Archive - Peter Crow | Helping boards govern with impact

Published on: 14 October 2016

On board reports: How long, and what to say?

One of the humbling privileges of working with boards and directors is the opportunity to participate in discussions and provide guidance on themes as varied as corporate purpose, strategy, corporate governance and board effectiveness. The overarching aim is straightforward: to help boards become more effective in the important role of steering and guiding the organisation they govern towards its intended purpose.

Recently, the topic of reporting seems to have been front of mind for many directors. I've been asked who should determine the structure and content of the board pack (the board), and what the appropriate amount of detail to include in the board pack is ("sufficient"—see the maxim below).

In responding to these questions, the first consideration is that the board report is no different from any other communications channel between two parties: the purpose of the report is to transport information to both inform the receiver and enable decisions to be made. Like other communications channels, the effectiveness of the exchange between management and the board is determined by the receiver, alone. Did the board understand the contents of the material in the board report?

If the board is to have any hope of doing its job well, it needs to ensure the chief executive understands what information it requires for effective decision-making. Otherwise, what hope has the chief executive got of knowing or, worse, of the board of making high-quality decisions? If the chief executive has to second-guess the board, the likelihood (from bitter experience) is that the board pack will be structured in a form that suits the chief executive and the information may not be readily usable.

The remedy to ensure the board pack meets the board's needs is straightforward: a 'board pack review' item should be included in the annual work plan. While one review per annum is appropriate, a brief review should be undertaken whenever a new director joins the board. The board should discuss the contents and structure of the board pack to ensure directors understand the information and can readily navigate their way around the pack as presented. If there are any concerns, changes should be recommended for the chief executive to act upon. This simple task should ensure the board gets what it needs to do its job properly and the chief executive knows what to prepare.

The second question (detail) is similarly straightforward. On this question, the following maxim applies:

If you would like some more information, including examples of how to structure the chief executive's report and financial report, please get in touch.

Published on: 4 October 2016

Essential qualities of a director?

Recently, an article was posted on the ICSA: The Governance Institute website, describing 5 essential qualities of a non-executive director. The author lists the following five 'core qualities' and suggests these need to form the basis of evaluations when companies are appointing non-executive directors:

Big picture thinker
Governance knowledge
Independent mindset
Ambassador potential
Energy and commitment

This is a good list and several of the items are intuitively appealing. However, having read the article a few times now and compared these suggestions with the findings from my own research and others elsewhere, I am not sure all of these qualities are actually 'essential'. This set me thinking, leading to some supplementary questions:

Why have these five qualities been singled out?
The fourth quality, 'ambassador potential', stands out as being somewhat different from the others. While some level of ambassadorial capability is desirable in the chairman (because they are usually the spokesman), I struggle to understand why it might be crucial in directors who do not speak for the company. The quality may be more usefully categorised as a desirable item.
The title of the article suggests these are essential qualities of non-executive directors. But what of executive directors? Do they possess different qualities? The law makes no distinction between executive and non-executive directors. If a board is to be effective, big picture thinking; knowledge of board practices (i.e., governance knowledge); an independent mindset; and, energy and commitment are more likely to be essential qualities for all directors.
What of other qualities that have been suggested as being highly important including competence (to understand the business of the business and complex information); the ability to deal with ambiguity and change; vigorous debate; and, teamwork and trust, for example?
Though not stated explicitly, the use of 'essential' implies these qualities are universally applicable. Given the complex and socially dynamic nature of corporate governance, companies and markets, is this reasonable?
How might possession of these qualities translate into a beneficial impact on business performance?

Though progress has been made in recent years, these questions demonstrate our knowledge abut boards is far from complete. We still have much to learn about how boards actually work; how they should work; and, crucially, whether boards can influence company performance through the decisions made in the boardroom (or not). If answers to these very difficult questions can be found, they will probably have significant implications including perhaps to a new understanding of corporate governance and updated guidance for board practices, director recruitment and on-going director development. While some directors may struggle to come to terms with such implications, the flow-on effects for sustainable business performance, economic growth and societal well-being are likely to be significant.

Published on: 30 September 2016

On the cusp of something big?

The last five years of my life have been dominated by research—the goal being to begin to understand how boards influence firm performance through their contributions in the boardroom. It's been a tough journey at times, but the end is now in sight—and thank goodness because a groundswell of interest in how my research might be applied to real situations is starting to become apparent. People in Australia; the UK; Europe; USA; South-east Asia; the Middle East; and, New Zealand have been in touch with questions and requests.

While the research is yet to be published, enquiries are arriving from many quarters including invitations to write an editorial for a leading magazine; speak at the Governance Institute of Australia National Conference; participate in a multi-city (Europe and Asia) speaking tour in 2017; prepare a webcast; and, write a book for practicing directors. These are on top of confirmation from the prestigious Leadership and Organization Development Journal that an article of mine will be published soon (Vol 37, Issue 8), and earlier commitments to deliver a webinar to a world-wide audience; tailor a governance development programme for members of an industry association; and, facilitate several workshops to help companies refine their corporate purpose, strategy and governance frameworks.

That so many people have begun to question 'conventional' corporate governance thinking (that the board and management must be kept separate; that particular board structural configurations lead to better firm performance; and, that the term 'governance' can be widely applied including beyond the boardroom) has caught me somewhat by surprise. However, my commitment to serve boards and directors who are intent on exerting influence from the boardroom in pursuit of an agreed corporate purpose is a matter of public record. So respond I shall (and happily so).

If you want to ask a question or toss around some ideas, please get in touch. I look forward to the discussion.

Published on: 8 September 2016

Webinar: Influencing company performance, from the boardroom

I'm thrilled to announce that the Madinah Institute for Leadership and Entrepreneurship (MILE) has invited me to present a webinar entitled Influencing company performance, from the boardroom. The webinar will start at 3:00pm Saudi time on Sunday 2 October—to suit American, UK/European, Middle Eastern, African and Asian company directors and board members in particular.

For more information, click here. You'll need to register (free).

The following topics will be discussed during the 45-minute webinar (with an open Q&A session afterwards):

How to resolve the challenge of exerting influence and adding value from the boardroom
What effective boards do and how effective directors behave
Practical suggestions to move the board's focus from compliance to performance

Reserve your place today!

Published on: 5 September 2016

Building board capability: Extra UK/Europe visit scheduled

Subject to two pending confirmations, the schedule for my upcoming visit to London (14–20 September) is full. During this short visit, I will be participating in the Organizations with Purpose conference (16–17 September) at London Business School (in conjunction with the Blueprint Trust); attending a non-executive director forum; meeting (separately) with ICSA and ICGN executives; discussing my involvement in a significant event in 2017; fulfilling requests for confidential meetings; advising several clients; and, delivering a presentation. While the visit will be fleeting (and busy!), I am hopeful of realising a long-time ambition: to climb the dome of St. Paul's Cathedral on Sunday 18th, my day off.

The high level of interest in my work has been both humbling and gratifying. Thank you for your support!

Looking ahead, I'll be returning to the UK and Europe is in October (19–28th), culminating with the 13th EIASM Corporate Governance workshop in Milan (I will be presenting a paper there). If you would like to learn more about my governance research (especially implications for practice); have a confidential discussion about a sensitive topic; or, discuss the possibility of me addressing your board or a public event, please get in touch. Recent experience suggests that the diary is likely to fill up quickly, so it would be wise to act promptly.

Published on: 4 September 2016

Making an impact on performance, from the top

One of the great challenges all business leaders face is the question of how to make an impact on the overall performance of the firm they lead. Boards are no exception. Effective boards are comprised of capable people who assess situations, make strategic decisions, and oversee management to ensure goals are achieved.

The challenge of leading well and making an impact on business performance is very real, especially in today's environment of fluid work patterns and declining levels of employee loyalty. Boards are responsible for company performance, yet they do not run companies directly (that is the job of the chief executive). How might boards respond to ensure firm performance goals are actually achieved?

Here are some considerations:

Boards need to accept that responsibility for overall business performance lies with them, not the chief executive.
The overall purpose of the business (i.e., its reason for being) must be both clearly defined (board responsibility) and well communicated (chief executive responsbility).
A carefully crafted strategy (to achieve the purpose) needs to be developed (ideally, by the board and management, together) and implemented.
Business systems and processes need to be optimised to expedite effective collaboration; teamwork; and, ensure the information that people need to do their job effectively is available when they need it.

The importance of this last consideration should not be underestimated: if employees cannot collaborate effectively because crucial information is missing or hard to access, overall performance will suffer—period. The impact on employee morale, productivity and the bottom line is likely to be very significant.

The board needs to know how the business is performing relative to the agreed strategy, and the whether expected outcomes and associated benefits are being achieved (or not). Financial reports only tell part of the story. Employee engagement is an important though often overlooked indicator. If your board isn't sure whether employees are fully engaged, it needs ask the chief executive some probing questions; request a staff engagement survey; seek regular updates from senior managers (in addition to the chief executive); or, pursue some combination of these and other options (*). If employee engagement is low or any inconsistencies are discovered, weak information flows or ineffective collaboration within the company and/or with customers are likely to be contributing factors—a starting point for further investigation and subsequent decision-making.

(*) Boards that lack direct expertise to actively pursue these suggestions themselves should seek independent advice from a seasoned expert, to help them understand what might be possible, establish benchmarks and inform future board decisions. A long-time colleague of mine, Michael Sampson, is one such person. He is an expert in the fields of workforce collaboration, teamwork and new approaches to work. Michael also speaks at conferences around the world and has written several books. I commend him to you.

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