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    Gender reporting...coming to a company near you

    Governance Management
    The New Zealand Stock Exchange has just decided to implement a gender diversity reporting rule for all publicly listed companies. The NZX announcement has been reported in several business papers today including NZHerald and DominionPost. The decision requires companies to report the gender composition of their board and senior executive and, subject to FMA approval, will become effective on 31 December 2012.

    Gender reporting is a good move in my opinion—albeit a very small one because companies already report the names of their directors in their annual reports. A reporting system is a far better option than a quota system. Quota systems run the very real risk of tokenism and making-up-the-numbers, neither of which contribute to effective governance. In contrast, a reporting system will simply make the composition of boards plain. I'm hoping it will improve governance effectiveness and ultimately company performance. Time will tell.

    No doubt the move will also provide a platform for lobby groups to exert pressure where they see fit. It will be interesting to see what develops in the 2013 reporting season and beyond!

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    Diversification: a dicey move?

    Governance Management Research

    Why do seemingly successful companies choose to diversify and, in doing so, put their future success at serious risk? The latest is a long line of companies to expand their reach is Dell. This week, with their acquisition of Quest Software, Dell made the move from being a hardware company (they make computer systems), to being a hardware and software company.

    On the surface, this looks like a good move. But when one looks at history, I'm not so sure. The sustaining of high performance over time is hard. When Zook and Rogers surveyed 2000 companies, they found just 10% sustained profitable growth continuously through the first decade of the new millennium. That's right, just 10%. They identified three characteristics that were common to the successful companies. Profitable companies reduced the scope of their business (Dell has just expanded theirs); they looked for profitable opportunities within their core business boundaries; and, they set high performance targets. So, with this insight, why would any company complicate its business as Dell has just chosen to do? 

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    What's your risk attitude?

    Accountability Governance Management Risk Societal Wellbeing

    What's your attitude towards risk? Are you a pragmatist, a conservator, a maximiser or, are you a manager?

    When I was young I used to ride motorbikes on the farm—fast, sans helmet and often in light clothing. It was the normal thing to do in the seventies. I also did many other things that, looking back, could easily be described as "risky" in today's terms. My risk appetite was high (and to be truthful, I probably didn't even think about it at the time). Now, forty years on, our children have grown and all but left home. I've gathered a wealth of life experiences. Unsurprisingly, my appetite for risk—as a father, husband and as a business professional—has changed. In some areas, I take fewer risks than before. In others, more.

    Understanding our attitude towards risk in the business world is as crucial as it is in our personal lives. There's a great article over at the HBR Blog Network that puts it all in perspective—particularly our response in different market conditions and the downstream consequences that follow. I commend it to you over coffee today!