors need to consider and make sense of information from multiple sources, and make informed decisions in the best interests of the company. It goes without saying that directors and boards need to maintain a continuous learning mindset if they are to keep up to date and contribute effectively.
In a few days, I'll be in Sydney, Australia (18–20 September), to work with directors committed to the ideal of high performance. While the main objective of the visit is to present the first day of a new three-day course entitled "The effective director", I have time available to attend other meetings to share ideas and discuss emerging trends in corporate governance, strategic management and related topics of interest.
If you'd like to get together while I'm in Sydney, please let me know. I have some free time and would be delighted to meet informally over coffee, or in a boardroom setting with you and your director colleagues.
Corporate governance has had a bad rap of late. From not even rating a mention twenty years ago (my father, an experienced company director, had not heard of the term until 2001), the term has become ubiquitous, hackneyed even, to the point now of being conceived (blamed?) variously as a perpetrator or panacea for all manner of corporate ills and missteps. Further, a bevy of related terms has emerged; an industry in and of itself.
One especially troublesome 'related term' that has emerged in recent years is 'governance professional'. What does it mean, and to what or whom does it refer? I put this question to a professional associate recently (a highly experienced director, chairman and board consultant). His answer, delivered without pause, was telling: "A company director, of course". After a brief pause, he asked why I'd posed the question. I related a couple of stories, of recent discussions including one in which the other party asserted that company secretaries and corporate risk managers are both 'governance professionals'. My colleague interjected asking, "Really? Aren't they getting ahead of themselves?"
Let's consider this in the context of another sector and look for parallels. Take healthcare. Doctors and nurses are universally understood to be healthcare professionals—clinicians who serve patients' healthcare needs in pursuit of physical and mental wellness. But what of receptionists, administrators and practice managers? These people make important contributions to the delivery of healthcare in a supporting capacity. But organising appointments, processing paperwork and supporting clinicians is not the same as delivering healthcare, the threshold for the 'healthcare professional' moniker.
How might this example inform our understanding of troublesome term 'governance professionals'? First, let's acknowledge that corporate governance describes the work of the board. We know this from Richard Eells, the person who first coined the term (the structure and functioning of the corporate polity), and Sir Adrian Cadbury (the means by which companies are directed and controlled). Given corporate governance is something that occurs in the boardroom (i.e., a board-activated mechanism for coordinating knowledge and making informed decisions in pursuit of the long-term future of the company), my professional associate's reply (that a company director is a governance professional, but the roles of company secretary and risk manager are not) seems plausible. What do you think?
This is a brief note to advise that I will be in London next week, to speak at the ICSA Annual Conference. The conference is being held at ExCeL, London, over two days (4–5 July). Programme details are available here.
I'll be speaking on the first day of the conference, at 12noon. My topic is strategy, from the board's perspective. Here's the session summary from the programme:
Good strategy vs bad strategy
Sound interesting? Come along, I look forward to meeting you.
Note: I'll be in London Monday 3rd to Thursday 6th inclusive, with some free time both during the conference, and immediately before and after. Please get in touch if you'd like to meet up (day or night) to ask a question; discuss an aspect of corporate governance or strategy; learn more about my research on boards and business performance; or, simply have a chat over a coffee or a drink. I'd be delighted to hear from you.
Monday 8 May 2017 shall, in our household anyway, be remembered as a significant date. It was on this date that a father and a daughter both crossed the stage to receive recognition for their respective achievements.
While the day was special for close family members in attendance, the awarding of academic credentials is by no means an endpoint. Rather, it marks a weigh point on a long-term journey. The priority for Megan now is to build her career in international business, marketing and customer service (get in touch if you have an opening for a willing and able staff member). I will continue to encourage boards and directors to focus on what really matters: fulfilling their responsibility for company performance.
The storied fall from grace of Wells Fargo continues to produce fodder for both informed discussion and speculation. And rightly so. Much can be learned from this case, of a once-proud bank that started believing its own press, and then breaching ethical and legal boundaries. To maintain a fictitious facade undermines the confidence that many private citizens place in banks.
The first, and most important learning is that when trust is eroded—regardless of whether through illegal and immoral actions or more simply ineptitude—consequences typically follow. In Wells Fargo's case they have, well mostly. The bank's share price and reputation have both taken a hit: mistrust being a heavy burden.
Now, the results of an independent investigation into the fake accounts scandal have been published. The report is comprehensive (it is nearly 100 pages long). The stated goal of the investigation was to identify the root causes of "sales practice failures", so that "these issues can never be repeated and to rebuild the trust customers place in the bank". So, what was discovered?
Expectedly, operational failings were uncovered. The report lays much of the blame on the shoulders of the then chief executive, Mr Stumpf. This is appropriate because the chief executive is the person who is normally responsible for operational performance, in accordance with both approved strategy and policy. Changes to personnel and practice have been made.
What is perhaps surprising however, is what is not reported. The board does not appear to have looked in the mirror. Yes, the roles of chairman and chief executive have been separated and allocated to two different people—but what of the board's engagement in effective oversight of management? The board of directors knew of the sales practice failures as early as 2014. Remedial actions were (supposedly) taken in 2015, and management reported these were working. But who checked?
That the board knew about the problem and remedial actions were supposedly taken is clear. What is far less clear is whether the board satisfied itself that the actions had in fact been taken and/or that the desired effects had been achieved. Sadly this is not uncommon. That the board trusted management, and blindly so it would seem, does not excuse the board from the consequences of the scandal that followed.
The board-commissioned independent review has shone the light brightly on management. Problems have been identified and actions taken. This is good. Now, one significant step remains: the board should have a good long look in the mirror.
Further to my recent announcement, the full findings of my doctoral research are now available. You can read the abstract here, or download the full thesis (all 359 pages!):
Understanding corporate governance, strategic management and firm performance: As evidenced from the boardroom (5.2MB, PDF)
The research is informed by a longitudinal multiple-case study of two large high growth companies. Data was collected from direct observations of boards in session, and multiple secondary and tertiary sources, creating a rich and rare data resource. The analysis revealed numerous insights, leading to a mechanism-based model of the governance–performance relationship and an explanation of how boards can exert influence beyond the boardroom including firm performance.
If you would like to discuss the research (or raise a challenge), ask a question or explore how your board might benefit from the findings, please get in touch. I'd be glad to hear from you.
This is the second of two instalments summarising observations from my recent two-week skip across Western Europe. This summary covers the UK leg of the trip. You can read the first instalment here; the European leg.
The trip was framed around four objectives, namely, to share learnings from my recently completed doctoral research and discuss the implications for boards; fulfil some speaking engagements; discuss emerging trends with boards; and, attend a training course. After travelling between cities (actually, countries) every day during the first week, the second week was much more settled. I was based in London for two-and-a-half days for meetings at institutions and with directors. The balance of the week saw me at Cambridge University, for a training course. Here's a brief summary of the key observations:
If you would like to know more about these observations, please get in touch.
In the last two weeks I have visited six countries spread across three timezones; slept in seven different beds; experienced snow, sunshine and rain; attended an intensive training course at Cambridge, one of the world's top universities; delivered six formal presentations; and, participated in more than 50 significant discussions about organisational purpose, corporate governance, strategy and board effectiveness. It's been invigorating! Along the way, I've been fortunate to gain many insights, a few of which are summarised in the points below:
These are but five significant insights to emerge. If you'd like to know more, please get in touch.
This is the first of two postings, covering the first week of my nomadic journey. Watch for the second posting soon!
Thoughts on corporate purpose, strategy and governance; our place in the world; and, other things that catch my attention.