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  • Published on

    On redefining success

    Conferences Performance Readings Societal Wellbeing
    Periodically, the topic of success appears in my musings. As recently as yesterday for example, I wrote about core purpose and values—in tandem—as being crucial to achieving high performance and, by implication, success. But what is success? How do you define it?

    For eons, most Western cultures have defined success extrinsically—by what others have, what others think about us, or what we think others might think. Money and power are the benchmarks of success in any society founded on accumulation. You know the story: the more people have the more they want—all in the name of so-called success—and so the bandwagon rolls on.

    I have long thought that extrinsic ambition is hollow and fraught with danger, because the price one has to pay to be successful in monetary or power terms only spirals one way—upward and, inevitably, out of control. Thankfully, calls to redefine success are starting to emerge. I hope such calls are heeded, lest our society simply collapses around us. And we wouldn't want that, would we? 
  • Published on

    Nailing down core purpose...properly

    Governance Management Performance Readings Societal Wellbeing Strategy
    The core purpose of most organisations is to maximise its performance—whether it be a not-for-profit agency, a government department, a faith-based group, a health provider, a commercial enterprise, or any other organisation. The definition of performance differs from organisation to organisation differs, of course. NFPs measure performance in terms of services provided, whereas commercial enterprises generally measure performance in terms of wealth creation, for example.

    Notwithstanding this honourable goal of maximising performance, many organisations struggle to perform as they'd like. Often, regulatory frameworks and internal confusion (over purpose, strategy and operational priorities) divert attention and resources away from the "business" of the organisation. Why is this? I'd like to suggest that many organisations are not entirely clear about why they exist—even though they think they are.

    When I'm asked to help an organisation with its performance, one of the first things I ask about is core purpose. Sometimes a clear statement is provided, but only sometimes. More tellingly though, the underlying values and belief system—upon which behaviour is based—is generally not nailed down. Organisations are complex, socially dynamic entities, and even the best laid plans can be readily undermined by dissenting (and sometimes well meaning) individuals or groups. And therein lies a root cause. High performance is generally contingent on having a clear purpose and an agreed set of values to guide behaviour and decision-making. Just ask the CEO of any successful enterprise.
  • Published on

    On the aspirations of women in business

    Management Performance Research Societal Wellbeing
    The topic of gender diversity has been a popular theme in the popular press and academic literature in the last couple of years. Awareness groups have been formed to speak into the diversity debate, and to promote the interests of women in business. Research reports have identified a correlation between women and performance, in that the presence of women in Boardrooms and executive suites seems to enhance company performance. However, the research is not conclusive, and a sound causal explanation is yet to emerge.

    With all this interest and activity, you would think women would be actively pursuing executive positions, particularly the C-suite. I thought this as well—until I read McKinsey's report entitled Unlocking the full potential of women at work. The most intriguing insight was that, despite their career success, 59% of women said they did not aspire to the C-suite. The main reasons for the reluctance? Structural obstacles, lifestyle choices, and corporate politics in the C-suite. While the market seems to be keen to provide opportunities for women to participate in all levels of the business community (which I applaud), it seems that for some roles at least, women just aren't interested.
  • Published on

    On vision, core purpose and related matters

    Management Performance Research Strategy
    What role does "vision" have in the modern organisation? Is such a thing still relevant and, if so, who should "own" it? The question of vision has been a bit of a hobby-horse of mine for over a decade now, particularly when I've been asked to help with strategic planning. A discussion on the Institute of Directors group page over at LinkedIn brought the issue to the surface again this week.
     
    I must admit to being a doubter when the wave of books, seminars, consulting engagements promoting the vision and mission statements first flowed across the business community in the 1990s. While considerable money and effort was expended on the creation of some quite wonderful statements, many of which were printed and displayed for all to see, the gains in productivity and business performance were questionable in most cases.

    Vision is typically expressed as some aspirational sense of what an organisation seeks to achieve (a big goal, if you will). It addresses "what", a key question that all stakeholders need answered. But people don't get behind things or targets, they get behind causes. It should come as no surprise therefore that vision "leaks", and that staff are naturally sceptical, particularly when vision statements are too ambitious as many are. 

    Vision alone is not sufficient however. For sustained effort, people need to know "what" and "why". Core purpose is much better, because it addresses both questions. Core purpose incorporates the vision (what) and the underlying driver/cause (why). A good statement of core purpose is succinct, self-evident and realistic. It should be developed by the Board because, ultimately, the Board is responsible for the purpose of the organisation, on behalf of the shareholders. The core purpose should be owned by everyone. Notwithstanding this, the challenge of motivating the people and aligning their effort to move the organisation towards the core purpose is no easy task. I guess that's one reason why good CEOs are paid so much! 
  • Published on

    The Independent Chair: what is going on?

    Governance Performance Societal Wellbeing
    I'm a strong believer that function trumps form, especially in matters of governance. However, I maintain a close watch on trends in research and practice, because things can change, and one needs to maintain an open mind. A case in point is that of the Independent Chair, a trend that has been developing over the last decade or more (actually, since the 1992 Cadbury Report), which appears to have hit a speed bump recently.

    This week, an article published on the Pensions and Investments website reported that, in America, support for Independent Chairmen had declined in 2013, despite a "bumper crop of calls" for independent chairs. I was somewhat flummoxed by the information presented in the article. How can increased demand lead to fewer appointments? Is this a new trend, or just a one-off blip? Who is in control, or, more directly, who actually has the power?

    Corporate governance in America, as in other jurisdictions, appears to be awash with power games. Calls to separate the Chair and CEO roles appear to be founded on concerns that too much power is concentrated with one person. Yet that very power seems to hold sway. It's as if holding on to the 3P's (position, power, prestige) is more important than a fourth P—the one that actually matters —performance. When will Boards and shareholders wake up and act?
  • Published on

    Should non-executive directors own company shares?

    Governance Performance Research Strategy
    I've often pondered the question posed in the subject line—not only from a personal perspective, but also from an independence/critical thinking perspective. This is a vexed topic, because many owners wish to occupy a seat in the boardroom themselves, either to influence company growth and development (a healthy motivation), or simply to keep an eye on their asset (not so good).

    The key issues to be grappled with when considering the question are influence and independence. Will the holding of shares influence the director to make certain decisions differently than if they did not own shares? The owning of company shares (by directors) is probably advantageous to engagement and commitment—so long as independence in decision-making is preserved, and decisions are made in the best interests of the company. However, if the answer is "yes" or "maybe", then the best answer to the topic question is probably "no". Either the non-executive director should not own company shares, or if they wish to continue to own company shares, they should consider resigning their position.

    The reasoning for my conclusion is as follows. Directors are required to act in the best interests of the company (in New Zealand, at least). In so doing, a primary task of a director is to make decisions. If a director was to make a different decision based on their ownership of shares, then clearly their decision-making is influenced (and potentially conflicted) by that ownership. Arguably, they are no longer acting in the company's best interests, but those of the shareholder, of which they are one. In such cases, the director is no longer meeting the legislative requirement. I wonder how many directors, particularly of smaller companies, inadvertently find themselves in this position?