Archive - Peter Crow | Helping boards govern with impact

Published on: 9 August 2015

Want to learn about emerging corporate governance and board practice themes?

Is effective corporate governance and board practice, in pursuit of high business performance, an important priority for you and your colleagues? If so, please read on.

From 1 September, I will be meeting with directors, executives and researchers in several UK cities (London, Wolverhampton, Leeds, Dublin, Belfast and Canterbury) to discuss the role of the board in influencing business performance. While the schedule for my eleven-day visit is fairly full, some gaps remain for additional meetings. Please get in touch if you wish to meet or have a private chat. Alternatively, you may wish to introduce yourself at one of these public events:

Corporate governance for a changing world (London, Mon 7 Sep, 1530–1900): Explore issues relating to capturing long-term value by integrating environmental, social and governance factors into strategic decisions. Roundtable hosted by: Frank Bold and Tomorrow's Company at Cass Business School.

Achieving competitive advantage through effective boardroom contributions (Belfast, Thu 9 Sep, 1745–1945): Learn how boards can add value to the businesses they govern. Master class hosted by: Ulster University Business School.

Board governance: A reality check (Canterbury, Fri 11 Sep, 1000–1430): Discuss key issues and challenges facing boards within health, public health and social care sector. REGISTER ONLINE. Seminar hosted by: England Centre for Practice Development.

Published on: 5 August 2015

Internships: a vehicle for getting aspiring directors up to speed?

The ‘profession’ of company direction seems to be beset with an interesting challenge: how can or should aspiring directors be introduced to boardrooms without compromising the quality of oversight and effectiveness of the board? A range of responses have been tried, with varying degrees of success. Might internships be a viable option? Thanks to the folk at Ethical Boardroom, I've had the honour of contributing to the debate. Click here to read to commentary, published in the Summer issue of Ethical Boardroom magazine.

If you'd like to know more, or to engage a hearty debate, please get in touch.

Published on: 2 August 2015

Health sector seminar: Board governance, a reality check

Every day, around the world, leaders in the health sector face a formidable challenge. On one hand, insatiable demands press in as people expect physical and mental health (foundational to our well-being). On the other, resources are limited—providers simply can't do everything. Consequently, tough choices need to be made, to ensure the appropriate services are delivered, efficiently and effectively. The complexity of the problem means 'best practice' answers are few and far between. However, progress should be possible if a clear sense of purpose, appropriate strategy and effective monitoring systems are all in place.

The England Centre for Practice Development is hosting an interactive seminar on 11 September, to help health and social care sector leaders explore these key issues and challenges. I have been asked to facilitate the seminar, and to share insights from research and experience in boardrooms. Topics to be discussed include:

Lessons from the coalface ‘School of hard knocks’
Emerging international research
Keeping strategy on the agenda
Driving (the need for) efficiency and effectiveness
Ensuring accountability and performance
A pathway forward: An integrated strategy framework for boards

If you are a board director or an executive of a clinical commissioning group or health provider; a policy maker; a researcher; or, an interested party, I encourage you to join the debate.

Published on: 28 July 2015

On the sources (and a possible remedy) of so-called "governance failure"

The much-storied scandals at FIFA, HSBC and Toshiba have highlighted a plethora of weaknesses in the way large companies are led and run. Fingers have been pointed and blame apportioned. Management has copped a fair bit of flak, but the board has not been immune either. While the media has had a field day, finger pointing and broad statements provide little comfort to those in pursuit of long-term performance. Remedies are required.

Reputability has studied a number of failures recently(*), in pursuit of remedies. The analysis identified nine prominent categories of weakness, the first six of which were influential in the majority of failures:

Board skill and NED control
Board risk blindness
Defective information to or from board
Leadership on ethos and culture
Risk from incentives
Risk from complexity
Risk glass ceiling
Charismatic leader
Poor crisis management

When these factors are considered holistically, the stark implication is that failure appears to be associated with board weakness in at least three areas (engagement, strategy and risk). If boards are to make effective contributions, these weaknesses need to be resolved. And therein lies a challenge: a return to first principles, and a different conception of corporate governance is likely to be necessary. Will boards embrace such a change in pursuit of better business performance? Let's hope so.

(*) The full Reputability Report, entitled Deconstructing failure—Insights for boards, is available here.

Published on: 23 July 2015

The Toshiba case: Is it time to re-think our understanding of corporate governance?

These seemingly innocuous statements are telling: Fix the compliance and the problem will be fixed. Yet history (Olympus, HSBC, FIFA, amongst many others) shows otherwise. Neither the 'monitor and comply' conception of corporate governance, nor the 'advise and monitor' variant espoused by many corporate governance codes and directors' institutes have achieved the desired outcomes. Yet, many boards dogmatically pursue such conceptions.

The Toshiba scandal has raised questions about efforts by the Japanese government to improve corporate governance and culture. (NY Times)

The problem seems to be more fundamental. The contemporary conception of corporate governance seems to be flawed. Consider these statements, which highlight the problem:

How many more failures will it take to realise that additional layers of regulation and compliance-oriented boards that operate as policemen don't actually add value? How many more failures will it take to acknowledge that a new understanding of corporate governance and appropriate board practice might be appropriate? Emerging research seems to suggest that when boards adopt a strategic orientation, and corporate governance is re-conceived as a value-creating mechanism, increased performance is not only possible—it is potentially sustainable. Please get in touch if you'd like to know more.

The now very public overstatement of profits at Toshiba (approximately US$1.22bn over six years) has led to the downfall of the chief executive, Mr Hisao Tanaka (below), and seven other senior managers, all of whom were also board directors. The share price has taken a 25 per cent hit and the company's reputation is in tatters. What a mess. At least there is a modicum of accountability and remorse, something sadly lacking in many other cases including HSBC and Lombard Finance.

The Japanese finance minister, Taro Aso, said: “If [Japan] fails to implement appropriate corporate governance, it could lose the market’s trust. It’s very regrettable.” (Guardian)

Thankfully, people have begun thinking about what needs to change. So far, the response has followed a predictable course: The possibility of appointing independent directors to replace the disgraced directors has been mooted. Will this structural response be enough to fix the problem? Maybe, but I'm not convinced. Compliance responses rarely lead to sustainable change. (The compelling case is Sarbanes–Oxley: created post-Enron, it did little to prevent the GFC.)

Published on: 16 July 2015

On diversity: How many is too many, and does it matter?

Calls in support of appointing women as corporate directors have proliferated in recent years: the stated view being that the presence of women around the board table can improve decision quality and, potentially, business performance. Some legislatures have supported these calls by implementing quota systems. Many (but certainly not all) boards now count at least one female amongst their number.

Anecdotal commentaries suggest that the level of attendance, engagement and discussion quality improves after a woman is appointed to a board. This is good, but another question lurks around the corner: If one capable women makes an impact and two more so, is an all-female board better still—or can we have too much of a good thing? Might an all-female board be as problematic as a board comprised only of men?

I've seen some great all-male boards, some great all-female boards and, sadly, some rather ineffective diverse boards in action. That a diverse range of options are explored, independence of thought is displayed and that directors make considered decisions seem to be more important considerations than the physical composition of the board. Thankfully, the rhetoric is starting to mature along these lines. Hopefully director selection processes will soon follow, such that the qualities possessed by directors and the way they work together in the boardroom are the main considerations. Then, the gender (or any other diversity attribute) of directors should matter no more. Might this offer a viable path forward?

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