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    Women on Boards: what is the real goal?

    Governance Management Performance Phd Research Strategy
    Interest in gender diversity in boardrooms and C-suites has been increasing over the last 12-18 months. In that time, many commentators have expounded the virtues of having women alongside men on Boards and in C-suites, in both the academic and practitioner literature. Lobby groups have been established and conferences convened, with good effect.

    While such efforts are laudable, the suggestion that the presence of women (on Boards) leads to increased company performance—as has been asserted in the rhetoric—is a big call. I agree that a relationship appears to exist, however I am yet to see any robust evidence that supports the assertion that the presence of women on boards per se improves company performance.

    Before you launch volleys in my direction, please read on. Governance is a complex, open system, and many inputs affect the operation of Boards and the outputs they produce. A single-minded focus on one structural variable—as has been the case with gender—is far too simplistic. Rather, attention needs to move away from bidding up the percentage of seats occupied by women (and expecting performance will reliably improve as a result), towards the holistic consideration of governance as a system, and to the causative factors that affect performance. Preliminary research efforts suggest that behavioural factors; high levels of engagement; vigorous debate; an involvement in the development of strategy; and, the making of strategic decisions, are far more likely casual mechanisms than gender or any other structural variable.

    So, to my question. What is the real objective of placing women on Boards? Participation or performance? If it's the latter (and I hope it is), then the focus needs to move beyond counting the number of women around the table, to discovering what Boards actually do as they go about their work, and to how that contributes to performance (or not). 
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    Twelve months on: living the dream

    Governance Management Performance Phd Readings Societal Wellbeing Strategy
    Today is an auspicious day (well for me anyway). Musings was created twelve months ago today. At that time, I wanted (needed?) an outlet through which new ideas, thoughts and reflections could be expressed as I began to grapple with the demands of a PhD. 

    When I set out, the goal was entirely personal: Musings was a vehicle to share my thoughts and ideas about governance, strategy and societal wellbeing. I had no idea whether Musings would make it beyond a few months (or a few entries for that matter!), or whether anyone would read the entries. I wasn't really bothered either. To my surprise, my motivation to share ideas remains intact, somewhere between 50 and 200 visitors view the site each day (that number is slowly growing over time), and quite a few people have either posted comments or contacted me directly.

    Looking ahead, I plan to continue writing, because the process helps me refine my (doctoral) thoughts. The focus will probably narrow slightly (to strategy, decision-making and governance), as these topics start to dominate my thinking time (I've discovered doctoral research does that to you). One twist though: I'm going to move from writing for my sake, to trying to provide "value" to readers. To do this, I'd appreciate some feedback. Are there some topics or themes that you'd like to read about in the coming months? If so, please post a comment! In the meantime, postings will continue at the pace of 2-3 postings each fortnight.
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    The Solid Energy case: we have much to learn

    Governance Management Research Strategy
    The case of state-owned enterprise Solid Energy, the CEO of whom was a doyen of the business community, raises some interesting questions, as practitioners and researchers search for reasons for the "perfect storm" and the recent fall from grace:
    • What sequence of events and circumstances led to Solid Energy arriving in its current predicament?
    • Why did Solid Energy pursue such an aggressive diversification plan, and risk the viability of its core business in so doing?
    • Who approved the diversification plan, and what milestones and monitoring regime was put in place to ensure goals were being met?
    • Why did the Board not respond more quickly or more decisively in the face of a rapidly changing external factor (slump in coal prices)?

    Hopefully, answers to at least some of these questions will become apparent in the coming weeks, as the investigations proceed. We have much to learn from this case—both in terms of what happened, and in terms of how governance, decision-making and management could (should?) be conducted differently in the future.

    In the meantime, one thing that has been puzzling me has been the response of the Board. Why did Don Elder, the former CEO, have to endure considerable criticism from the media, the public, former employees and the government (the shareholder and regulator) in recent days? Why was attention not focussed on the Board, and why did they not come forward? Surely the Board, as the shareholder's representative, holds the ultimate accountability to ensure the satisfactory and sustainable performance of the business?

    The attendance of John Palmer, former Chair, alongside Don Elder at the Select Committee meeting yesterday provided some comfort. Helpfully, apologies were provided to affected parties amongst the conciliatory and defensive responses. However, many questions over the financial management of the company, and of how strategic decisions were made, remain. Hopefully, the various authorities and interested stakeholders will put their reputations, egos and agendas aside in order to conduct a proper investigation and learn from the findings. Here's hoping.
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    Perhaps Board composition does matter after all?

    Governance Performance Research
    An interesting article appeared in the Financial Times about a week ago. I've been pondering it for a few days now, because it challenged my perception that Board composition has relatively little bearing on company performance outcomes.

    The article reported the results of a comprehensive survey into US company performance in the decade 2000–2009. The results revealed that the prevalence of lawyers on Boards increased from 24% (2000) to 43% (2009)—and that the levels of litigation, malpractice and corporate risk-taking declined markedly—through the decade. The results are not that surprising, given the introduction of Sarbanes-Oxley and other compliance measures in the survey period.

    On the surface, this study suggests that the presence of lawyers on Boards does make a difference in some areas (and therefore composition may matter). But what about the big question: Does the presence of lawyers lead to increased company performance? The study enhances the case for lawyers on Boards for their contribution to the risk conversation. However, this should not be misunderstood as providing evidence to link the presence of lawyers with increased company performance. Increased performance is dependent on innovation, the taking of risks and the making strategic decisions—all of which are somewhat of an anathema to many members of the legal community.

    So, does Board composition matter when it comes to company performance? On the evidence provided by  this study, we still can't tell—but I doubt it.
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    Proud to be a Kiwi

    Societal Wellbeing
    Picture

    Hannah Stilborn (Piopio, left) and Megan Crow (Wellington, right) reading "The Ridge"

    New Zealand is a small country of some 4.4 million, nestled in the south-western Pacific. On the world stage, we cast a reasonably small shadow most of the time. However, from time-to-time, our contributions belie our scale—like when women gained suffrage (first in the world), Rutherford split the atom, Hillary scaled Everest, and Jackson made the Lord of the Rings trilogy.

    Today, a group of New Zealanders joined a group of Flemish people at Messines Ridge Cemetery, to rebury the remains of a soldier that fell in World War 1, and remember New Zealand's contribution to defending the Western Front. We don't know who the soldier was, but do know that he was fighting for freedom. Commander of the Defence Force, Lt. Gen Rhys Jones, Ambassador Paula Wilson and many other New Zealand and Flemish dignitaries were present. Also, two young New Zealand AFS exchange students currently in Belgium, including our daughter Megan, laid a wreath and read a poem. The ceremony was reported in the Dominion Post and the NZ Herald.

    The weather was cold, but the moment moving. It's at times like these, when we remember the contributions of our forebears, that I'm proud to be a Kiwi.
    Picture
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    Can the domino effect be avoided?

    Management Performance Societal Wellbeing Strategy
    Every time a major company fails, smaller suppliers and associated companies are at risk of the domino effect—of becoming a statistic themselves. It's through not fault of their own, save choosing to do business in good faith with the failed company. This was highlighted in fairly stark terms in the last week, when companies either sub-contracted to, or associated with, New Zealand's third largest construction company, Mainzeal, started suffering.

    The domino effect has major implications on economic performance and the wellbeing of communities. When major companies succeed and grow strongly, many smaller and associated companies also gain considerable benefit. Sadly, the domino effect also applies when major companies struggle or, worse still, fail.

    While suppliers are generally very happy to benefit from upswings, downsides are something to be avoided. But can the downside of the domino effect be avoided? Thankfully, suppliers do have options. Here's two for starters:
    • Diversify their customer base, so that they are not reliant any one customer for a major portion of their business. 
    • Negotiate more favourable commercial terms, which may well include fortnightly invoicing and payment cycles (although this can be very difficult to achieve).

    What other "defence" mechanisms can put in place to avoid the domino effect?