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    On the role of the company secretary

    Accountability Decision Making Governance Performance
    This recently published summary of a meeting held to discuss the role of the company secretary caught my eye today. The company secretary has an important supporting role (preparing reports including compliance reports, recording minutes and managing the processes of the board) in most companies. However, some meeting participants appeared to suggest that a greater role was appropriate:
    The meeting followed the publication of ICSA’s report The Company Secretary: Building trust through governance, which found that company secretaries ‘make a significant contribution to board performance’, supporting ICSA’s wish to reinstate the legal requirement for all large private companies to have company secretaries. The topics that were discussed at the roundtable included governance, messaging, tone, teaching, acting as the ‘radar’ of a company and being the ‘bridge’ between the company and stakeholders.
    This conception is helpful, except that it perpetrates the widely-held view that corporate governance is a conformance activity. However, the responsibility to act in the best interests of the company in pursuit of shareholder wishes lies with the board. Thus, a conformance conception provides the wrong basis upon which to understand board and company secretarial contributions.
    Someone needs to have their finger on the pulse in terms of strategy, monitoring, process and shareholder communications. Ideally, these are tasks for the board as it discharges its duties. In those cases where the board is weak, aloof or less than fully engaged, these tasks tend to fall on the company secretary (or even the chief executive in some cases): the requisite processes and compliance tasks still need to be performed. Thus the thinking of many in the governance community including those cited in this report it would seem.
    An expanded conception of the company secretary role may remedy the symptoms (and serve the interests of company secretaries hoping to elevate themselves), but it does not address the root cause. The focus needs to be on the board, its roles and its contribution to business performance. Candid discussions around the board table and, potentially, with shareholders will probably be necessary. However, the benefits of resolving the board's role are likely to be many including that the company secretary would be released to perform their role as first conceived: to provide an outstanding administration and support service.
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    Getting over ourselves: a crucial competence for directors?

    Accountability Decision Making Governance Leadership Performance Research
    Board meetings are uncompromising places of work and decision-making. Not only are boards themselves inherently socially-dynamic (they are make up of people, after all!), but every situation is different and directors meet infrequently and they generally need to act on incomplete data.
    Consequently, decision-making effectiveness is largely dependent on directors working well together when the board is in session. However, that is much easier said than done. In fact, recent research suggests that we humans struggle to understand the minds of others, even though we think we are good at it. This renders group dynamics difficult, at best. 
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    One of the biggest barriers to understanding is egocentrism—we can't get over ourselves. We over-estimate knowledge and capability, including that of others to understand what we say or mean. The problem is exacerbated by the technological world of electronic mail (which strips out tone and meaning), and even more so the abbreviated 140-character world of Twitter and text messages.
    If directors are to make effective contributions in boardrooms they need to get over themselves. Older and more experienced directors are not exempt from this problem—they are just as prone to making assumptions as their younger or less experienced colleagues. 
    Techniques that might be helpful for directors wanting to make effective contributions include meeting together in social settings to learn more about each other; asking questions during board meetings with open hands and a humble spirit; careful (reflective) listening, to limit assumptions and check understanding; and, the demonstration of a collective empathy amongst directors. Perhaps it might even be helpful to appoint a psychologist onto the board! Please note this is not a categorical list—if you have evidence-based suggestions, please feel free to share them.
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    48 hours in (close to) paradise

    Accountability Decision Making Governance Leadership Performance Speaking Engagements Strategy
    When travelling, what's your favourite destination? Mine—from a work perspective anyway—is anywhere where board directors and executives who are eager to debate issues of boardroom practice and business performance. Since Tuesday evening, I have been in Dublin, Belfast and Dublin (again) doing exactly that—addressing groups of directors and answering questions. Matters of strategy in the boardroom; diversity; board structure; accountability; and, culture, amongst other topics, were discussed with vigour.
    To work with well over 70 directors and executives, all of whom were motivated by the discovery of board practices that might lead to improved business performance outcomes, has been wonderful. Thank you to the Ulster University Business School and the Irish Times Training for inviting me to visit the Emerald Isle to work with such influential people. That these busy directors and executives gave their time to debate important issues bodes well for the future performance of Irish businesses and social enterprises. I look forward to hearing great stories of success in the months to come!
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    Are the latest OECD #corpgov principles an opportunity lost?

    Accountability Decision Making Ethics Governance Leadership Performance
    Finance Ministers from the twenty most powerful trading nations, the G20, have endorsed a new set of corporate governance principles published by the OECD. The principles provide recommendations on matters including shareholder rights, executive remuneration, financial disclosure, the behaviour of institutional investors and how stock markets should function.
    The OECD principles have been promoted as contributing to more effective corporate governance. That sounds good—but what does 'effective corporate governance' mean and why might it be important? The OECD preamble offers this guidance:
    Good corporate governance is not an end in itself. It is a means to create market confidence and business integrity, which in turn is essential for companies that need access to equity capital for long term investment.  
    Wow, this suggests that corporate governance is a mechanism to protect investors and markets. The responsibility of the board for business performance is not mentioned—thus implying that  corporate governance is not a performance-based mechanism through which to pursue wealth creation. Rather it is positioned as a conformance tool to manage agency costs. What is the likelihood of boards spending time thinking about the purpose of the company, strategy or future performance if they are beholden to a set of conformance-oriented principles? 
    Sadly, it would be appear that these latest OECD principles represent an opportunity lost—for medium-sized and privately-held companies at least.
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    "Rise but seldom..."

    Accountability Governance Leadership Management Performance Societal Wellbeing
    In November 1787, George Washington offered this advice in a letter to his nephew Bushrod:
    “Rise but seldom—let this be on important matters—and then make yourself thoroughly acquainted with the subject. Never be agitated by more than a decent warmth, & offer your sentiments with modest diffidence—opinions thus given, are listened to with more attention than when delivered in a dictatorial stile. The latter, if attended to at all, although they may force conviction, is sure to convey disgust also.”
    What profound advice. Could it still be relevant in the always-on and rather selfish culture that has pervaded the twenty-first century? We live in a world infested by sound-bites in search of ears. Sadly, many offer little more than noise. The paucity of in-depth or critical thought is stark, yet we continue on—often blindly—in pursuit of change.
    If real progress is to be made to effect change, whether it be in the halls of power, boardrooms, executive suites or on the factory floor, might a 'rise but seldom' philosophy offer more hope than the prevailing sound-bite culture? On Washington's example, the answer could be 'yes'.
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    Cybersecurity: is it time for a Goldilocks conversation?

    Accountability Decision Making Governance Leadership Performance
    Cybersecurity is getting lots of airtime at present, often for all the wrong reasons. Reports of leaks, hacks, and data breaches pervade news sites on an almost daily basis it seems. Sadly, many news articles are sensationalist: but that is what sells the news, I guess.
    Many studies have been conducted to try to understand the problem—most of which seem to offer little when it comes to meaningful recommendations for directors seeking to mitigate business risk. Consequently, most studies and reports go in one ear and other the other.
    However, a recent study by the Ponemon Institute does make interesting reading (link here). The purpose of the study was to determine if boards of directors are a help or hindrance to creating a strong cybersecurity posture. Significant differences between how boards and IT security folk perceive risk (especially cybersecurity risk) were exposed. The technical people tend to talk it up (validly or otherwise), whereas directors typically consider cybersecurity as one risk amongst many others. That directors and technical people have quite different perceptions about cybersecurity is hardly a surprise. However, it does highlight an operational problem. The perception gap has the potential to see either too much or too little invested in appropriate risk mitigation measures. Either way, the impact on the overall performance of the business is likely to be significant. How might this be addressed?
    Perhaps the answer lies in a candid Goldilocks meeting, whereby directors, executives and IT security folk meet together (for as long as it takes), to discuss and reach agreement on two things:
    • Understand cybersecurity from a risk perspective
    • The nature of cybersecurity risk and how it might be addressed
    A Goldilocks meeting should have the effect of ensuring that the board is suitably informed about cybersecurity matters, and the IT security people should gain an appreciation of the balance of the risks the board needs to consider. An appropriate action plan, agreed between the parties and based on a common understanding, could ensue.
    To have the board, executives and technical people working together with an agreed purpose and outcome in mind, rather than talking past each other as is typical in many cases I have witnessed, might sound fanciful. However, it's bound to do wonders for morale and culture. Perhaps it might be the most beneficial outcome!