The annual International Conference on Management, Leadership and Governance is over for another year. The third edition of the conference, in Auckland New Zealand, built on the earlier editions. The two keynote speakers, Phil O'Reilly and Andrea Thompson, were well received. They set the scene for each day nicely. Three strong themes emerged during the conference, as follows:
Some further reflections:
So, there you have it. The 3rd International Conference on Management Leadership and Governance is over. I look forward to the 4th edition in twelve months' time. The venue should be announced in the next month or two.
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The first day of ICMLG2015 has been completed, with a very pleasant dinner cruise on Auckland Harbour. The three-hour cruise gave delegates time to enjoy the view back to the city across one of the world's great harbours; to get to know each other better; and, to reflect on the conference to date. The conversations were upbeat—both for the venue and logistics (thanks AUT and Massey) and the topical nature of the presentations and discussion on Day 1. The following points provide the tiniest of glimpses into some of the conversations and thinking so far:
In addition, many new relationships were formed, ideas for collegial working groups were discussed and several invitations were issued for cross-border and multinational cooperation. (Gosh, that sounds like the OECD or the United Nations!) I'm looking forward to seeing and hearing how the discussion builds and develops on Day 2, starting with Andrea Thompson's keynote.
News of the HSBC scandal has been plastered over major daily newspapers and news websites for several days now. Twitter and other social media platforms have been abuzz as well. That the leaders of an esteemed bank could have allowed such practices to occur is a travesty of leadership and good business practice. In the years to come, the HSBC scandal will make a great case study for students of business and human behaviour. However, in the meantime, the compelling questions are of corporate governance and leadership. What has been going on at HSBC? Why has the group chairman at the time (Lord Green) now gone quiet? Was the board aware of the practices? If so, why did it allow them to occur? If not, why didn't the board know? Ignorance is an unacceptable defence. Nor is silence. When will shareholders and others in the marketplace call time on this type of behaviour? Thankfully, some commentators are looking to the future. Dina Medland's opinion piece hits the mark. It's all about accountability.
Have you ever pondered the question of who actually controls your business on a day-to-day basis? Many chief executives have told me that they do. They say they have a large hand in the strategy; the culture; and, the policies and procedures, and that these things determine what the business is and what it does. But do they? Does this view match the reality? I've long held the view that businesses should be controlled by just two things. The first is strategy, the expression of how the overall objective of the business is to be achieved and against which all effort is aligned. In most businesses, strategy is expressed in commercial terms, based on whatever purpose the shareholders have laid out. The second controlling influence is the customer, or it should be. Customers are crucial because they "feed" the top line, without which the business has no future. The challenge for boards and chief executives is to ensure that all of the resources at their disposal (people, systems, product and service portfolio, finances) are aligned in pursuit of the agreed strategy. The benefits of doing so are almost self-evident, so much so that you would think all businesses would operate in this manner. But sadly, many don't. If you will allow me to relate an actual experience—one that probably happens more often than most chief executives and company directors realise. Recently, having opened a managed funds account with a large provider, my wife and I found ourselves with the frustrating problem of being forced to change the password to gain access to the on-line system. Here's the exchange with the financial services advisor: Me: We have discovered an annoying “feature” of the ABC programme: the “forced change” on user passwords. To be forced to change your password every few months is jolly annoying, to the point of arrogance on the part of ABC company. We are not forced to change our password with the bank. We can see no justification to impose such a regime on a look-only user account. Can you please talk to your people and get this setting changed. Advisor: This is a feature determined by the provider of the on-line platform; and it is across all client accounts. ABC company has been approached on this several times but their IT security people are unable to make exceptions at the individual customer level. M: Thank you for chasing our question through to an answer. It’s disappointing when “IT security people” get to drive the business and the customer experience eh! Your suggested work around is fine with us, on the proviso that it does not cause you any untoward extra work or hassle. One report per quarter will be fine. Is that OK? A: Hi, that sounds fine. The message is stark: that faceless people in back rooms often have more influence over business performance and perception than what executives and boards realise. They make decisions that seem reasonable. However, most of these decisions are made in isolation, without reference to customer or strategy. The consequences of decisions that detract from the customer experience and are inconsistent with the corporate strategy can be quite damaging. If customers start walking away, where does that leave the business?
Are you interested in the latest developments in management, leadership and corporate governance? If so, you might like to check out the 3rd International Conference on Management, Leadership and Governance being held in Auckland, New Zealand on Thu 12 Feb and Fri 13 Feb. Details are available here. The keynote speakers are:
The two previous editions, in Bangkok and Boston, were great forums. Auckland will be no different: ideas will be shared, emergent research findings presented and new ways of improving business performance debated. In addition to the main conference topics, the following themes will be discussed during mini track sessions:
As usual, summaries of each session will be posted here throughout the conference. Please let me know if a particular paper or conference track interests you and I will do my best to attend and report on it.
Several of the articles from the winter edition of Ethical Boardroom are now available online, including the one that the editorial board asked me to write, on accountability in the boardroom. Here's a snippet: The role of the director bears a weighty responsibility, so directors need to take their appointments, and the accountability that goes with such appointments, seriously. Most do, but some, clearly, flout the boundaries of moral, ethical, and in some cases, legal acceptability. Directors need to be beyond reproach. Clear demarcations of what is acceptable – and what is not – need to be established. This may mean that the curious propensity to collect directorships, as some badge of honour it would seem, needs to be called into question by shareholders and by the profession’s body. That directors with six or more appointments have any hope of providing any more than a cursory contribution is beyond us. The challenge, of course, is holding directors to account for this level of performance, among peers, in the public domain and through any legal processes that may be required. Click here to read the full article. Thank you to the editors for the opportunity to make a contribution. I hope it stimulates some debate and, in some small way, advances the understanding of how boards can and should contribute to business success. If you have any feedback, or would like to explore the issues raised in the article, please contact me.
Te Papa, the Museum of New Zealand, is front-page news today. This time, the museum has "lifted the lid on Michael Houlihan's disastrous tenure as its chief executive"—a strong opening statement by the newspaper. Houlihan has presided over several years of poor business and financial performance since his arrival in 2010. However, two big loss-making exhibitions and the Chief Executive not coming "anywhere near meeting any of the targets we gave" led the board to its decision to agree to Houlihan's departure. The newspaper suggests that the problem lay with the Chief Executive, by implying that he was ineffective. Indeed he may have been, but is that where the enquiry should stop? The Chief Executive is accountable to the board, so the board should not be beyond scrutiny. The board's job is to govern (to steer and to pilot). This is (or should be) an active role. Why did it take two years to act? Was it asleep at the wheel? Some further enquiry is likely to be beneficial—not as a witch hunt, but to reveal insights and provide guidance for other boards. Thankfully, the Te Papa board has now acted. A new Chief Executive has been appointed, and the museum is looking to the future. The Minister of Culture and Heritage seems to have had her confidence restored as well, now "[new] Chief Executive Rick Ellis and Chair Evan Williams are now steering the ship in the right direction".
The 10th European Conference on Management, Leadership and Governance is over. The conference organiser, Academic Conferences International, and the host, VERN' University, did a great job hosting the event in Zagreb, Croatia. I now have returned to London, ahead of some meetings with researchers and business people before flying home later in the week. Some reflections on the conference:
Sharp-eyed readers will notice that I have not reflected on my own paper, or on the session that I chaired. The reason for this is straightforward. It's pretty hard to offer anything approaching an objective critique of one's own paper, and the prospect of making comprehensive notes (to inform the blog summary) when also chairing the session is 'too hard'. If you would like a report on the session or my paper, or would like any other information about the conference, please contact me. Next year, the conference is being hosted by the Military Academy in Lisbon, Portugal. I met Luis and Carlos when they announced the location and the date (12–13 November 2015). They are great guys and, if the professionalism and commitment they demonstrated in Zagreb is any indication, the 11th edition of the conference promises to be a fantastic event.
Jadranka Ivankovic, a Croatian businesswoman and VERN' University scholar, opened the second day of ECMLG 2014 with an important message: that values, and a strong values-set, are often the difference between success and failure in business. Speaking from an informed point of view (as a member of the Management Board of Podravka, a food manufacturing company), Ivankovic provided a timely reminder that the best strategy and management systems alone provide no guarantee of business success. Rather, successful business performance requires hard (management: plans, systems, actions, results) and soft (leadership: attitudes, values, culture, behaviours) expertise, at least. Ivankovic outlined how Podravka went through the process of creating, adopting and embedding a set of values in the very heart of the company. Something like 500 of the 5000 staff were directly involved, in focus groups; in informal discussions; in presentations and in communicating and championing the adopted values once they were agreed by the board. She suggested that the most successful companies are values-driven, and that if a company truly values its values set, there is actually only one boss: the values! While Ivankovic's message was not ground-breaking per se, it provided a timely reminder that businesses are actually constructions of people, and that without committed people, aligned to a common way of thinking, behaving and acting, then business success can be only but a dream.
Denis Mowbray (New Zealand) reported the results of his research into perceptions of the board's effectiveness and its influence on organisational performance. He surveyed the directors and executives, and analysed the financial performance, of publicly-listed companies in Australia and New Zealand; and he analysed the data using something called fuzzy-set qualitative comparative analysis (fsQCA). This tool is useful for understanding the influence of particular variables and attributes being investigated. Mowbray's noted—correctly—that because boards are constructions of people and that effectiveness is likely to be dependent on how well directors and managers work together. Important elements appear to include intellectual capital, team effectiveness, knowledge sourcing and the leader-manager exchange. However, there is a distinct lack of evidence supporting how boards exert influence, even though effectiveness appears to be dependent on the board exercising control and service tasks. High levels of synergy, trust and confidence—between the board and the managers—also appear to be important. Notwithstanding these observations, the perception of the board's effectiveness appears to be related, in some way, on the current performance of the company being governed:
Mowbray's insight was interesting, in that it identified an interesting disparity between the board's perception of its own effectiveness, and the executive's perception of board effectiveness, when company performance is poor. However, while some contributing factors were identified, no suggestions as to why the disparate views exist were proffered. The subject of Mowbray's work is important to our understanding of how boards contribute. I hope he and others pick up on the good start made by this paper, because we need to understand how if and how boards can actually influence the achievement of company performance outcomes.
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