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    ICMLG'15: Breaking to mould—new perspectives on executive development

    Conferences Language Leadership Performance Research
    Dorothy McKee, University of Ulster, Northern Ireland, presented a fascinating paper that explored the extent to which executive development (read professional development for executives) that focusses on leadership, governance and business ethics has a positive impact on business performance.
    The research was insightful, for it bridges the oft-discussed chasm that exists between academia and practice. Courses bathed in research rigour and practical application are far less common than you'd expect. I have been critical of the way many academics happily resist any activities that might see them becoming tainted by 'the real world'. Yet McKee walked right into the centre of the issue, and intentionally so, to try to gain some understanding as to what is really going on and what needs to go on to ensure executives are appropriate equipped to to lead and direct well. She surveyed and interviewed a group of business executives who are also graduate business students (Masters level). The findings were very revealing:
    • Leadership is a key feature that differentiates effective from ineffective boards, and collaborative leadership was particularly important
    • Many executives believe that gender balance has a positive impact on leadership decision-making, event though the research does not categorically support this perception
    • Effective interpersonal relationships are crucial to optimise the workings of the board (read: board processes and practices)
    While none of these insights were particularly revolutionary, they reinforce the "I think this is correct but can't put my finger on it" perceptions held by many working directors and business executives. The insights provide great guidance for professional bodies (including the Irish Institute of Directors) to inform the development of their professional development programme. They also speak volumes to academics, to get busy and to produce some meaningful theory-based models and frameworks to support the emerging perceptions of skilled and insightful executives.
    Given the overlap between our research interests and professional backgrounds, McKee and I plan to get together in a few months time, and advance these ideas, with a view to developing some new professional programmes for working directors. If you are interested in learning more, including the possibility of becoming an early adopter, please contact me.
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    ICMLG'15: the state of corporate governance research

    Accountability Conferences Governance Performance Research
    James Lockhart, of Massey University, presented the results of an investigation he undertook, to understand what the research community has added in terms of knowledge about corporate governance in the last two decades. He did this by re-reading every issue of the top corporate governance journal (entitled Corporate Governance: An International Review). Over the 22 years since the first issue, 782 papers have been published (totalling 11,063 pages!). Lockhart has reviewed all of them, categorised them and done some analysis.
    Sadly, his findings provide little comfort for the research community. They also challenge many of the commonly-held 'maxims' that have defined the commentary of belief system about the phenomenon:
    • There is no unifying theory—simply put, we don't have a common understanding of what corporate governance is or does
    • There is no coherent research agenda.
    • The rate of progress (of research) is perhaps best described as 'plodding'.
    • There seems to be a fundamental failure amongst researchers to understand the motivation of business.
    • While most researchers claim 'agency theory' is the dominant theory, the reality is quite different: Approximately 42% of the research is based on agency theory. The rest is fragmented across five or six other theoretical frameworks.
    • Only 21 of the 782 papers even attempted to attribute causality or approach the subject of prediction (that if boards do X, then the likelihood of performance outcomes is Y).
    Gosh, this is a real indictment. It's little wonder that boards are reluctant to admit researchers to boardrooms to undertake research. Researchers are producing outputs for sure, but the queue of companies and directors waiting to consume the findings because they are relevant is remarkably short.
    Lockhart's verbal summary was consistent with my own findings: that much of what business schools produce is of questionable value. If the research agenda is to be advanced in any meaningful way, then a whole new approach is not only warranted, it is crucial.
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    ICMLG'15: Voluntary disclosure

    Conferences Governance Performance
    Syelia Md Zaini, a researcher from Waikato University, presented an interesting paper on voluntary disclosure in developing Asian nations. Voluntary disclosure has been associated with increased market capitalisation and with the expectations of investors, yet the understanding of how voluntary disclosure works and why it might be important is fairly limited.
    Zaini's paper is a work-in-progress, part of her doctoral research. So far, she has analysed prior research to identify why companies have adopted voluntary disclosure practices. These include corporate governance requirements; peer pressure; and, accounting and auditing regulations. All of these drivers are compliance orientations: which suggests that voluntary disclosure may not be that voluntary! Zaini hopes to build on her current work, to answer the important 'so what' question. If she can achieve that, the answers could have quite meaningful implications for businesses motivated by growth. I look forward to reading her findings.
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    ICMLG'15: Opening Keynote

    Conferences Governance Language
    The 3rd International Conference on Management, Leadership and Governance got underway in Auckland New Zealand this morning, with a keynote presentation by Phil O'Reilly, CEO of BusinessNZ. BusinessNZ is the apex organisation that speaks for businesses and those in the private sector in particular. O'Reilly is also the Chair of Business and Industry Advisory Committee to the OECD and of International Labour Organisation a United Nations agency, so he has a strong global perspective.
    O'Reilly's topic was The Research Agenda in Business. He spoke passionately about the need for high quality research to inform the business community to bring rigour to the 'educated guesses' of many business owners and leaders. O'Reilly suggested that if researchers are to deliver 'value', research needs to be relevant. More specifically, he argued that business needs research that is:
    • Applied
    • Dynamic
    • Affecting growth
    • Strategic
    • Tactical
    • Pro-business
    O'Reilly had some interesting ideas including that profit, business and capitalism are not ends in themselves. Rather, they are means: the actual end being successful communities. This was a refreshing comment, because it demonstrated that business has a vital place in the wider social fabric (the community). However, the value of the contribution of business is dependent on high quality research, to help leaders move from educated guesses to robust applicable knowledge.
    The keynote set a strong tone for the conference ahead: that the academic–practice divide must be bridged, through relevant research that can be used by business leaders to grow strong, high-performance businesses.
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    What can we learn from the HSBC scandal?

    Accountability Governance Leadership Management
    News of the HSBC scandal has been plastered over major daily newspapers and news websites for several days now. Twitter and other social media platforms have been abuzz as well. That the leaders of an esteemed bank could have allowed such practices to occur is a travesty of leadership and good business practice. 
    In the years to come, the HSBC scandal will make a great case study for students of business and human behaviour. However, in the meantime, the compelling questions are of corporate governance and leadership. What has been going on at HSBC? Why has the group chairman at the time (Lord Green) now gone quiet? Was the board aware of the practices? If so, why did it allow them to occur? If not, why didn't the board know?
    Ignorance is an unacceptable defence. Nor is silence. When will shareholders and others in the marketplace call time on this type of behaviour? Thankfully, some commentators are looking to the future. Dina Medland's opinion piece hits the mark. It's all about accountability.
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    Who should control your business, and who actually does?

    Accountability Governance Management Performance Strategy
    Have you ever pondered the question of who actually controls your business on a day-to-day basis? Many chief executives have told me that they do. They say they have a large hand in the strategy; the culture; and, the policies and procedures, and that these things determine what the business is and what it does. But do they? Does this view match the reality?
    I've long held the view that businesses should be controlled by just two things. The first is strategy, the expression of how the overall objective of the business is to be achieved and against which all effort is aligned. In most businesses, strategy is expressed in commercial terms, based on whatever purpose the shareholders have laid out. The second controlling influence is the customer, or it should be. Customers are crucial because they "feed" the top line, without which the business has no future.
    The challenge for boards and chief executives is to ensure that all of the resources at their disposal (people, systems, product and service portfolio, finances) are aligned in pursuit of the agreed strategy. The benefits of doing so are almost self-evident, so much so that you would think all businesses would operate in this manner. But sadly, many don't.
    If you will allow me to relate an actual experience—one that probably happens more often than most chief executives and company directors realise. Recently, having opened a managed funds account with a large provider, my wife and I found ourselves with the frustrating problem of being forced to change the password to gain access to the on-line system. Here's the exchange with the financial services advisor:
    Me: We have discovered an annoying “feature” of the ABC programme: the “forced change” on user passwords. To be forced to change your password every few months is jolly annoying, to the point of arrogance on the part of ABC company. We are not forced to change our password with the bank. We can see no justification to impose such a regime on a look-only user account. Can you please talk to your people and get this setting changed. 
    Advisor: This is a feature determined by the provider of the on-line platform; and it is across all client accounts. ABC company has been approached on this several times but their IT security people are unable to make exceptions at the individual customer level.
    Another client logs in only rarely and has the same frustration. I suggested that I diarise to generate the account summary at around the same time it’s being system-generated, and email it through. What do you think of that as a work-around? I agree it’s irritating; I log in several times a day so the password refresh isn’t the same issue for me, as it is when you’re logging in maybe only every few weeks or in response to a system-generated prompt.
    M: Thank you for chasing our question through to an answer. It’s disappointing when “IT security people” get to drive the business and the customer experience eh! Your suggested work around is fine with us, on the proviso that it does not cause you any untoward extra work or hassle. One report per quarter will be fine. Is that OK?
    A: Hi, that sounds fine.
    FYI, I had the same thought about who drives the business: we have new printers with card swipes to unlock the print queue, for “security” and cost savings purposes, and also “print anywhere” capability. OK, I suppose, up to a point; but some IT person decided that the tray for standard white copy paper will be tray 3 (second-lowest) not tray 1 (highest, as it’s always been – and easiest to reach down to), and locked it into the printer in a way we can’t alter the settings locally. Letterhead and continuation paper (used in much lower quantities) are in trays 1 and 2, not trays 2 and 3 which would make more practical sense. So we are all (apart from the IT person, who thinks this is very orderly but who never uses our printer) inconvenienced both in terms of having to reach down all the time to replenish tray 3, but also having to go through and reconfigure many standard documents that will otherwise print on the wrong paper. I imagine that when the next printer comes along, there will be a new IT person and we’ll now be squatting down to replenish tray 4!
    The message is stark: that faceless people in back rooms often have more influence over business performance and perception than what executives and boards realise. They make decisions that seem reasonable. However, most of these decisions are made in isolation, without reference to customer or strategy. The consequences of decisions that detract from the customer experience and are inconsistent with the corporate strategy can be quite damaging. If customers start walking away, where does that leave the business?