Peter Crow
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Is 'good' governance to be desired?

7/4/2019

4 Comments

 
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I'm in London for the weekend, an interlude between inter alia commitments hosted by the Institute of Public Administration (a masterclass for board chairs, in Dublin); Lagercrantz Associates (a workshop, in Stockholm); and the Baltic Institute of Corporate Governance (a masterclass and the BICG conference keynote, in Vilnius). 
To work with people across cultures, countries and contexts is a great privilege. Discussions reveal differences in perspective and approach. Yet, some things are consistent, transcending borders and cultures. One example is 'good governance'. Directors everywhere want to know how to achieve good governance.
This is a tough request. The problem is that 'good' is a moral qualifier, implying someone or something is morally excellent, virtuous or even righteous. But that is not all it means. A quick check in any dictionary reveals at least 39 other definitions! Which one does a person have in mind they ask for help to achieve 'good governance' or 'good corporate governance'? And what about other directors around the table. Do they have the same understanding or not?
It's little wonder that directors have become confused about the role and purpose of the board.
Pragmatically, corporate governance is the means by which companies are directed and controlled (Cadbury, 1992), that is, it describes the work of the board. The objective is to produce an agreed level of performance (however measured). 'Effectiveness' is a more appropriate qualifier than goodness. If something is effective it is adequate to accomplish a purpose; producing an intended result. 
Returning to the question of how to achieve good governance. After reminding the enquirer that so-called best practices offer little guarantee of success (which one is best anyway), I usually steer the discussion away from goodness towards effectiveness (performance), and suggest that Bob Garratt's Learning Board matrix, and the Strategic Governance Framework are useful starting points for a lively discussion at the board table.
Once directors acknowledge that high company performance is the appropriate goal, and that success is a function of effectiveness more so than goodness, they start to ask more relevant questions, such as, "What actually matters?" and, "How do I as a director and we as a board become more effective?"
4 Comments
Leon
7/4/2019 07:39:25

My comments are probably more questions: do moral principles (eg honesty and integrity) apply? Can we be more effective through immoral means? If people are asking about good governance, are they implying moral and effective (good) governance?
And to broaden this a bit, think about diversity (very topical and relevant in today’s world). Is good governance implying that diversity is applied as well?

Reply
Peter Crow
7/4/2019 07:51:10

Thanks Leon, for your insightful questions (comments).

Your comments have exposed a weakness in my original post. Moral principles do apply; they are necessary but they are not sufficient. The gap I come across frequently—daily it seems—is that boards, consultants and virtue-signallers seem to be more, even exclusively, interested in goodness (the moral dimension) without giving 'performance' much attention at all. My submission is that boards need to explicitly pursue effectiveness as the primary goal. But in so doing, they need to operate consistently with agreed corporate values.

Reply
Peter Crow
8/4/2019 23:59:02

Further, moral principles are held by people, not the company per se. In my experience there are no bad or good companies, just bad or good people.

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Joella Bruckshaw link
8/4/2019 22:19:19

When a Board convenes there can be many agendas. Good governance can only come from doing the work to allow them to act as one. That can be uncomfortable initially but literally pays dividends!

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Peter Crow PhD CMInstD

Company director | Board advisor
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