An outstanding Editorial appeared in our local newspaper, the DominionPost, today. The editorial highlights the significant conflict of interest that exists when local government politicians are appointed to the boards of Council Controlled Organisations (CCOs). The appointment of local councillors—many of whom lack sound governance expertise, and all of whom are conflicted as the editorial argues—must stop. 

Councils and local communities would be far better off if independent directors were appointed to the boards of CCOs (and held accountable through normal shareholder and fiduciary processes). Independent, commercially astute directors would focus entirely on their role of acting in the best interests of, and maximising the performance of, the company. In so doing, the returns to shareholders would more than likely improve over what would otherwise be possible with a highly conflicted Board.

PS: I disagree with one sentence towards the end of the Editorial "...over time, superior systems will produce superior results." No. Governance is a complex and socially dynamic phenomenon. Over time, superior systems should produce superior results. 

A seemingly small—but ultimately quite significant—statement emerged from the corporate governance sector this week. The CEO of one of New Zealand's larger companies went on record when announcing the company's annual result. He stated that his directors must act in the best interests of the company (not the shareholder).

Meridian chief executive Mark Binns said the company would take time to evaluate the situation but would ultimately come to a decision that was in the best interests of Meridian Energy Limited. ''The obligations of the directors are very clearly set out in companies law and the Companies Act, that is to act in the best interests of the company.''

This was a refreshing statement, because most directors and executives (in New Zealand) incorrectly believe their role is to act in the best interests of the shareholder. Research conducted in 2010 by Dr James Lockhart indicated that the majority of directors in New Zealand simply do not understand their legal obligations. The New Zealand Company Act is quite clear: directors must act in the best interests of company. Well done, Mr Binns.

Calls for more women on boards have been coming thick and fast for a while now. Many proponents (here, here, here) are taking a stand, and the noise seems to be reaching a crescendo. The growing body of research that women make a difference is starting to look compelling. 

The presence of women on boards seems to be associated with many positive aspects of governance, particularly behavioural aspects, including:

• More civilised boardroom behaviours and conversation
• Better dynamics and interaction
• Increased attendance at meetings
• Improved corporate reputation

Women are also better at processing information. However, evidence relating to one metric—some would say the most important one—is still remarkably elusive. Does the presence of woman on company Boards lead to improved financial performance? Is there a causal link? Inferential associations have been made, but no solid evidence has been demonstrated yet. If a causal link does exist, we need to find it. We need to move beyond the emotion, rhetoric, quotas and sideshows, to solid evidence. Then we can move on.

New Zealand has a proud heritage of export-led growth. For over 100 years, the world has beaten a path to our door to buy our protein and fibre. Superficially, this has been great for the nation. Export sales from our large companies grew by 40% in the four years to 2011. Yet in the last 50 years, New Zealand's OECD ranking has plummeted—from the top-5 to well into the bottom third of the list. The trouble is that our large exporters sell low margin commodities. They contribute little to the economy in real terms. And export growth in the rest of the market is languishing at less than 2%. Clearly, our smaller, aspirational companies aren’t getting the traction they need to grow.

How should we respond to this? Do we accept our place in the world? Or should we make the changes necessary to punch above our weight as we have done so well in the past? The late Sir Paul Callaghan was right when he argued that diversification into high-value, high-margin businesses is crucial to our economic future.

The question in my mind, having read the 2012 Budget summary and subsequent comments from MEA, interest.co.nz and others is this: “What role should the government play (if any), to kick start this reinvention of New Zealand’s economy?”

Have you lost confidence in some of the leaders around you? You are not alone. Mike Figliuolo just hit the nail squarely on the head. Check this out:The Leadership model is broken.

• We are broken as leaders.
• We talk funny.
• So what's to fix?
• One person. The whole person.

Mike's thesis is as profound as it is pragmatic.

One of my core motivations for embarking on my doctoral research is a deep belief that a link exists between good company performance and the 'two socials'—social progress and societal wellbeing. If companies can find ways to sustain high levels of performance, then society will be better for it. Getting ahead is good, we have all heard and read messages extolling the virtue. However, many have interpreted 'getting ahead' as getting rich—presumably to enjoy life to the max, without necessarily sharing the gains with others. The saying "He who dies with the most toys wins" comes to mind. This troubles me.

My faith in business leaders to do the right thing was restored somewhat this week however, when I read this article. With references to other studies, including a very good report published by Forbes, the authors suggest that mucking in and helping others is going mainstream. Leaders of successful businesses seem to be moving beyond selfish financial goals and beyond handing out cash, to helping out. This is inspiring stuff, and it should give us all hope. But more than that, it is a call to action. We all have a role to play—some as thinkers and 'thought' leaders, others as implementers and 'do' leaders. What role will you play?