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    Paper accepted for international conference

    Conferences Governance Phd Research
    I'm both thrilled and humbled by some news that arrived overnight. A paper that I prepared some time ago, The crucial importance of access to the advancement of governance research (read abstract), has passed through the double-blind review process and been accepted onto the programme of the 10th European Conference on Management, Leadership and Governance (ECMLG)! The conference is being held at VERN', in Zagreb, Croatia, in November.

    The paper discusses the difficulties that governance researchers face when their research is limited to the analysis of secondary data—typically interviews, surveys and questionnaires. It suggests that if researchers study what boards actually do, by observing board meetings directly, then it should be possible to learn enough to provide an explanation of how boards influence company performance outcomes (or not). The paper also includes some preliminary insights, which emerged from a series of boardroom observations conducted as part of my doctoral research. It will be interesting to see how this paper is received. Hopefully, it will give folk the confidence to press on and try different approaches to corporate governance research, to discover if and how boards create value, or whether they simply impose cost.

    The full paper will be available on the Research page immediately after it is presented at the conference.
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    Amendments to the Companies Act 1993: How will they affect you?

    Governance
    An important new piece of legislation--the Companies and Limited Partnerships Amendment bill—has just had its third reading in the New Zealand Parliament. It has been designed to hold directors that operate at or beyond the edges of moral and legal acceptability more directly accountable for their actions. The Bill affects the Companies Act 1993 and the Limited Partnerships Act 2008. Amongst the provisions, companies will be required to have at least one New Zealand-resident director, directors of limited partnerships will need to provide some personal information, and new offences for directors who act dishonestly or in bad faith will be created. 

    Law firms MinterEllison and Bell Gully have published a helpful summary of the amendments on their respective websites (here and here). The Institute of Directors in New Zealand will probably provide some information to its members nearer the time the Bill comes into force. Directors, investors and other affected parties should become familiar with the amendments, even though most local companies and directors are unlikely to be directly affected by them. If you have any concerns, seek legal advice. 
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    New job requirement: Ability to read a crystal ball

    Governance Leadership Performance
    Have you seen the new governance code that in being introduced in the UK later this year? It contains many good elements, and one that is quite scary. The new code will require (figuratively) directors to add a new line-item to their competencies: reading crystal balls. The new code seems to place a duty on directors to predict how long their company will remain viable. The so-called viability test is a big development, and one that may see directors running to check their insurances. While New Zealand and other jurisdictions utilise a solvency test (that directors do not trade recklessly and do not knowingly allow the company to trade while insolvent), this new development lifts director responsibility and accountability to a new level. 

    Directors of businesses that operate near the edges of moral, ethical and legal acceptability should be concerned, and rightly so. It will be very interesting to see how this development shakes out, and whether the boards of well-run companies have anything to be concerned about or not. What is your view?
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    Boardroom decisions: The crucial importance of context

    Governance Leadership Management Performance Strategy
    Things are looking rosy for the New Zealand economy—rosy enough that Paul Bloxham, Chief Economist at HSBC, reckons "New Zealand will be the rock star economy of 2014". An important driver appears to be continued strong demand for New Zealand's dairy and meat products, particularly from Asia where the move to protein-based consumption continues unabated—which reminded me of a speech that I heard eight to ten years ago, delivered by the then Chief Economist of Westpac Bank. The suggestion was that Chinese demand for coal and steel would wane, as massive infrastructure projects were completed. Demand would then shift to food, to feed the growing middle class. The corollary was that New Zealand could look forward to long-term demand for its primary exports, and the resultant economic growth from a steady stream of export receipts. The chickens seem to be coming home to roost.

    This seems to be good news, so what should corporate boards do with it, if anything? Should boards move quickly to capture "their share" of what is obviously a growing international pie? Should more capital be applied to drive expansion into new areas, or should companies stick to their knitting? These are important questions. In the last seven days, I have been party to discussions with two successful companies that are seriously considering international expansion, to become exporters of services to Asia on the back on high primary sector demand. My initial response was to suggest several questions that their boards should ask and answer before any decisions are made:
    • What is the actual opportunity?
    • How does it fit with our current strategy?
    • What do we know about the off-shore market that the locals don't?
    • How transferrable is our capability? 
    • What will the impact be on our established business? 
    • How will it fit with the wishes of our shareholders?

    The pursuit of opportunistic growth is often exciting. However, it is rarely sustainable. Boards need to stand back and look at the big picture—to understand the context within which they operate, check their strategy and understand how the so-called opportunity fits—before making any significant decisions. The pathway of history is littered with stories of companies—including some large, well-resourced ones—that have tried and failed to become exporters on the coattails of growth in another sector. However, if boards are adequately informed before they make important decisions about strategy and the application of capital, they stand a much greater chance of success. Growth opportunities abound, but context is crucial.
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    The crucial importance of providing great customer service

    Governance Leadership Management Performance
    I want to tell you a short story, to demonstrate the crucial importance of providing great customer service, and reflect on implications for boards of directors. In mid-May, a small but important part of my website stopped working—the Twitter counter. This counter reports how many people have tweeted or retweeted links to any given blog post. It is a very useful indicator of whether a posting is of interest or not. I reported the issue to the website people. They quickly admitted there was a problem; told me that others had reported the problem; and, said they were working on a resolution. However, they kept my expectations in check by saying that they did not have an expected resolution date. All good so far. A few days later, a 20-second survey form arrived, asking for feedback on the customer service provided to date. I happily provided a positive response. Yesterday, another note arrived—this time to advise that the engineering team thought they had fixed the problem and could I please check my website. So, I checked and provided the requested feedback. Hopefully the problem is now fixed, and the update to the software will be deployed soon.

    While we don't like things to break, sometimes they do. Given this, it's the putting right that counts. This is what I learnt about "the putting right" that counted from this experience:
    • If there is a problem, admit it straight away
    • Commit to finding a remedy, but be realistic about when and how that might occur
    • Keep the customer informed of developments as they occur
    • Ask for further feedback or information
    • Tell the customer when the problem is resolved

    There is a profound message here for boards of directors. It concerns communications. People talk. They tell their friends and colleagues about their experiences—good and bad—in ways that can't be controlled. Boards are somewhat aloof from the day-by-day activities of the companies they govern, yet the effect of poor customer service has the potential to directly ruin the board's day. However, if boards put effective reporting measures in place and ask appropriate probing questions, the chance of being blindsided by unforeseen problems is greatly reduced. Effective leadership and a healthy culture from the boardroom out through the organisation are crucial. Boards that do the hard yards in the boardroom should see the fruits of their labours become apparent—on the bottom line—soon enough.
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    ICMLG 2015 to be hosted in Auckland, New Zealand

    Conferences Governance Leadership Management Phd Research
    The 3rd International Conference on Management, Leadership and Governance (ICMLG) will be held in Auckland, New Zealand on 12–13 February 2015. This conference attracts leading thinkers from around the world. It is a significant opportunity to share research findings; debate emerging ideas on leadership, governance and strategic and operational management; contribute to the body of knowledge; and, importantly, meet some great people! In case you are wondering, the conference is designed for scholars and practitioners with an interest in these important topics.

    The call for papers has just been issued. I commend this conference to you, particularly if you undertake academic or commercial research, or if you are a doctoral candidate. I have delivered papers at the two previous conferences (click here and scroll down for details), and will be chairing a minitrack in Auckland.