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    Qualities of directors and boardroom behaviours that actually make a difference

    Accountability Governance Leadership Performance Research
    Have shareholders worked out that the appointment of women to corporate boards per se is not a ticket to improved business performance? The challenge of lifting representation has been embraced by many groups across the Western World, including the 25 Percent Group. Yet the numbers are not stacking up in the way many had hoped. While some countries have implemented quota systems, conclusive evidence is yet to emerge to show that, by adding one or more women to a corporate board, business performance will increase.
    Diversity amongst directors makes sense, because a mix of backgrounds and experiences tends to produce a wider range of options for consideration. If the debate is healthy and vigorous, higher quality decisions can follow. However, women should not be appointed for political or social reasons. The conversation needs to move on, beyond simple numbers and the presence of absence of XX and XY chromosome pairs, or any other specialist technical skill for that matter. Physical attributes and technical skills are inputs (only), their presence does not produce results.
    Researchers and professional directors need to dug deeper, to discover the qualities and behaviours of directors that are likely to contribute to better outcomes. In other words, what directors do and how they think in boardrooms. If we can discover these qualities and the social interactions that flow from them(*), and nurture their expression in boardrooms, then increased business performance might not only be possible, but perhaps sustainable. The likelihood of a mix of male and female directors is pretty high as well, I would have thought.
    (*) This is the essence of my doctoral research. Details will emerge during 2015. Contact me if you want to be notified when papers and articles are available.
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    International Conference on Management, Leadership and Governance

    Conferences Governance Leadership Management Research
    Are you interested in the latest developments in management, leadership and corporate governance? If so, you might like to check out the 3rd International Conference on Management, Leadership and Governance being held in Auckland, New Zealand on Thu 12 Feb and Fri 13 Feb. Details are available here.
    The keynote speakers are:
    The two previous editions, in Bangkok and Boston, were great forums. Auckland will be no different: ideas will be shared, emergent research findings presented and new ways of improving business performance debated. In addition to the main conference topics, the following themes will be discussed during mini track sessions:
    • Pluralistic approaches to effective corporate governance research
    • The role of leadership in effective corporate governance
    • Research into cultural and gender leadership
    • Effective corporate governance
    • Effective leadership at different stages of organisational growth
    • The role of women in sustainability management
    As usual, summaries of each session will be posted here throughout the conference. Please let me know if a particular paper or conference track interests you and I will do my best to attend and report on it.
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    Corporate governance speaking tour: March 2015

    Conferences Governance Leadership Strategy
    My first scheduled trip to UK and Europe for 2015 is only a few weeks away now. The dates are 9 to 19 March. This trip includes speaking engagements, an annual conference and quite a few meetings; primarily on board and corporate governance topics. Here's a selection of the activities my programme:
    • Speaking at the "Inspiring Leaders Network" symposium in Leeds
    • Guest lecturer: Masters programme at Winchester University
    • Attending the ICSA annual conference in London
    • Meetings with a publisher, executives and researchers in London
    • Meetings with banking executives and academics in Zurich
    • Visit to Oxford (as a tourist!)
    The programme is nearly complete, but there is still some space for a few more meetings or a speaking engagement, in England or Europe. If you want to discuss some aspect of board practice or business strategy; learn about my latest research; or, if you would simply like to meet informally to discuss something else of interest to you, please contact me.
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    What should boards do about the emerging "Internet of things" trend?

    Leadership Strategy
    Boards need to get their heads around this development, and quickly, lest the companies they govern get overtaken as consumer preferences change. The pressing question is "how":
    • How should boards respond to this seemingly significant trend as they consider strategy and the future of the businesses they govern?
    The desire to connect everything to everything else, via the Internet, appears to be alive and well amongst some sectors of society. The name that's been given to the emerging trend is the "Internet of Things". Essentially, the concept is one whereby everyday devices have embedded computers and two-way Internet connectivity, thus enabling them to send and receive data. If this proposal gathers sufficient steam—certainly the term seems to be entering the mainstream of business consciousness if these Forbes and Guardian articles are any indication—uber-connectedness is likely to have a significant impact on businesses and business models and, consequently, the strategic choices that boards need to make.
    My suggestion: Find a business strategist with expertise in this area (not just a populist consultant or local self-styled "expert"), and a respected academic, and invite them to lead a discussion at your next board strategy day. If you need an independent facilitator, I'd be happy to help. Ask a few of your customers, suppliers and staff to join the conversation as well—their comments may surprise you!
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    Does NZX have a serious conflict of interest?

    Ethics Governance Performance
    Image description
    Reports have emerged that the company that operates the New Zealand stock exchange, NZX Limited, has initiated a review of its own operating policies and processes—with a particular focus on conflicts of interest (and perceived conflicts). The review is timely, because NZX seems to have begun operating beyond what might be considered reasonable for a market operator. 
    So, what's the problem? Let's start by looking at NZX itself. Here's how NZX describes its business activity:
    NZX builds and operates capital, risk and commodity markets and the infrastructure required to support them. We provide high quality information, data and tools to support business decision making. We aim to make a meaningful difference to wealth creation for our shareholders and the individuals, businesses and economies in which we operate.
    This seems reasonable. NZX owns infrastructure, operates markets (including regulation) and provides information. However, what is not stated is that NZX also runs a funds management business line. Therein lies the problem (or the perceived problem), because the funds management business invests in companies that are themselves listed on the exchange.
    If you'll allow a sporting analogy: NZX sets the rules, provides the playing field, referees the game and is a player as well. Player coaches are common in sport, but player/referees? 
    Some might respond by saying this is a great example of the capitalist system in operation. It might be. But I can't help but wonder whether NZX is operating right at the very edge of what might be considered to be ethically and morally reasonable. Consequently, I look forward to reading the results of the review.
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    What's actually more important: Longer-term value creation or shorter-term gains?

    Accountability Governance Leadership Performance
    Big box retailer, The Warehouse Group, is experiencing a bit of turbulence just now. The company has had a dream run over the past couple of decades. From its genesis as a single-store, The Warehouse Group has grown to become New Zealand's largest retailer. However, some tensions are starting to emerge. Some investors (actually, funds managers) are not happy.
    The company is currently rebuilding its business model to meet emerging customer and market demands. In 2011, the company embarked on a five-year 'turnaround' strategy under Group CEO Mark Powell. The strategy, which involves both acquisitions and a major refit programme in existing stores in order to provide enduring longer-term returns and capital growth, was approved by the board and it was well signalled to shareholders and the market. Yet some shareholders are making their expectations of ongoing share price growth and dividend returns quite clear.
    The emergent tension has the potential to be a major distraction for the board and management. Clearly there are two views on the table. The pressing priority for the company is that the shareholders, board and management are united in their pursuit of one agreed strategy. So, which view should prevail?
    I'd like to suggest that the longer-term view needs to prevail, because that's the agreed strategy and it's probably the option that better suits the best interests of the company. However, I am not a funds manager trying to eek the most out of my 'product', the investment in the business. Ultimately though, if they are not satisfied with the performance of the business, the funds managers have several choices available including these three (amongst others, no doubt):
    • Make representations to the board and ask the board to review the strategy
    • Seek to appoint new directors to represent their interests in the boardroom
    • Offer their holdings for sale and pursue their interests elsewhere
    What do you think is an appropriate course of action, and why?