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    Women on boards: more rhetoric

    Governance Leadership Performance Research
    The board and business performance discourse has been maturing over the twelve months or so: beyond various "blunt stick" theses that link certain structural and composition attributes of boards with improved business performance (women, board size, independent directors, CEO duality, et al), towards more general (and more subtle and far more complex) notions of diversity, behaviour and interactions in the boardroom. The maturing that has started to occur is welcome. Most of the time, when we don't understand something, we start by investigating the obvious (what we can see). Then, if answers are not forthcoming, we dig deeper. The maturing that I referred to in the opening sentence is the start of the digging deeper phase.
    The discourse has evolved in recent months, as people have begun to realise that answers to social problems rarely involve inanimate constructs like percentages. However, the conversation took an unexpected turn this week, with the publication of this well-written article in the Washington Post. It picked up one of the blunt sticks that I thought had been put down. The rhetoric is laudable, and it may well sell newspapers, but the argument is somewhat misguided.
    McGregor and Schulte's article starts by commenting on the percentage of US board seats occupied by women: 19.2 percent. So far so good. It's only when you read the article for a second or third time that the underlying (and unstated) thesis—that more women on corporate boards is good—becomes apparent. It may be, but I doubt that the presence of women in boardrooms per se is the answer to the question of how boards can or should influence business performance. Rather, women are far more likely to be a proxy for another underlying quality or social mechanism that cannot be spontaneously observed. A diversity of opinion and life experience, to enhance boardroom debates, is one likely possibility. However, we don't know that yet.
    More research is needed, including longitudinal studies of what actually occurs in boardrooms (silent observation), to identify the underlying qualities of directors, social mechanisms and tasks completed by boards that, importantly, actually make a difference to business performance in certain circumstances. Then, and probably only then, will the rhetoric start to gain substance amongst directors and the wider community. In the meantime, articles like those written by McGregor and Schulte need to be consigned to the cutting room floor, so that there is plenty of space available for articles that dig deeper.
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    Boards and accountability: honoured to have article published

    Accountability Governance Leadership Management Research
    Several of the articles from the winter edition of Ethical Boardroom are now available online, including the one that the editorial board asked me to write, on accountability in the boardroom. Here's a snippet:
    The role of the director bears a weighty responsibility, so directors need to take their appointments, and the accountability that goes with such appointments, seriously. Most do, but some, clearly, flout the boundaries of moral, ethical, and in some cases, legal acceptability. Directors need to be beyond reproach. Clear demarcations of what is acceptable – and what is not – need to be established. This may mean that the curious propensity to collect directorships, as some badge of honour it would seem, needs to be called into question by shareholders and by the profession’s body. That directors with six or more appointments have any hope of providing any more than a cursory contribution is beyond us. The challenge, of course, is holding directors to account for this level of performance, among peers, in the public domain and through any legal processes that may be required.
    Click here to read the full article. Thank you to the editors for the opportunity to make a contribution. I hope it stimulates some debate and, in some small way, advances the understanding of how boards can and should contribute to business success. If you have any feedback, or would like to explore the issues raised in the article, please contact me.
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    That composition will be the #corpgov story of 2015: Really?

    Governance Leadership Performance Research
    Sorry folks, but I have just seen red. Rich Fields, a correspondent at Tapestry Networks, has just proclaimed that board composition will be the big corporate governance story in 2015. I'm surprised, really surprised. 
    For well over a decade now, the academic and practitioner communities have been exploring a wide range of board structure and composition options, in search of a causal link with business performance. Many attributes of boards and directors have been investigated including gender; CEO duality; independent director; board size; and, diversity, amongst others. Positive, neutral and negative associations have been reported in the research. Earlier this week, I wrote a thought piece on independent directors, and offered the following conclusion:
    A variety of conclusions are apparent in the research. Cause has not been established. It's a bit like saying that female directors cause companies to perform better. Increasingly, people are realising that board performance is more likely to be contingent on what directors do in certain situations than on who they are or any specific board structure or composition. Like gender, the independence attribute is likely to be a proxy for something else. We need to discover what that might be, so it can be used to qualify the suitability of director candidates and inform board performance assessments.
    Respectfully, I suggest Mr Fields needs to think a little harder about what is known already and what is yet to be discovered. Aspects of composition may be topical, but to suggest that board composition will be the hot topic is rather myopic. We need to move on, and turn over some other rocks, elsewhere.
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    London and Europe, in early Spring

    Governance Leadership Performance Strategy
    I am sitting the United Lounge, in the new Queen's Terminal at Heathrow, awaiting the departure of my flight home after a very productive trip to England and Europe. In the last ten days, I have been fortunate enough to speak at the European Conference on Management, Leadership and Governance in Zagreb; refine aspects of the doctoral thesis; meet with executives from the US and UK to discuss board practice matters; discuss research opportunities with UK-based researchers; and, catch up with some research colleagues and make some new acquaintances. To top it off, I attended a Holy Communion Service at St. Paul's in London and was taken on a most wonderful tour of Winchester (the ancient capital of England), including the Cathedral where the da Vinci Code movie was filmed. While trips away can be physically and mentally demanding, and I am looking forward to returning home, my mind is thinking ahead to the next trip, such is the wealth of opportunity that presented itself over the last ten days. Here's a small selection:
    • I have been asked to address a class of Masters-level students at the University of Winchester.
    • A confidential recruiter has begun exploring the possibility of an appointment to a UK-based board.
    • An opportunity to collaborate on a research project, to explore the leadership–board nexus in multi-national companies has emerged.
    • I have been asked to make two presentations, to a board and to an executive team (two different companies), on the topic of strategy in the boardroom. 
    As a result of these opportunities (and a couple of others that I'm not at liberty to mention), I plan to return to the UK and Europe in the early Spring (probably in mid-March), hopefully with my freshly minted doctorate in hand. I expect to be based in London, and may stop over on the East Coast of the USA en route.
    If you would like to explore aspects of strategy in the boardroom, board practice or business performance; or to arrange a meeting or a presentation, please contact me directly. I can travel to any major centre in the UK, or in Western or Central Europe, if required. I look forward to hearing from you.
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    ECMLG2014: Boards need to start valuing information as an asset

    Conferences Governance Leadership Research
    Nina Evans, of University of South Australia, presented an interesting paper on the importance of information as an asset to business. In so doing, she commented on the difficulties that managers often have in justifying the effective management of information assets.
    Information assets are intangible resources used in business including all tacit and explicit knowledge and information that is generated by, held by and used by the business. Information assets can be stored in a plethora of forms including in a person's mind; in hard or electronic format; and, on computers or in libraries. They are one of just four classes of asset (and therefore, levers) that managers have available to drive business performance (physical assets, information assets, human assets (people) and financial assets).
    Evans suggested that if information assets are managed well, then operating costs can be significantly reduced, and business credibility can be increased. However, many managers treat information assets as being within the domain of the information technology department of businesses, and technical people often like to 'control' access. Further, while executive managers and boards often ask about the status of the other asset classes, they rarely enquire about the status of the information assets of the business. She went on to suggest that several barriers exist:
    • Lack of awareness of the value that information assets can deliver
    • Poor enabling systems
    • That information assets are highly contextual—that a piece of information might have high value today but low value tomorrow
    • Poor management and communication capability within the technology teams (particularly the CIO), to demonstrate how the effective management of information assets can enhance the achievement of business strategy and company performance
    Evans closed by sharing the results of some preliminary quantitative analysis work. She said that companies that manage their information assets well stand to gain at least $20,000 per employee per year in direct operating benefit. This means that a 1000-person company can expect to add at least $20,000,000 per annum to its bottom line, if the information assets are managed well. If this is correct, this is huge! Nina Evans and I had a preliminary conversation after her talk. It would appear that a collaborative project, to combine Evan's work with my board performance research, may well generate some useful guidance for boards and executives in the future. Watch this space!
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    ECMLG2014: The importance of values to performance (day 2 keynote)

    Conferences Governance Leadership Management Performance Research
    Jadranka Ivankovic, a Croatian businesswoman and VERN' University scholar, opened the second day of ECMLG 2014 with an important message: that values, and a strong values-set, are often the difference between success and failure in business.
    Speaking from an informed point of view (as a member of the Management Board of Podravka, a food manufacturing company), Ivankovic provided a timely reminder that the best strategy and management systems alone provide no guarantee of business success. Rather, successful business performance requires hard (management: plans, systems, actions, results) and soft (leadership: attitudes, values, culture, behaviours) expertise, at least.
    Ivankovic outlined how Podravka went through the process of creating, adopting and embedding a set of values in the very heart of the company. Something like 500 of the 5000 staff were directly involved, in focus groups; in informal discussions; in presentations and in communicating and championing the adopted values once they were agreed by the board. She suggested that the most successful companies are values-driven, and that if a company truly values its values set, there is actually only one boss: the values!
    While Ivankovic's message was not ground-breaking per se, it provided a timely reminder that businesses are actually constructions of people, and that without committed people, aligned to a common way of thinking, behaving and acting, then business success can be only but a dream.