Archive - Peter Crow | Helping boards govern with impact

Published on: 12 November 2014

ECMLG 2014: Welcome function tonight, sessions from Thursday morning

The 10th European Conference on Management Leadership and Governance starts tonight with a welcome function for delegates. This year the conference is being hosted by VERN' University, in Zagreb, Croatia. I am rested after the long flight from New Zealand via London, and am looking forward to hearing about the latest developments in management, leadership and corporate governance research over the next two days.

Please check back regularly if you are interested in the discussion. I will post session summaries here during the conference, and use the #ECMLG2014 hashtag on Twitter to announce new postings. The full conference programme is available here. If you are interested in a particular session, please let me know and I will do my best to attend and report on it for you.

Published on: 9 November 2014

Research update: a new dimension?

I've been deep in thought in recent days, lost in the depths of my research; trying to get to the bottom of something that has been troubling me—to the extent that I neglected to post a research update last week. Sorry! Thankfully, some clarity started to emerge in the last two or three days.

The concept that has been troubling me has been behaviour, or more specifically, the necessary behaviour of directors as they seek to make meaningful contributions to effective board practice and business performance. Several researchers—including, notably, Larcker and Tayan—have suggested that the behaviour of directors in the boardroom is crucial to the achievement of performance outcomes. Various attributes have been described. However, that is where the research seems to stop: at description. I'm still working through the literature, but am yet to find anything approaching a robust, explanatory argument.

The question that I've been pondering builds on this: Does a link exist between the social mechanisms that my research seems to suggest are important, and certain fundamental (personality level) behaviours of directors? Further, might the link be such that these crucial behaviours are yet another layer in the stratified view of reality that is emerging from my research? The tentative answers seem to be yes and yes. This is exciting because it could mean that a couple of disparate threads of corporate governance research can be brought together. However, I am not confident enough about this new dimension yet, to know whether it is credible or not. Notwithstanding this, if you have any experience, or can point to any research to guide me, I'm all ears.

Published on: 7 November 2014

What is the real purpose of business?

Does the question posed in the title of this musing have a straightforward, even profound‚ answer? I would have thought so. In fact, when I am asked this question—as happens on a fairly regular basis—my reply is that the purpose of business is to provide a return to the shareholders, whether by way of a dividend or a capital gain, or both. The shareholders own the asset (the business), so it seems fair that they receive a reward for making the asset available. I've thought this for the long time, on the basis that the shareholders are the ones that put up the money in the first place. Staff, suppliers and others receive payments for services rendered and products supplied at the time they are provided.

However, if companies become selfish and get too greedy, by trying to maximise profit at the expense of almost anything else, as some do, then cries of protest can be expected from some quarters. Do cry-ers have a point? Maybe, but not if they are promoting some form of social engineering, whereby profits are distributed to others beyond the shareholder base. Businesses exist for the purpose of making money for their shareholders. They are not social clubs for a wide group of so-called stakeholders. Others disagree, I know, but the purpose of a for-profit business is to make a profit! Otherwise, the business would be a not-for-profit agency.

It would seem to me that, in the context of an open market, those companies that achieve dominant positions are very good at what they do. Yet no business is exempt from the invisible hand. The self-regulating behaviour of the market described by Smith over 200 years ago remains in control. It will have an effect, perhaps sooner rather than later if boards and shareholders get too greedy with profit maximisation.

So, back to the question. What is the real purpose of any business? To make a profit for its shareholders, and those that do this well, in an ethical manner, can and should expect to operate successfully for many years.

Published on: 4 November 2014

European Conference on Management Leadership and Governance: Just around the corner

The 10th European Conference on Management Leadership and Governance (hashtag #ECMLG2014) is almost upon us. This year, the conference is being held in Zagreb, Croatia on 13–14 November. I have a session to chair and a paper to deliver. Also, I hope to renew some acquaintances and get some feedback on my latest research while there.

A copy of the full conference programme is available here. As with other conferences I have attended, I will post updates and reflections throughout the conference, right here on this blog. Please contact me if there is a paper that you are particularly interested in, so that I can attend and provide a report.

My journey from New Zealand to Croatia is via London, to attend some meetings (although I still have a few gaps, so please contact me if you wish to meet) and, hopefully, sneak another peak at the poppies at the Tower of London.

Published on: 2 November 2014

The Imposter Syndrome: Are you a director or a "director"?

Do you know the difference between a book and a "book"? Here's a clue. Books have substance, they are helpful and meaningful. In contrast, "books" are that in name only: testaments to the ego of the author or publisher whose name is printed on the spine. That is not to say that "books" are not popular: the distinction is one of value.

I had not given this distinction much thought before. However, having read Beam's article, I found myself pondering the question in the context of boards of directors. As with books and "books", the distinction between a director and a "director" is not initially obvious. "Directors" are quite likeable people. Many carry an aura of authority. However, the distinction—one of style over substance—becomes rather stark if you look more closely at some of the behaviours:

A propensity to 'collect' board appointments, and to volunteer one's status in an overt manner
A lack of commitment to invest time and energy to understand the business of the business, or to think critically about the issues raised in board papers so that meaningful questions can be asked in board meetings
A tendency towards highly vocal contributions during board meetings, or silence

Do you recognise these indicators in any of your colleagues or associates? Sadly, I suspect more directors than some would care to admit would fit in the "director" category, if they were honest with themselves. And what of yourself? Am I director or a "director"? The corollary is perhaps even more important: What, if anything, I am going to do about it? These are important questions for all of us to ponder.

Published on: 2 November 2014

Have you seen the poppies?

My wife and I had the opportunity to see the poppies at the Tower of London first-hand in early September, as the display commemorating the soldiers that paid the ultimate price in World War 1 was being prepared. This is what we saw:

As impressive as it was at the time, the display then is not a patch on the moat today, now that all 888,246 poppies have been "planted". The poppy had huge significance for the allied soldiers on the Western Front. It continues to be significant for their descendants. I am looking forward to visiting the commemoration again, on Monday 10 November—along with a great many others, I suspect.

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