Governance, by looking backward - Peter Crow | Helping boards govern with impact

The NACD's annual missive, of the burning issues likely to light up the corporate governance firmament in 2014, has just been published. The article, which claims to provide a comprehensive assessment of what's on the board director's horizon, makes interesting reading—as much for its omissions as its inclusions. Sadly, the reportedly burning issues, which were "gleaned from interviews with directors and corporate governance leaders", are historical, defensive or operational in nature.

I have no doubt the reported issues are the ones that were on the top of director's minds when they were interviewed. They are important, and need to be dealt with. However, the omission of issues that can make a difference to company performance is very revealing. Boards are responsible for optimising company performance in accordance with the shareholder's wishes. If the published list is any indicator, few boards will spend much time actually looking ahead in 2014 to issues that matter, like strategy, boardroom performance and accountability.

The question that drops out of this discussion is a tough one: Why do shareholders continue to appoint directors and accept boards that spend the bulk of their time looking backward?

3 Comments

Shaun Coffey - 1 week ago

Peter, thus is an excellent piece. Boards do need to get on the front foot, especially with strategy and edition. Annual strategy discussions are a thing of the past. They also need to be far more aware of trends and challenging management to respond in a more timely manner. Your challenge is a good one.

Peter Crow - 1 week ago

Thank you Shaun. From boardroom observations I have done over th last twelve months (data collection for my PhD), I am of the view that strategy needs to feature on the agenda every meeting (through the consideration and on-going assessment of strategic options, leading to decisions). A couple of "strategy only" days per year, where the only agenda item is to consider the trends, the market and the company's response is also helpful. Such days should include the board, management, and selected customer and market experts (to inform the discussion).

This will mean a greater level of engagement by directors though, such that that may only have sufficient time to sit one two or three boards at any given time.

Peter. I totally concur with your comment on strategy. I frustration too, as a CEO experienced in the NZ scene, is the penchant to have monthly meetings, especially for Crown Entities. This tends to focus attention on the monthly accounts, becomes operational, and discourages attention to future strategy and trends.