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    Want to learn about emerging corporate governance and board practice themes?

    Conferences Governance Leadership Performance Speaking Engagements
    Is effective corporate governance and board practice, in pursuit of high business performance, an important priority for you and your colleagues? If so, please read on. 
    From 1 September, I will be meeting with directors, executives and researchers in several UK cities (London, Wolverhampton, Leeds, Dublin, Belfast and Canterbury) to discuss the role of the board in influencing business performance. While the schedule for my eleven-day visit is fairly full, some gaps remain for additional meetings. Please get in touch if you wish to meet or have a private chat. Alternatively, you may wish to introduce yourself at one of these public events:
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    Health sector seminar: Board governance, a reality check

    Decision Making Ethics Governance Leadership Societal Wellbeing Strategy
    Every day, around the world, leaders in the health sector face a formidable challenge. On one hand, insatiable demands press in as people expect physical and mental health (foundational to our well-being). On the other, resources are limited—providers simply can't do everything. Consequently, tough choices need to be made, to ensure the appropriate services are delivered, efficiently and effectively. The complexity of the problem means 'best practice' answers are few and far between. However, progress should be possible if a clear sense of purpose, appropriate strategy and effective monitoring systems are all in place.
    The England Centre for Practice Development is hosting an interactive seminar on 11 September, to help health and social care sector leaders explore these key issues and challenges. I have been asked to facilitate the seminar, and to share insights from research and experience in boardrooms. Topics to be discussed include:
    • Lessons from the coalface ‘School of hard knocks’
    • Emerging international research
    • Keeping strategy on the agenda
    • Driving (the need for) efficiency and effectiveness
    • Ensuring accountability and performance
    • A pathway forward: An integrated strategy framework for boards
    If you are a board director or an executive of a clinical commissioning group or health provider; a policy maker; a researcher; or, an interested party, I encourage you to join the debate. 
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    On the sources (and a possible remedy) of so-called "governance failure"

    Accountability Ethics Governance Leadership Performance Research Strategy
    The much-storied scandals at FIFA, HSBC and Toshiba have highlighted a plethora of weaknesses in the way large companies are led and run. Fingers have been pointed and blame apportioned. Management has copped a fair bit of flak, but the board has not been immune either. While the media has had a field day, finger pointing and broad statements provide little comfort to those in pursuit of long-term performance. Remedies are required.
    Reputability has studied a number of failures recently(*), in pursuit of remedies. The analysis identified nine prominent categories of weakness, the first six of which were influential in the majority of failures:
    • Board skill and NED control
    • Board risk blindness
    • Defective information to or from board
    • Leadership on ethos and culture
    • Risk from incentives
    • Risk from complexity
    • Risk glass ceiling
    • Charismatic leader
    • Poor crisis management
    When these factors are considered holistically, the stark implication is that failure appears to be associated with board weakness in at least three areas (engagement, strategy and risk). If boards are to make effective contributions, these weaknesses need to be resolved. And therein lies a challenge: a return to first principles, and a different conception of corporate governance is likely to be necessary. Will boards embrace such a change in pursuit of better business performance? Let's hope so.
    (*) The full Reputability Report, entitled Deconstructing failure—Insights for boards, is available here.
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    The Toshiba case: Is it time to re-think our understanding of corporate governance?

    Accountability Decision Making Ethics Governance Leadership Performance
    These seemingly innocuous statements are telling: Fix the compliance and the problem will be fixed. Yet history (Olympus, HSBC, FIFA, amongst many others) shows otherwise. Neither the 'monitor and comply' conception of corporate governance, nor the 'advise and monitor' variant espoused by many corporate governance codes and directors' institutes have achieved the desired outcomes. Yet, many boards dogmatically pursue such conceptions. 
    The problem seems to be more fundamental. The contemporary conception of corporate governance seems to be flawed. Consider these statements, which highlight the problem:
    How many more failures will it take to realise that additional layers of regulation and compliance-oriented boards that operate as policemen don't actually add value? How many more failures will it take to acknowledge that a new understanding of corporate governance and appropriate board practice might be appropriate? Emerging research seems to suggest that when boards adopt a strategic orientation, and corporate governance is re-conceived as a value-creating mechanism, increased performance is not only possible—it is potentially sustainable. Please get in touch if you'd like to know more.
    The now very public overstatement of profits at Toshiba (approximately US$1.22bn over six years) has led to the downfall of the chief executive, Mr Hisao Tanaka (below), and seven other senior managers, all of whom were also board directors. The share price has taken a 25 per cent hit and the company's reputation is in tatters. What a mess. At least there is a modicum of accountability and remorse, something sadly lacking in many other cases including HSBC and Lombard Finance. 
    Thankfully, people have begun thinking about what needs to change. So far, the response has followed a predictable course: The possibility of appointing independent directors to replace the disgraced directors has been mooted. Will this structural response be enough to fix the problem? Maybe, but I'm not convinced. Compliance responses rarely lead to sustainable change. (The compelling case is Sarbanes–Oxley: created post-Enron, it did little to prevent the GFC.) 
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    Success attributed to board: Lessons for all

    Accountability Decision Making Governance Leadership Research Strategy
    How valuable is a board of directors to the performance of the business it governs? Does it influence business performance; or does it act as a policeman, "simply" monitoring the chief executive; and, do we even know? Many have attempted to answer this question. More often than not, the responses have been based on statistical analyses of secondary data (surveys, questionnaires, public data). Descriptions of what actually occurs in the boardroom typically remain hidden. Insights from direct observations of boards in action or from first-hand interviews are rare, so it pays to take note when they become available—as occurred when Nigel Bamford, chief executive of fireplace manufacturer Escea went on record this week. His comments, reported here, provide some interesting insights for boards to consider:
    The Bamford interview provides a much-needed glimpse into the boardroom of a successful company. However, and thankfully, the Escea experience is not unique. The insights are consistent with emerging research about what boards need to do if they are to exert influence on business performance. Consequently, important questions for your own board to consider include:
    • The Escea board meets monthly, for two hours per meeting. Despite this small amount of time spent together, the board manages to monitor past performance and look ahead. This suggests that the chairman has a disciplined approach to meeting protocol, and that the board has at least one eye on the future success of the business.
    • The board is comprised of directors with "a whole range of different perspectives and different disciplines". Decision quality appears to have benefited as a consequence.
    • That the board is comprised of three company founders and two external directors suggests that technical independence (as promoted in many corporate governance codes) is not necessary for board effectiveness including effective decision-making.
    • The emphasis in Bamford's comments is on debate and diversity of thought. Gender and other forms of observable diversity were not mentioned.
    • The Chief Executive expects the board to 'add value' by challenging proposals and driving the decision-making process.
    • A one-size-fits-all approach to board practice and corporate governance is not appropriate.
    • While the Escea board looks ahead, strategy was not explicitly mentioned. Whether the board works with management on the development of strategy, or critiques strategic options and proposals presented by management is unclear.
    Bamford's final comment is perhaps the most telling. "In time, a board is useful for all businesses of reasonable scale and ambition." Two important lessons emerge from it:
    • Formalised boards and board practices are helpful once ambitious (growth oriented) businesses have achieved reasonable scale, and if attention is focussed on the future.
    • Formalised board structures and practices are not always necessary (beyond statutory requirements), especially very small businesses where the same person or group of people both own the company shares and manage the business. Meet your statutory requirements but don't burden the business with unnecessary corporate governance and board practices. They are not required.
    • How might the insights discussed here help your board lift its performance in pursuit of business success and value creation?
    • Might a discussion at your next board meeting, to consider the appropriateness of your current board practices be useful? 
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    Speaking & advisory tour to UK & Eire—programme is filling fast

    Governance Leadership Research Speaking Engagements Strategy
    Wow, that was quick! Six days ago, plans for my Spring speaking and advisory tour to the UK and Ireland were 'starting to come together'. Now the eleven-day tour—to discuss corporate governance, value creation and board practice topics—is nearly full subscribed. Thank you! Three masterclasses, four 'general' speaking engagements, a masters-level lecture and several private meetings are confirmed on the programme. (Details of the 'public' events will be published by the event sponsors in due course.) In addition, two parties have requested planning meetings to discuss future advisory or speaking engagements, to occur in early 2016. If you think you might want to book me but want to talk about it first, that's entirely fine. Just let me know.
    As of today, just one full day (2 Sep) and one part-day (7 Sep) remain available to be booked. I'll be in London on both days as you can see. If you are based in London (or the home counties) and you want to book a meeting or speaking engagement, please get in touch soon--before it's too late!

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