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    ECMLG2014: Perceptions of board effectiveness and influence on performance

    Conferences Governance Management Performance Research
    Denis Mowbray (New Zealand) reported the results of his research into perceptions of the board's effectiveness and its influence on organisational performance. He surveyed the directors and executives, and analysed the financial performance, of publicly-listed companies in Australia and New Zealand; and he analysed the data using something called fuzzy-set qualitative comparative analysis (fsQCA). This tool is useful for understanding the influence of particular variables and attributes being investigated.
    Mowbray's noted—correctly—that because boards are constructions of people and that effectiveness is likely to be dependent on how well directors and managers work together. Important elements appear to include intellectual capital, team effectiveness, knowledge sourcing and the leader-manager exchange. However, there is a distinct lack of evidence supporting how boards exert influence, even though effectiveness appears to be dependent on the board exercising control and service tasks. High levels of synergy, trust and confidence—between the board and the managers—also appear to be important. Notwithstanding these observations, the perception of the board's effectiveness appears to be related, in some way, on the current performance of the company being governed:
    • When company performance is high, the perception of the board's view of its own effectiveness and of the manager's view of the board's effectiveness is closely aligned
    • when company performance is low, the perception of the board's view of its own effectiveness and the manager's view of the board's effectiveness is poorly aligned
    Mowbray's insight was interesting, in that it identified an interesting disparity between the board's perception of its own effectiveness, and the executive's perception of board effectiveness, when company performance is poor. However, while some contributing factors were identified, no suggestions as to why the disparate views exist were proffered. The subject of Mowbray's work is important to our understanding of how boards contribute. I hope he and others pick up on the good start made by this paper, because we need to understand how if and how boards can actually influence the achievement of company performance outcomes.
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    ECMLG2014: Opening Keynote

    Zelijko Trezner, a leading tourism expert and part-time academic at VERN' University of Applied Sciences, opened the conference by exploring management, leadership and governance in the context of tourism. The area of tourism is rapidly growing (estimates suggest there will be 1.8B tourist arrivals globally per annum by 2030) and changing. The expectations are moving from sight, touch and smell, to 'experience'. The trend is towards specialisation and hyper-segmentation, to offer something different and specific to every tourist: the market of one is nigh.
    The democratisation of information, expedited by the Internet, means tourist and tourism expectations are changing. The primary emerging needs are social—including exploration; change; entertainment; success; love; and, social conformism. To be successful in these regards, the emphasis needs to move from 'physical' sights to 'stories' and 'experiences'. Increasingly, tourists are expecting to engage. What are the implications for managers, leaders and governors? Those with influence need to embrace the following dimensions:
    • To move from standardised systems and processes, to flexible engagement
    • To embrace 'co-creation', an interaction between tourism designers and tourists to craft meaningful experiences
    • To move from seeing things (in a packaged way) to sharing ideas and stories (to learning together)
    Trezner, in effect, was saying the the 'control' needs to move, from the operator to the tourist themselves. A different level of consciousness is required, whereby tourists, operators and decision-makers influence each other on all sorts of levels: Trezner called this transmodernism. 
    Trezner's talk provided a great foundation for the conference because it gave delegates much to ponder.
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    ECMLG 2014: Welcome function tonight, sessions from Thursday morning

    Conferences Governance Leadership Management Phd Research
    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.
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    Research update: a new dimension?

    Governance Performance Phd Research Research Update
    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.
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    What is the real purpose of business?

    Governance Management Performance Research Societal Wellbeing
    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.
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    European Conference on Management Leadership and Governance: Just around the corner

    Conferences Governance Phd Research
    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.