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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.
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    Reading list: all queued up

    Readings
    I had a wonderful Christmas Day yesterday with my family: giving and receiving gifts, eating together, telling stories and relaxing. This year, I was blessed to receive three books (I'd sent some signals), and no e-anything!  I have come to really enjoy reading for pleasure in recent years, as a diversion from the copious volume of journal articles and books that I have to deal with for my research. The books I received as gifts are:
    • Victorian City by Judith Flanders
    • One Summer by Bill Bryson
    • The Men who United the States by Simon Winchester

    I am seriously tempted to start reading these straight away, but two books currently on loan from the local library need to take priority:
    • Cronkite by Douglas Brinkley
    • History Lessons by Jonathan Gifford

    In case you are wondering whether I am a glutton for punishment, I also have two books on order from Amazon:
    • Strategy: a History by Lawrence Freedman
    • The Equation That Couldn't Be Solved by Mario Livio

    Given the rate at which I read, these books are likely to keep me gainfully occupied well into Autumn! Do you read? If so, what titles are you currently enjoying?
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    Signing off for 2013...

    Phd Research Societal Wellbeing
    Unless something compelling occurs in the next few days, this blog entry is likely to be my last for 2013. Christmas is upon us, so it is time to pause.

    Christmas can mean different things to different people. For some, the deep spiritual significance of remembering the birth of Jesus is almost palpable. For others, Christmas is an opportunity to buy and give gifts, to eat and to catch up with family and friends. Yet others enjoy Christmas because it is "time off"—a holiday. However you spend Christmas this year, may it be a joyful time for you.

    Overall, I've had a good year. The opportunity to travel (to speak in Australia, Asia and Europe), to meet some wonderful people, and to spend time pondering some pretty tough questions to do with my research, has been amazing. While there have been several times during the year when I've felt becalmed, it's not until I've stopped in the last few days and looked back that I've realised just how far I've travelled. I hope it's the same for you as you take stock this Christmas season. Thank you for your support and encouragement throughout the year, I appreciate it.