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    Is the rush to place women onto boards driving the best behaviours?

    Accountability Governance Performance
    The rising tide, expressed as an increasing number of women receiving appointments onto boards of directors, is now well-established. Some countries (Norway, Germany, for example) have driven change via quotas, whereas others (Australia) have utilised peer pressure by requiring companies to report the gender mix of their boards in annual reports. Others are just getting on with it.
    The latest drive, in India, has seen some interesting behaviours emerge. The Indian Companies Act now requires every board of every publicly listed company to have at least one female director, with a compliance deadline of 31 March 2015. The Bloomberg reporter used "scramble" to describe recent behaviours, as if to imply that the motivation to appoint female directors is driven by compliance rather than performance. While the scramble may satisfy the statute, and some inspired appointments will be made, there is a very real risk that some boards will be encumbered with a 'token' female who does not have sufficient skill and expertise to contribute effectively.
    If companies and societies are serious about achieving high business performance, then at least three things probably need to happen:
    • The strong norms of privacy and self-serving interests that pervade some director groups and shareholding interests needs to be challenged. The best interests of the company, and of all shareholders, needs to prevail over those of any individual director or shareholder.
    • Researchers need get inside boardrooms to find out how boards can have an impact on performance. However, this will require researchers to embrace a new generation of more sophisticated research methods. Standing on the outside of boardrooms and counting things, or interviewing or surveying directors about what supposedly happens inside the cloistered boardroom, is unlikely to reveal meaningful knowledge.
    • A commitment to continuing professional development, for all aspiring and incumbent directors, needs to emerge, to build a sizeable pool of highly capable 'board ready' directors for shareholders to select from.
    If these things (and others, no doubt) occur, then the unhelpful patterns of behaviour witnessed in India will, hopefully, be consigned to history. However, this hope is predicated on an underlying [cultural] change taking place, whereby the focus of shareholders and boards moves from conformance and compliance, to performance. Is this something worth pursuing, or might it be a bridge too far?
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    Changes at Diligent. I'm confused.

    Accountability Governance Leadership Performance Strategy
    Diligent Board Member Services has just announced the appointment of former McKinsey partner Brian Stafford as chief executive. Stafford takes over from outgoing chief Alex Sodi, "who will become chief product strategy officer and remain on the board". This second part of the announcement caught me by surprise and, quite frankly, confused me.
    I'm not sure I'd want to be in Stafford's shoes just now. The former chief executive is now both his boss (a director) and one of his staff. Consequently, the moral ownership of strategy implementation, and of product strategy in particular, is unclear to say the least. Why the Diligent board chose to structure the company in this way, and why Stafford agreed to the appointment given the challenges of 'above-and-below' reporting is beyond me. I can't see how this sort of anomaly is conducive to a high trust and high performance work environment.
    Perhaps a 'better' approach might have been for Sodi to perform one or other of the two roles (director or strategy office), or to leave the company. If any readers have any insights as to why Diligent made these decisions, or how the new structure might add value to the business, I would love to hear them!
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    Can strategy development and pragmatism be bedfellows?

    Performance Strategy
    With my doctoral thesis now out to review (sent to my supervisors on Monday), I have decided to take a couple of days out to catch up with myself and reflect on the events of the past twelve months. I also need to start thinking about upcoming priorities because, in addition to refining the thesis based on the feedback from my supervisors, my diary contains several teaching, speaking, advisory and facilitation engagements; in New Zealand, the UK and Europe.
    Amongst the engagements are several strategy development workshops, to lead boards and executive teams on a journey of discovery and critical thinking; the goal being a coherent strategy. These workshops are fun: I get to ask some searching questions and to help the participants think about the future prospects of their business. Often, we need to go back to basics, to discuss and agree what strategy is (and is not). Sadly, many managers have a predilection for detail, which means their expectations are of a highly detailed plan (more akin to an annual operating plan). The causality is pragmatism.
    Thankfully, there is no need to forfeit pragmatism. If a holistic framework is used and the debate is focussed on the purpose of the company, business performance, and a set of strategic priorities to achieve the purpose, then the strategy that emerges is likely to be coherent, succinct and workable. Many frameworks and tools are available. The framework that I use is StratCross. It contains the sum of my knowledge and experience gained over fifteen or more years of helping companies create effective, winning strategies. If you'd like to know more, please get in touch.
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    The board's contribution to strategy and business performance: Some thoughts to ponder

    Accountability Governance Performance Strategy
    The topics of strategy in the boardroom and the influence that boards have (or not!) over firm performance have been in the minds and on the lips of many people in recent months. From high-quality articles on websites and respected magazines, to academic research papers, speeches at conferences and symposia and casual thoughts expressed in private, the conversation has ebbed and flowed.
    That these topics remain on the radar suggests that directors are starting to recognise that the board might have a role beyond approving strategy and monitoring performance. But what role? To assist the discussion, here are some thoughts published on Musings in the last twelve months:
    I hope this collection of links is of some use. Please contact me if you would like to pick up on any of the points made here or elsewhere.
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    Even small milestones are important. They mark progress.

    Governance Phd Research Update
    Just over three years after first setting out, I arrived at a small but significant milestone on my doctoral research today. The candidate final draft of the thesis (a 'mere' 336 pages) was sent to my supervisors for their detailed review. I'm hoping that, subject to relatively minor edits and changes, this draft will be submitted for examination.
    Tomorrow will be my second day off in 2015. After a steady diet of 14 hour days, my wife is not sure what I'll do with myself. I've got a fair idea: it'll probably involve a Colnago, and I doubt there will be a word processor in sight! Thank you to everyone who has provided support to this point. The journey is not over yet, but I'm hopeful that the end is not too far away now.
    The personal satisfaction of arriving at this point is palpable: Some of the numbers: read over 1000 articles; listened to over 6GB of audio recordings of board meetings and interviews; read and analysed over 900 printed pages of documentation; untold hours spent wrestling with candidate theories; and, written over 83,000 words (this is what remains, I've probably written and scrapped at least 20,000 more than this). The going has been tough lately, because writing up a thesis, in an academic style is not my forte. A couple of months ago, I expressed some frustration. Today, the sun shone again, and it was good.
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    Should the threshold for director elections be increased?

    Ethics Leadership Strategy
    Most of the elections and meeting resolutions that I have been involved in over the past 35 years have used 50% as the acceptance threshold. Gain the support of at least half of the decision-makers and the proposal is accepted or candidate appointed. While this is an easy threshold to understand (more people support the idea or person than don't), the possibility of a large pool (sometimes close to half) of people who are opposed means that the post-decision period can be filled with angst and opposition.
    I've long wondered whether a higher threshold might be appropriate, especially when voting for company directors and making major (read: strategic) decisions. In other words, big decisions need widespread support. If a director candidate or a proposal fails to gain the support of most of those with decision rights, then clearly the body is not in strong agreement. Two of the social enterprises that I have been involved with for many years work this way: one uses 66% and the other 75% as their decision threshold. Yes, sometimes it takes a little longer to get agreement, but the time-to-benefits is usually much less because people are more united. Overall, the approach has served the enterprises, and those they serve, well.
    The question of decision thresholds was raised in the business press recently. Seventy per cent was mooted as a possible threshold. Might such a proposal have legs? Would directors would be more likely to think and act in the best interests of the company? Candidates and those promoting various proposals would need to work harder to gain more widespread support, that's for sure. Decision timeframes would probably blow out; director candidates and strategy proposals might need to be more populist to garner the widespread support needed to breech the threshold; and, necessary but unpopular proposals might fail to attract the required levels of support thus putting unnecessary pressure on people, resources and possibly business viability.
    While these downsides might seem daunting, the idea of raising the decision threshold on major decisions (like director elections and the approval of strategy, for example) might be worth some consideration. After all, the more united a group can be, the more likely it is of achieving its goal and, therefore, realising the expected benefits. What do you think?