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    Boardroom authenticity: are director actions consistent with their claims?

    Accountability Governance Performance Strategy
    The NYSE has just published the results of its 12th annual director survey. The survey, conducted by Spencer Stuart, makes for interesting reading. For example, strategy and performance features as a "perennial concern" of respondents—directors claim a strong interest in strategy. However, the responses do not bear this out. When asked to identify board actions that are critical to company performance, the top six responses from directors were:
    Directors say they know strategy and performance is important. That's clear. So why, when directors are asked specifically, do 'monitor' and 'control' activities feature more highly? Ouch! Why are some director's actions inconsistent with their claims?
    Do you notice anything unusual these responses? Apart from reviewing the strategic plan (presumably developed by management), none are practices of strategic management at all! If the board is responsible for business performance, why isn't it directly involved in the development of strategy, or monitoring strategy implementation, or verification of business performance goals? Why don't these elements, which are crucial to any influence the board might exert on business performance (watch for my forthcoming research), feature at all?
    • Regular CEO evaluation 96%
    • Strategic plan review 91%
    • Review of bench strength 83%
    • Capital use review 83%
    • M&A analysis 73%
    • Meeting on-site managers 62%
  • Published on

    NACD announces "long-term value creation" commission

    Governance Performance Phd Research Strategy
    The National Association of Corporate Directors (NACD) has announced the establishment of a Blue Ribbon Commission to investigate the board's role in driving long-term value creation. You can read the full announcement here.
    Twenty-six "distinguished corporate leaders and governance experts" have been appointed as commissioners. Surprisingly, no corporate governance academics have been appointed. This begs the question of how the BRC intends to go about its work, and to conduct empirical research in particular. I hope the opportunity to investigate what value creation is—and how it is created—is not lost.
    I'm in two minds about this investigation. On one hand, it confirms the profession has a serious problem: that we simply don't know how boards add value or influence performance begs the question of what directors and boards actually do. On the other hand, congratulations are due to the NACD taking the bold step of commissioning the investigation. The subject is topical (in the last six months alone, I have been party to well over 100 conversations and debates on the topic of strategy in the boardroom), to the point of being somewhat personal (the subject is at the heart of my doctoral research).
    Consequently, I intend to watch developments closely especially as the commission seems to be very similar to a study undertaken last year. If asked, I will make my research findings available to the BRC.
  • Published on

    Telling the emergent #corpgov story

    Conferences Governance Research Speaking Engagements Strategy
    About three and a half years ago, I had the privilege of listening to a leading thinker speak about some of the problems with boards, board practice and the phenomenon of corporate governance. The comments were as contentious as they were disarming: we don't know nearly as much as we would like to think we do. Further, many of the widely discussed measures (women on boards, board size, an independent chair) provide little if any guarantee of increased business performance.
    My initial reaction was to dismiss the comments. They stood apart from the prevailing opinions of many practitioners and consultants. However, there was something compelling about the the way the story was told. Something made sense, so I dug deeper. Pretty soon, I found myself on the quest that became my doctoral journey, to try to work out how boards can influence business performance in real terms.
    Jun 3–5

    Jun 11–12
    Jun 17–20
    Week 1 Sep
    Sep 8
    Sep 9
    Sep 10
    Oct 29–30
    Nov 12–13

    Nov 23–27
    International Corporate Governance Network  annual conference
    (London, England)
    International Governance Workshop (Barcelona, Spain)
    European Academy of Management conference (Warsaw, Poland)
    * available in UK and Western Europe
    Masterclass: Corporate Governance (venue tbd, Ireland)
    Masterclass: Boards and Performance (Dublin, Ireland)
    Guest lecturer: University of Ulster (Belfast, Northern Ireland)
    EIASM conference (Brussels, Belgium)
    European Conference on Management Leadership & Governance
    (Lisbon, Portugal)
    Reserved for Singapore event and meetings
    (The prospect of some meetings in Australia and the US is being discussed as well, but nothing is confirmed yet.)
    That quest continues today. However, the doctorate is nearly complete so the time to package the learnings (there have been many), tell the emergent corporate governance story and discuss implications for boards and businesses has arrived. To this end, I will be travelling internationally in June (as signalled yesterday), September and November as follows:
    If you want to know more about any of these events, or want me to meet your board or executive team, please get in touch.
  • Published on

    Want to learn more about boards and corporate governance?

    Conferences Governance Strategy
    Are you interested in boards, board practice and corporate governance? Do you want to learn about emergent trends and how boards can influence business performance? If so, read on...
    I will be visiting England, Spain and Poland soon to discuss corporate governance topics with directors, boards and academics. The overall trip theme is "Boards and business performance". Four speaking engagements are confirmed and several private meetings are in place.
    While the diary is filling up, there is still room for several more meetings! Please contact me if you have a question or want to set up a meeting. Here is my current schedule:
    June 2
    June 3–5

    June 8 & 9
    June 10
    June 11 & 12
    June 15
    June 16
    June 17–20
    June 20
    Arrive in London, available for meetings after 1pm, including dinner
    International Corporate Governance Network Conference 
    (click to set up meeting at conference)
    Available in London or nearby (Want to meet? Get in touch)
    Travel to Barcelona
    International Governance Workshop, Barcelona (my paper abstract)
    Limited availability in London (Want to meet? Get in touch)
    Travel to Warsaw
    European Academy of Management (my paper abstract)
    Return to New Zealand
    Thanks for your interest!
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    Directors, you are accountable—the Supreme Court says so

    Accountability Ethics Governance Performance
    Is the worm starting to turn? After many years of relative calm—save a small number of judgements including this example from the New Zealand finance sector—directors seem to be facing increased levels of scrutiny, including being held accountable for actions (or inaction).
    A new judgement, by the Supreme Court in England, places a stake in the ground for British companies. The seven judges determined (unanimously) that directors were responsible for their actions, and that where those actions were fraudulent directors should be held personally accountable. No doubt some directors will throw their arms up in horror, asking how they could possibly know everything in order to make informed decisions. Yet directors are responsible for the overall operation and performance of the business they govern. Therefore, directors have a duty of care to become informed before they make a decision. 
    The Jetivia–Bilta judgement provides a timely reminder to directors. Precedents have now been set in several countries. The buck stops with us (yes, I am a director too). Directors need to ponder the implications carefully. Thankfully, those who are not happy to carry the responsibility and accountability that goes with every appointment have an 'out'—they can (and should) resign.
  • Published on

    It's time to act: Boards need to focus on leadership and strategy

    Governance Performance Strategy
    Governance researchers and some more forward thinking directors have known something for a long while: that boards can add considerable value to business. However, most directors see their role on the board as being one of monitoring and compliance—to keep the chief executive honest and make sure they don't take the company to rack and ruin.
    Calls for boards to put their energy into things that actually matter—leadership and strategy—are becoming commonplace now. Here's one recent example. I have been writing about it for some time as well (see here and here for examples). My doctoral research suggests that boards that are actively involved in strategic management practices (the development of strategy in particular) are more likely to influence business performance than those that embrace the monitor and control mindset. Thankfully, the basic principles of strategy haven't changed much in 30 years, so directors should find it relatively straightforward to come to up speed—but only if they want to.
    Clearly, the drum is beating. How will you respond? 
    If you'd like to understand what an involvement in strategy might mean for your board and business, or you would like some more information, please contact me.