Another example of driving while looking backward

Several weeks ago, I posted a critique of the NACD's 2014 list of burning issues for boards. The list indicated that the main priorities of US directors were compliance and operational matters. I suggested that directors needed to place more emphasis on activities that impacted the future performance of the companies they are responsible for. To my surprise, the muse garnered considerable attention and comment, indicating (to me at least!) that the subject of board performance is topical for many people.

This week, Grant Thornton, a global advisory and audit firm, published a similar list for UK directors, of the areas that need to be addressed by boards in 2014:

• The nominations committee
• Executive remuneration
• Audit committee's extra responsibility
• Risk and internal control

Like the NACD's list, the Grant Thornton list sounds a tone of compliance and control. The assumption seems to be that if boards report accurately, control the CEO and manage risk, then they are discharging their duties well. Sorry, but I don't accept this. Structures and controls do not guarantee effective governance, nor can they assure company continuance. They did not avert the corporate collapses of the early 2000s, the global financial crisis of 2008–2009, nor some of the more recent failures of governance. 

While the monitoring of past performance is important, the primary focus of boards needs to be on the road ahead. Boards—and their advisors—need to wake up to their obligations, to ensure company performance is optimised in accordance with the shareholder's wishes. Rarely, if ever, does the rearview mirror provide the best view if the task is to drive forward. 

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