Archive - Peter Crow | Helping boards govern with impact

Published on: 11 March 2014

Major health and safety reforms (for the better) ahead

The New Zealand government has just announced the introduction of new health and safety legislation. It requires companies to keep their employees safe or face some stiff penalties. While many boards and senior management teams display responsible attitudes towards the safety of their employees, some have been been quite cavalier in their approach. The reforms include making directors personally liable for breeches—the penalties being fines of up to $3m (companies) and $600,000 (individuals).

Some may see the proposal as being 'over the top'. However, it has been well signalled: new guidelines for directors were announced ten months ago, in May 2013. The proposal will be a helpful addition to the governance landscape if it drives directors towards taking greater responsibility for their decisions. Certainly, the move towards holding directors accountable for inaction will be welcomed by many.

Published on: 8 March 2014

On women in leadership, the glass ceiling and statistics

The glass ceiling seems to be alive and operating well in New Zealand—or so a reporter's interpretation of a recently published report by Grant Thornton would have us believe.

Whereas New Zealand was the first country in the world to embrace universal adult suffrage, it now ranks 15th in terms of the proportion of senior executive positions held by women (down from fourth a decade ago). The reporter seems to have used this statistic to make the glass ceiling claim. The Grant Thornton spokesman has made similar claims. However, when one reads the Grant Thornton report more carefully, the picture is actually somewhat different. The global average has also stalled. The proportion of women in senior executive positions jumped from 19% to 24% in the three years from 2004 to 2007 but has remained largely static since. (The New Zealand proportion is 31%.)

Rather than make speculative claims, of a glass ceiling, the discussion needs to centre on why the proportion has stalled. It could be that a quarter to a third is representative of the number of effective female leaders available to contribute. Or, it could be that more are willing, but they lack the expertise to be truly effective when measured against male counterparts. Or, it could be due to a myriad of other contributing factors. Whatever the reason, business and society would be well served by finding out. Notwithstanding this, simplistic approaches (like counting things) are unhelpful. They cannot produce anything more than correlations, statements of what 'is' and emotive claims. The problem is complex, so a different research approach is required to reveal the underlying mechanisms. However, such research is typically slow and demanding, as I've discovered in my own research work. In the meantime, reporters like Mr Foreman would be well served by taking a little more care in their reporting.

* For the record, I am a strong advocate of appointing the best and most capable person to any role, regardless of their gender or any other diversity variable.

Published on: 3 March 2014

Healthy team dynamics trumps individual performance

A new piece of research, about boards and performance, confirms what many people already know: the power of 'team' is more conducive to performance than individual brilliance is. You see it all the time in team sports. Whether it's the Seattle Seahawks, Sky Procycling or the All Blacks of New Zealand, the collective power of a cohesive team, working towards a single goal, is a much stronger proposition than a team of individuals, as brilliantly capable as some of the individuals may be.

Boards of directors are no different. Celebrity directors or notables with important political, investment or other business connections are no match for a cohesive board that works as one towards an agreed goal. Given the widespread knowledge of this principle, why do so many shareholders and activist investors continue to promote candidates that play as individuals the moment they enter the boardroom?

Published on: 1 March 2014

Qantas: a corporate tragedy, or a gross failure of governance?

What is happening at Qantas, Australia's once great national airline? While other airlines, including Air New Zealand, are performing well and generating solid returns, Qantas has fallen off its perch. Profits are down and jobs are being axed. Many commentators have published articles in the past few days about the impending demise of Qantas, including this one published in the Sydney Morning Herald. While claims of impending demise may be impetuous, a sorry pattern of neglect is apparent. The board of directors is nowhere to be seen.

The board has the delegation to oversee the performance of the company, in accordance with the shareholder's wishes. Yet the board has not been mentioned. It has remained remarkably silent. We don't know what its been doing. Have the directors been actively working in the back room, or have they fallen asleep at the wheel? Clearly a series of mis-steps and mishaps have beset Qantas and placed it on a downward trajectory. The job of the board is to respond. It is the board's job to set strategy, appoint a CEO to implement it and make adjustments when needed. Will CEO Alan Joyce (just 42 years old when appointed) and others be sacked? Maybe. Should they be? If Alan Joyce has failed to implement the approved strategy then possibly. However, if the board has not crafted an appropriate strategy, or if it has not made adjustments in response to unexpected situations and changing market dynamics, then the board itself is culpable.

Clearly, there are more moves to be played out yet, including the possibility of a bailout by the government (that happened to Air New Zealand—over a decade ago now). However, we need to hear from the board, to see some leadership in what is obviously a time of crisis. After all, the accountability buck stops there.

Published on: 27 February 2014

Advancing governance research beyond correlations

A couple of months ago, I was asked to consider submitting a paper to the British Academy of Management (BAM), for presentation at the annual conference (in Belfast, Northern Ireland this year). The BAM conference is attended by over 850 delegates, from academia and the working world. Once I got over the surprise of being asked to contribute to such an esteemed conference, the challenge of choosing a topic loomed large in my mind.

The topic I have selected plays to the foundation of my current research work: that of finding a way to move beyond the limitations of the research methods that have been favoured by many governance researchers. Researchers are really good at counting and measuring things, but the process of digging deeper, to explain why something is as it is (in my case, how boards influence company performance) has proved to be much harder. The aim of the paper I have written is two-fold:

Challenge the foundational assumptions and normative input-output approach that has dominated the much of governance research agenda
Suggest an alternative approach to governance research, to enable the researchers to move beyond correlations toward the postulation of credible explanations and theories

The paper was submitted last night. The ideas in it are somewhat contentious, so it will be interesting to see how the paper is received, and whether it is accepted on the programme. Please contact me if you'd like a sneak-peak at the abstract now, or to be sent a copy of the paper after it is presented.

Published on: 20 February 2014

My multifaceted week: the life of a governance researcher

Please excuse my silence over the last ten days or so. I have been concentrating on several important research tasks and some family matters, and this has precluded me writing any musings. To give you an idea, here's a list of some of my activities from the last week:

Prepared for and observed the February meeting of the Company Alpha(*) board, to collect more research data.
Prepared for the next observation of the Company Beta board, to occur in a few days' time.
Attended a PhD forum, a new initiative run by Massey University School of Management to bring its doctoral candidates together from the three campuses for support, encouragement and technical assistance with the process of research.
Reviewed feedback provided by my supervisors, of the first substantive draft of the research methodology chapter that I sent them a couple of weeks ago.
Continued the refinement process of the methodology chapter, ahead of reforming it into a standalone paper suitable for submission to the BAM conference.
Hosted guests visiting from Belgium. Our daughter's host parents from her twelve-month student exchange to Flanders are on holiday in New Zealand at present.
Drove our daughter and her gear to Massey University (90-100 minutes drive north of our home), to start her tertiary career. (She's enrolled in the Business Studies programme, and will be living on-campus in one of the hostels.)

I'm hoping things will settle down a little next week, so I can finalise the BAM paper; spend some more time on data analysis; start thinking about the slidedeck for my presentation to the International Conference on Management, Leadership and Governance in Boston, Mass. on 20–21 March; and, resume normal transmission on Musings.

(*) Companies Alpha and Beta are the two companies who have provided me with access to observe their boards in action and collect governance data. Both are quasi-public, high-growth organisations of substance domiciled in New Zealand. Anonymity is a condition of research so all other information that may enable the companies to be identified is withheld.

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