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    ICGN, IGW, EURAM : Post-conference reflections

    Conferences Decision Making Governance Leadership Research Strategy
    • All of the host organisations rang great conferences. Thanks ICGN, Toulouse Business School and Kozminski University! That you attracted and hosted delegates from around the world, and stage-managed them to the correct venues and activities at the correct time, and fed and watered them, and attracted great speakers like Bob Monks, Martin Wolf and Lech Wałęsa to speak is a testament to the quality and reputation of your organisations.
    • The 20th ICGN annual conference was a lavish affair with close to five hundred delegates in attendance. Of the three conferences, this was the most commercially focussed one. Most of the delegates were active in the institutional investor community. Serving company directors and academic researchers were very much in the minority. While this conference has a well-established constituency, I could not help but think that the quality of the conversation, and the impact on board practice and business performance, would be enhanced if more serving company directors and board researchers were in attendance, both to speak and to participate in the debate. 
    • The International Governance Workshop, in Barcelona, was the smallest of the three conferences—by a long way. Fewer than thirty board research scholars assembled to discuss emergent themes. Yet, the quality of the discussion was outstanding. That the conference has managed to attract such a strong cohort of esteemed scholars is amazing, especially when the cost of getting to conferences and the plethora of choices is taken into consideration. This workshop is on my 'must attend' list.
    • EURAM is a good forum within which to exchange management ideas. I overheard many enthusiastic discussions in hallways and over coffee and food. It's a pity that the conference only attracts academics (which is perhaps not surprising, as EURAM is an academy after all). Notwithstanding this, the EURAM executive may wish to take steps to bridge the academy–practice divide by inviting more business people, to address the conference and to participate as delegates. 
    • A concern about EURAM? Membership is steady at about 1200 members. About 1300 papers were submitted, of which 650 were accepted onto the programme after the review process (the corporate governance special interest group received 60 papers, of which 46 were accepted). These numbers make good reading, until the surface is scratched. It turns out that EURAM experiences a 70 per cent turnover in membership each year (yes, seventy per cent)! That EURAM experiences this level of churn should be ringing alarm bells. Something about the organisation is broken, or are academics simply being mercenary (buying a membership only for those years that they attend the conference)?
    The last three weeks have been great, although progress towards 'effective corporate governance' remains torturously slow. Notwithstanding this, I met some amazing people and learnt a lot. The challenge now is to assimilate the newfound knowledge, and to incorporate it into my advisory work and research, so that directors and boards can gain benefits as well. If you wish to know more, or arrange for me to speak with your board, please contact me directly.
    The annual European Academy of Management conference is done for another year. Consequently, my commitments in the UK and Europe are also done. As I make way home (my favourite destination!) and reflect on both EURAM and the two preceding conferences (International Corporate Governance Network and International Governance Workshop), the following ideas and observations come to mind:
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    EURAM'15: Governance in social enterprises

    Conferences Decision Making Governance Leadership Research
    If you were to look across the board research landscape, the view would be dominated by studies of large, publicly-listed (and typically Anglo–American) corporations. Small-medium enterprises,  family-owned businesses and businesses in emerging economies have received far less attention (although this is starting to change), and social enterprises even less so.
    Saskia Crucke, of Ghent University in Belgium, is interested in social enterprises and, more specifically, in the governance function. She reported the preliminary results of a study that is considering governance in a category of social enterprise called Work Integration Social Enterprise (WISE). WISEs help disadvantaged or disabled people enter or return to the workforce.
    Crucke is using an organisational behaviour construct called 'faultlines' to try to understand why some WISEs perform better than others. She used a two-stage questionnaire (the first to ask the chairman and CEO about the WISE, and the second to ask all board members questions about decision-making and performance) to collect data from several dozen Belgian WISEs for analysis. Her preliminary findings show that where faultlines exist, decision-making is impaired and organisational performance is weaker.
    While this result may sound self-evident to some, it does provide a useful platform for further (qualitative) research, to discover how and why decision-making is compromised, and to inform board member recruitment. If faultlines can be minimised, then higher levels of organisational performance may be possible on an on-going bass. For a sector that is typically cash-strapped, that would be a very good outcome.
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    EURAM'15: So, what about outside directors?

    Conferences Governance Leadership Performance Research
    I had the pleasure of chairing a corporate governance topic session at EURAM this year, in which three papers on outside directors were presented. Each of the studies were fascinating. The first one explored director motivations, and the other two added emerging market contexts (China and India):
    • Axel Walther, Germany, presented a very interesting paper about the motivations of non-executive directors and board effectiveness. While many board researchers limit their investigations to a limited range of established board–management interactions theory (including most often agency theory), Walther and his colleagues incorporated organisational behaviour and psychology literature and theory in an effort to understand director motivations. This inter-discipline approach offers exciting possibilities for board research. While the results of the case research are preliminary, they did demonstrate that the motivational drivers of non-executive directors are complex, and that a straightforward split between intrinsic and extrinsic factors is somewhat simplistic. A more subtle differentiation is needed. The team has identified some possibilities. More analysis is now underway, to try to dig deeper into the data to try to isolate triggers to various motivations. From there, it may be possible to re-approach the original question, of the relationship between director motivations and board effectiveness.
    • Wenxuan Hou Hou, a Chinese national living and studying at University of Edinburgh, has been investigating non-executive directors in Chinese firms. Prior studies of director behaviours have reported mixed results. Wen decided to extend the research into an unstudied area—behaviour relating to dissenting director decisions. In China, voting in public company boardrooms must be made public. Thus any dissenting votes should be identifiable. Interestingly, the analysis conducted by Wen showed that a tiny percentage of the decisions made by Chinese boards included any dissenting votes, suggesting the voting tended to be unanimous. Wen concluded that it was unlikely that all directors agreed with proposals all of the time, but that other factors including 'power' and 'cultural norms' were likely to be moderating the decision preferences of directors. This raised the question of alignment. Were directors just following the leader (the chairman or the chief executive), or were they genuinely in agreement in proposals requiring decisions. Wen couldn't answer that question. However, he did say that further (qualitative) research might reveal what is actually going on. I suspect direct observations within Chinese boardrooms will be required, but that prove to be a difficult challenge!
    • Tara Shankar Shaw reported the findings of his quantitative study of data collective from Indian companies on the Bombay Stock Exchange (BSE500). Shaw wanted to find out whether institutional theory might offer explanatory support for any relationship between non-executive directors and firm performance. The audience pricked up their ears, because it sounded as though Shaw might be going to reveal a cause-and-effect relationship from the data. However, and to Shaw's credit, causality was not claimed (straightforward causality is rare in natural science and unheard of in social science). Rather, he reported mixed results (as would be expected in a quantitative study of this type). Shaw study was helpful, in that it added to the growing list of studies that challenge suggestions that any given board structure or composition is conducive, let alone causal, to firm performance.
    Perhaps the strongest message from this session was one that wasn't explicitly stated: that statistical analyses of quantitative data can only ever reveal correlations between variables (attributes) of interest—because variable measure change, not reasons. My hope is that researchers start to move beyond simply counting things, and soon. Precious research time would be far better spent collecting primary data, ideally from inside boardrooms, to understand what boards actually do, and then to draw conclusions from there.
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    EURAM'15: Corporate governance, firms and boards of directors

    Accountability Conferences Decision Making Governance Leadership Performance
    Two interesting papers, that explored various aspects of chairman effectiveness and CEO succession, were presented during the late-morning session of the first day of EURAM2015:
    • Tien Nguyen, a doctoral candidate from the University of Sydney, presented preliminary results of her research on the influence of board chairman on firm performance. She suspected that share ownership was material to any influence, so designed a quantitative study to analyse some industry data. The preliminary analysis (which considers share ownership, tenure, prior industry experience and intra-industry networks) suggests the prior industry experience and share ownership are crucial to firm performance. However, Nguyen qualified her comments that the analysis is incomplete and that the results will be limited to correlations not explanations. For that a new [qualitative] study will be required, to look at 'how' and 'why' influence in exerted by the chairman, and the conditions under which such influence might be effective.
    • Ljiljana Erakovic, Associate Professor at the University of Auckland, described the findings of a recent case study which explored CEO succession at New Zealand's flagship airline, Air New Zealand. She and her team interviewed all of the directors that have served over a twelve year period, to understand how CEO succession was handled and to provide guidance to boards. The analysis of the interview data identified that a clearly defined and agreed recruitment process; and strong cultural fit between the candidate and the company; and, the early on-boarding of prospective external candidates into senior roles (almost as a try-before-you-buy) appeared to be crucial to the successful appointments and tenures of CEO's Sir Ralph Norris, Rob Fyfe and, most recently, Christopher Luxon. Erakovic suggested that the learning from this case is that chances of successful CEO appointments are enhanced if boards focus their attention on a few key things, including starting into the succession and recruitment process early, as early as eighteen months before the outgoing CEO leaves the company.
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    International Governance Workshop: Reflections

    Conferences Decision Making Ethics Governance Leadership Research
    The second annual International Governance Workshop is complete. A small(ish) group of leading thinkers assembled at the Toulouse Business School in Barcelona to discuss and debate emergent research and to ask the "So what?" question. Overall, the presentations and papers were of a high standard, as was the discussion and debate that followed each paper. Also:
    • The organisers did a great job. Barcelona in June is like Goldilocks—not too hot and not too cold. The venues, both at TBS and those used for extra-curricular dinners, were conducive to good interaction between the delegates.
    • The highlight of the workshop (for me) was Silke Machold's keynote talk. She challenged much of the conventional thinking, and called both researchers and practitioners to re-think boards, board-practice and corporate governance expectations.
    • The discussion over wine in tapas bars and restaurants was something to be savoured. Even while socialising, delegates continued to think about the challenges facing companies and boards, and to explore options and scenarios to move from corporate governance towards the notion of a value-creating board.
    • The main theme (actually, challenge might be a better descriptor) that emerged from the workshop was 'change'. The nature of board research needs to change, from investigating isolated and observable attributes of boards and corporate governance activity, to studying boards themselves, both in situ and holistically. This presents a huge challenge for researchers, because it means that straightforward statistical analyses probably need to be replaced by more sophisticated techniques not unlike those used in sociology, psychology, behavioural economics and related fields.
    • The dominant logic of companies—maximisation of shareholder returns—probably needs to be reassessed in the light of wider stakeholder issues. This is not a call for Marxist or socialist-style interventions, but rather a recognition that shareholder maximisation to the exclusion of other logics is unlikely to be sustainable in the longer-term.
    While this conference was amongst the smallest (in terms of delegates) that I have attended in recent years, the quality of the discussion and debate was amongst the highest that I have experienced anywhere. Senior academics openly interacted less experienced researchers and other attendees in the discussions, to the extent that it was hard to tell who was who unless you looked at the titles on name tags.
    From small beginnings in 2014, the TBS team has a clear vision of what they want to achieve. This second workshop built on the first workshop (I am told, I did not attend the first one), which augers well for the future. I commend this workshop to all academics, consultants, advisors and serving directors with an interest in board practice and business performance.
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    IGW'15: Overcoming barriers to deploying complex technologies

    Conferences Decision Making Governance Leadership Performance Research
    The deployment of complex technologies can be a demanding problem in modern societies, especially when various interest groups support or oppose such deployments. The magnitude of the challenge was not lost on Alfred A. Marcus (Carlson School of Management, University of Minnesota). 
    Using the example of implementing wind turbine systems as a source of renewable energy generation, Marcus compared the approaches taken in Texas and Minnesota. Both states have the high and relatively consistent wind runs considered to be a necessity for large farms of wind turbines. However, renewable technologies such are wind turbine farms are not universally supported. Some like the romanticism of the blades gently turning in the breeze; others assert they are a blight on rural vistas; and, yet others both like the idea but oppose local deployment (the pejorative NIMBY). 
    Marcus observed that Texas' approach to decision-making and deployment was more top-down in nature, whereas the Minnesota experience was more bottom-up (and highly politicised). In considering this, he suggested that charisma without supporting regulation can lead to short-lived benefits. In effect, some ideas and decision processes need top-down 'support' to gain traction. Drawing on the work of Wilson (hierarchical decision-making) and Ostrom (collective action), Marcus proposed four 'rules' that can help, as follows:
    • Boundary rules
    • Allocation rules
    • Conflict management rules
    • Rules for changing the rules (!)
    In effect, Marcus' proposal was that a combined approach—incorporating hierarchical governance structures and decision-making processes and collectivism—was probably necessary if the not inconsiderable barriers to the deployment of complex and somewhat contentious technologies (like wind farms) are to be overcome.
    Although he did not explicitly extrapolate his comments, Marcus' suggestions are relevant and applicable to boards of commercial businesses. Many decisions, especially strategic decisions, fail to gain traction in implementation because a suitable framework for both decision-making and monitoring and verifying implementation is not established. Perhaps boards might like to consider Marcus' proposal, and see how it might apply. I suspect the answer in many cases will be 'well'—so long as a shared commitment to a common and singular purpose was in place.