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    2014: A big year ahead...

    Conferences Phd Research
    The first couple of weeks of January are usually a fairly laid-back affair in New Zealand. As a population, we tend to 'get away' after the hustle and bustle of Christmas. We camp, we get out on the water, we hike, we read, and we share each other's company over food and drink. Corporate offices and factories are usually fairly quiet, with skeletal staff keeping things ticking over until things get underway again, usually in the second or third week or the year.

    One of my habits during the summer break is to think about the year ahead, to get a sense of where my priorities should lie. When I get back to my desk (6 January this year), I write my ideas down, make some choices and load important dates and deadlines into my diary.

    This year the decision process was easy: my doctorate is the priority. Here's a snapshot of how my year is shaping up at this stage:
    • January: write methodology chapter for thesis; quick personal visit to Sydney
    • February: write paper for British Academy of Management conference; continue boardroom observations; finalise methodology chapter
    • March: speak at International Conference on Management, Leadership and Governance (Babson, Mass); continue boardroom observations; commence analysis of data
    • April: update literature review chapter; continue boardroom observations; continue data analysis
    • May: final boardroom observation; continue data analysis
    • June: continue data analysis; second round CEO & Chair interviews; finalise literature review chapter
    • July: complete data analysis; write paper for European Conference on Management, Leadership and Governance; short winter break
    • August: thesis writing in earnest; think about conclusions
    • September: speak at British Academy of Management (Belfast, Northern Ireland); thesis writing; assemble first substantive draft of thesis
    • October: finalise first substantive draft for review by supervisors 
    • November: update thesis based on feedback from supervisors; speak at European Conference on Management, Leadership and Governance (Zagreb, Croatia)
    • December: complete final draft of thesis; submit thesis! 

    What does 2014 hold for you?
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    When opportunism is misguided, society suffers

    Many things have contributed to the United States becoming a great and influential nation over the last sixty years—the taking of risks foremost amongst them. However, the same opportunism that motivated Rosa Parks, JFK and Martin Luther King (and others) in the 1950s and 1960s has precipitated a litigious, mistrusting society in more recent times.

    Misguided opportunism, encouraged by a self-serving legal 'industry', has led to some crazy claims and quite outrageous reparations, the most recent of which is reported here. While safety is important, the imposition of huge payouts for what are, in effect, accidents is counterproductive. Enquiring minds and innovative dispositions—so necessary to the creation of new knowledge, the discovery of new technologies and, closer to home, the formation of strong and robust communities—are stifled when a legalistic, rules-based culture gains the upper hand.

    It's no wonder that America's claim of being the greatest nation on earth is under threat.
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    Gosh, is this a good governance practice?

    Governance Performance Societal Wellbeing
    Several months ago, Tony Marryatt left his job as CEO of Christchurch City Council, following a falling out with Mayor Bob Parker (now Sir Bob) and others. As part his severance deal, it appears that Marryatt agreed to resign also from the board of Civic Assurance (more correctly, of the parent, Local Government Insurance Corporation Limited), the Council's insurer (yes, that sounds like a conflict of interest to me as well). 

    Marryatt did fufill his commitment to resign from the LGIC board as required. However, he was reappointed immediately. Wow, this sounds like a highly unusual decision process, to say the least. Some serious questions need to be asked. Two that spring to mind are:
    • Why did Marryatt allow his name to be considered for reappointment, when many questions hung over his reputation and recent performance? (Marryatt's unhappy departure from the CEO role was not his first.)
    • Why did the LGIC appointment panel even consider Marryatt as a candidate, let alone immediately re-appoint him?

    The matter raises many more questions as well, mostly about the quality of governance practice and decision-making at LGIC. LGIC is owned by several local councils, a sector that has endured a few failures of governance in recent times. Transparency and accountability are crucial if the confidence of the public is to be maintained. Hopefully the LGIC board will put its collective ego (and political motivations?) to one side and commission an independent evaluation, of its appointment process and its overall performance. 
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    New Years Honours: where is the consistency?

    Governance Leadership Management Performance
    I'm confused. The New Years honours list has just been announced, and it appears some odd choices have been made. Two recipients of high honour are Dame Alison Paterson and Sir Robert (Bob) Parker, both of whom are well-known in governance circles. When one looks at the credentials of Dame Alison, it's easy to see why she was nominated and supported. However with Sir Bob, the picture is less clear.
    • Dame Alison has served as a company director and board chair for four decades. She was a pioneer in terms of female directors, and most of the companies she has been associated with have performed well. Dame Alison is widely respected.
    • Sir Bob is a well-known media personality and former mayor of Christchurch. While he was the 'face' of the Christchurch earthquake response, he has also been associated with several failures of governance, including a CEO pay debacle and the Council losing the right to issue building permits. His knighthood has polarised opinion.

    On the surface, one recipient has served consistently, with distinction, over a long period. In contrast, the other has been a mediocre contributor, save a high-profile media role following a natural disaster. The credibility of the honours system, particularly the bestowing of knighthoods, is dependent on the consistent application of demanding criteria, lest it be reduced to 'gongs for mates'. 

    Have I missed something, or are there a few inconsistencies in play this time around?
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    When are advisors deemed directors?

    Governance Management
    The matter of advisory boards has become topical in recent years, particularly amongst emerging companies seeking additional help. Advisory boards are established in many cases to provide advice and oversight on some sort of ongoing basis—the motivation being to access advice without forfeiting control or passing responsibility.

    However, vital differences between boards of directors and advisors to boards are not well understood, such that advisors may be deemed to be directors (or officers) anyway. Kevin McCaffrey made this point at a symposium earlier this month (see point #4). The matter has also been discussed on the Institute of Directors' discussion page on LinkedIn.

    As a further illustration, the Employment Relations Authority has reportedly imposed maximum penalties against a business owner and her advisor in relation to an employment matter. While this case appears to involve malpractice, it highlights the point of this post—that advisors can be (and increasingly are) deemed to be accountable in the eyes of the law.

    Caveat emptor.
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    Do you remember the Cadbury Report (1992)?

    Governance Leadership Management Performance Research Strategy
    Christmas 2013 is now history, which means 2014—and all the rituals associated with New Year—is nigh. For many people, the act of hanging a new calendar on the office wall in the last few days of December carries far more significance than simply closing off one year and opening the next. It stirs thoughts of the future, of what lies ahead, of one's dreams, hopes and aspirations. I am amongst those that think about the future and what lies ahead when the new calendar is hung. However, this year, I'd like to briefly look back before looking forward, lest an important anniversary in the world of corporate governance is overlooked.

    The Cadbury Report has just turned 21 years old. Do you remember the Cadbury Report and the recommendations it contained? The so-called Cadbury Report was actually the Report of the Committee on the Financial Aspects of Corporate Governance. An archive containing copies of Sir Adrian Cadbury's speeches, the report itself, and other related matters is now available online. The Report was commissioned following several scandals and company collapses, and the damage to investor confidence that ensued. It provided several recommendations to improve corporate governance. Amongst other items, these included:
    • that the roles of Chair and CEO be separated and held by two different people
    • that the majority of the board be outside directors
    • that an Audit committee, comprised of outside directors, be appointed

    The goal was to improve trust, transparency and performance. Subsequent to the Report, many companies have adopted the recommendations (motivated perhaps by the London Stock Exchanges "comply or explain" requirement), although not without resistance and reluctance in some quarters.

    The question to be asked on the occasion of the Report's 21st birthday is whether the recommendations have improved corporate governance and, perhaps more importantly, company performance. Sadly, the evidence is mixed, very mixed. History shows that the structural provisions, including those contained in the Cadbury Report, were insufficient to prevent the high-profile failures of the early 2000s (Enron, WorldCom, Tyco, et al), the global financial crisis of 2007–2008, and some more recent failures in New Zealand and elsewhere as well. But that should not be a surprise to anyone, because the purpose of rules and structures is to provide boundaries. Rules and structures cannot ensure or predict any level of future performance. The human condition; ethics; and, the propensity to act in good faith (or otherwise) need to be factored in, if a performance orientation is to be pursued.