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    When time is up, act

    Accountability Corporate Governance Effectiveness Leadership Performance
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    These past few weeks, I have been acting as an envoy of sorts—a go-between to help tackle some problems that, ultimately, seem to come down to strained relations between shareholders, directors and senior management. While one case is playing out in a rapidly-growing PE-funded entity, and the other in a smaller enterprise, the situations are remarkably similar: the organisations appear to have outgrown the leadership capability of the CEO, and the board and CEO no longer see eye-to-eye.
    In one case, the leader is the founder; in the other, the CEO has led the entity for over two decades. In both, signs of Founder’s Syndrome​ are apparent. The cases are difficult because the CEOs have led well. But things have changed, and both deny they might be part of the problem, much less that leaving might be the best option for the organisation.
    The cases are proving insightful reminders for me—not only as examples of the destructive impact when behaviours turn negative, but of something most decent management and leadership courses teach: No one is perfect, and no one is indispensable.
    In contrast, consider the actions of these leaders:
    • Sir Rod Drury, founder of Xero and recently-named New Zealander of the Year, has been lauded for his entrepreneurial expertise and success. Yet he stepped away from executive leadership at Xero about a decade ago, and from the board in 2023. The business has not stalled or failed—it has grown bigger and better. 
    • George Washington, the first President of the United States, served for eight years and then retreated to Mt. Vernon, even though he was encouraged to remain President. 
    These men, both highly successful in their respective fields, knew something many chief executives and board directors miss: humility matters. When the time is up, act. Strive to leave on good terms. And, if you think it might be time, it probably is. Chances are, it might be one of the best leadership decisions you make.
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    Towards great: governing with impact

    Accountability Corporate Governance Effectiveness Leadership Performance Sustainability
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    In 2018, before mankind was tipped upside down by a global pandemic, the chattering class had been very active, responding vociferously as news of various corporate failures and missteps came to light. Carillion plc and the Institute of Directors (both UK), Steinhoff (South Africa), AMP (Australia), and Fletcher Building (New Zealand) were topical examples. The consternation and angst was palpable.
    That seemingly strong and enduring organisations were failing (or suffering significant missteps) on a fairly regular basis concerned many; for the societal and economic consequences significant. Many commentators (primarily, but by no means exclusively, the media) responded by berating company leaders (specifically, the board and management), placing ‘blame’ squarely at their feet. This is a reasonable: ultimate responsibility for firm performance lies with the board after all.
    Fast forward to 2026, what has changed? Well, if post-Covid failures are any indication, not much. The Post Office scandal in the UK, accounting firm PwC, and Port of Auckland (New Zealand), have been in the news for all the wrong reasons. Wilko (UK), GDK Group (Australia) and Du Val Group (New Zealand) are three amongst many that have collapsed under large debt burdens. Fletcher Building has suffered again too, which suggests it may not have learned from its earlier experiences.​
    Amidst it all, calls for tighter regulation and stiffer codes abound. This, despite the geographical spread of corporate failures implying that local statutes and codes are probably not a significant contributory factor. Examples of compliance-driven responses include the King V code (South Africa), ISO 37000 standard (global), and Better Boards Act proposal (UK).
    The responses of boards I have been invited to sit with in recent months have been telling: some have circled the wagons, to defend against accusations that they may have been negligent; some have diverted blame elsewhere, such as, management or regulatory burden; and, some board directors have simply walked away, the burden too great.​ Others have decided that focussing attention on what matters (engaging strongly, in pursuit of sustainable performance), is what matters most.
    Given the chatter in business and social circles, and in the media, it would be easy to join in; to berate all and sundry. But let’s not go there. Instead, it is probably more productive to identify activities and behaviours that may have contributed to the situations, in search of learnings:
    • The role of the auditor: Most if not all of the firms mentioned above were attested by their respective auditors to have been reported accurately and operating satisfactorily. Yet, clearly, some were not. Whether the auditors were in cahoots with management, or the board; failing to discharge their duty to provide an accurate and impartial  assessment; or, even, inept, is a matter of speculation in most cases. Regardless, something in the audit world is amiss. To date, few commentators have called out the audit profession as being an accessory.
    • ​​Business knowledge: Remarkably few of the directors of the companies identified here seem to have understood the business of the business they were governing at the time. Often, directors are recruited for their technical skills (notably, legal and accounting expertise) or extant relationships. Relatively few had significant experience in the sector the business operated in. This is consistent with global research by McKinsey, which revealed one director in six possess relevant knowledge. How any board can make an informed decision when most of its directors do not understand the wider operating context well is perplexing.
    • Director engagement and behaviour: Most of the directors of the companies noted here had a classical conception of board work and engagement: They read their papers and attended board meetings, but did little else. The relationship with management was distant and aloof; directors rarely engaged with each other or the company between meetings; and they saw their most important contribution as being the hiring or firing of the chief executive—all characteristics of a board focussed on control, not governance.
    • ​Board involvement in strategy: The boards of all of the firms identified here relied heavily on management to prepare strategy. Directors backed themselves to ask questions and respond to proposals when they were presented. Some delegated strategy approval to management. While most directors appear to have been well-intentioned, the resultant outcomes tell the story. A heavy reliance on management is, clearly, unwise. What of “trust, but verify?” If the board is not involved in the development of strategy in some way, as researchers and commentators increasingly recommend, the likelihood of the board understanding what it is being asked to approve and subsequently providing adequate steerage and guidance is low.​
    If boards are to learn from the failure cases noted here (amongst others), the first and, frankly, most pressing priority is to mitigate apparent weaknesses and focus on what matters. My research suggests that sustainably high levels of firm performance are possible, but they are contingent on several factors, including:
    • Ownership: The board is the apex decision-making authority in every company, meaning it is responsible making the very biggest decisions. Consequently, if the board is to have any influence over performance at all it needs to take responsibility, directly, for the big calls.
    • Purpose: If performance is to be achieved and sustained over time, all contributors need to understand their role and why it is important. Sadly, many directors bypass the ‘why’: they do not understand (and, therefore, cannot describe) why the company exists (activity trumps reason, it seems). Even if they can, directors often do not hold one view. Agreement on why the company exists—its purpose—is crucial: it provides the touchstone against which strategy is formed, all other decisions can be made, and performance assessed.
    • Strategy: Purpose alone is insufficient. Strategy is the course of action required to achieve the agreed purpose. While no one model (of strategy development) fits all situations, the board should roll its sleeves up and get involved in the formulation of strategy, together with management.
    • Effective boardcraft: This is the biggie. My article, Towards more effective corporate governance, paints the picture.​
    Some commentators have suggested that the success of the board is entirely a matter of luck. I disagree. While outcomes are not guaranteed, my doctoral research and experience supporting boards across five continents suggests boards can exert influence beyond the boardroom, including on firm performance. However, this is contingent: they need to focus on ‘the right things’.
    Unless and until boards start taking their responsibility for the performance for the company seriously, the hope of much changing remains, sadly, dim. What is your experience?
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    On high-performing boards: unlocking potential

    Accountability Corporate Governance Effectiveness Family Business Governance Leadership Monday Muse Performance Tough Questions
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    Have you ever stopped to wonder why so many companies fail to realise the potential they aspire to?
    When I speak with directors, the desire to operate at high levels of performance is palpable. In my experience, most say they aspire to have a great impact. But when one looks more closely, a great many boards struggle to break the shackles of average: they are constrained by confusion over the role of the board, impaired by dysfunction within the boardroom, and/or expectations are misaligned.
    A recent survey (conducted by PwC) highlights the characteristics of high-performing boards:
    • strong and effective leadership from the chair
    • strategic vision and focus
    • proactive engagement
    • culture of trust and collaboration
    • pragmatism and responsiveness
    • focus on high-performance [mindset and teamwork]
    • awareness of stakeholder expectations
    • cool in a crisis
    This is quite a list! Yes, it is. But most of these characteristics are consistent with the findings from ground-breaking board research conducted over a decade ago. That research concluded that if the board is to have any impact beyond the boardroom (especially on firm performance), three things matter: 
    • capability (what directors 'bring')
    • activity (what the board does)
    • behaviour (how directors act and interact)
    Board structure and composition is relatively less important, to the point of being insignificant. This finding (now known as the Strategic Governance Framework, see this article for a summary) emerged from a peer-reviewed long-term observation study of boards going about their work—one of a small handful conducted to date. As with studies conducted by the late Jane Goodall, my study sought to get as close as possible to the subject of interest (the board) to observe them in their 'native' habitat. That meant direct observations, for the board only exists when the directors meet.
    Since that time, the Strategic Governance Framework has shown itself to be a useful mechanism to help ambitious boards move beyond orthodoxy and box-ticking, to realise organisational potential. But the embrace of such a mechanism is not without its challenges: it means stepping away from the perceived safety of 'best practice' recommendations—a daunting prospect of some. 
    Ultimately, boards must decide: is compliance with contemporary recommendations, codes and regulations sufficient to discharge duties owed, or is more required? For those who decide more is required, the Strategic Governance Framework ​may be worthy of consideration.
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    Are we prepared to govern AI?

    Accountability Artificial Intelligence Corporate Governance Ethics Guest Post Performance Sustainability Value Creation
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    Guest blog: Dr. Cletus Kadzirange (GBS Oxford University, United Kingdom)
    By now, almost everyone has heard that artificial intelligence is revolutionising the commercial world. In addition to creating customer insights and automating procedures, it offers advice on hiring, pricing, and medical diagnosis. Around board tables, the atmosphere is frequently positive—AI is quick, intelligent, and full of potential. 
    While boards are positive about possibilities, are they prepared to govern AI?
    This is a governance question, not a technological one. The most progressive boards are starting to realise that monitoring AI requires far more than a digital strategy, because AI has the potential to affect reputation, social license, compliance, ethics, brand, and more besides. Questions boards should consider centre on accountability, transparency and long-term risk management:
    • Who is at fault when AI fails? This is a question of accountability. Apple's credit card algorithm made headlines in 2021, when it was revealed it gave women much lower credit limits than men with comparable financial backgrounds. Apple blamed its banking partner, Goldman Sachs. Regardless of who is at fault, boards cannot afford to wash their hands. Instead, they need to lean in, consider who is responsible for the performance and outputs of the AI systems and satisfy themselves everything is OK. Before systems behave in unpredicted ways (and they will), boards should check escalation processes and remedial procedures. Accountability is not about assigning blame, but about having foresight, to not only minimise the possibility of unintended outcomes but also respond well. The best companies embed clear accountability lines and practices during the design and implementation of AI systems, to facilitate good governance responses downstream.
    • Is it possible to see inside the black box? This is a question of transparency. Understanding AI's conclusions can be a challenge, even for the people who designed and trained the system! However, businesses that cannot explain the workings of their AI systems are coming under great pressure from consumers and authorities who want greater openness. Consider COMPAS, the system used by US courts to determine recidivism risk when sentencing criminals. Investigative journals discovered the system was skewed against black defendants. When challenged, the corporation that built the system refused to reveal the inner workings, citing trade secrets. Predictably, public disapproval and general suspicion rose sharply. The lesson here is that transparency is a reputational issue as much as a technological one. Boards should ensure management understands how AI systems work, and that credible non-technical explanations are available if required.
    • Are we ready for the new wave of regulation? This is a question of long-term risk. Regulation of AI is advancing rapidly. The Artificial Intelligence Act, which was ratified by the EU in March 2024, established stringent requirements for high-risk systems. A Presidential Executive Order signed in October 2023 moved the US in a similar direction. Provisions such as these expose businesses that cannot exhibit moral AI practices to the risk of fines, legal action and, even, system usage prohibitions. Boards can get ahead of the regulatory curve by regularly reviewing their AI policies against current and proposed regulations, and by calling for reports to confirm that systems are fair in use. 
    AI is no longer a back-office technology. Already, it has emerged as an important enabler, influencing operational, strategic and reputational performance. Consequently, boards that ignore AI as someone else's problem may be blindsided. Boards need to ask questions to ensure AI literacy is adequate, risks have been well-assessed and that governance practices are fit-for-purpose. This is not a matter of dreading the unknown: it is about providing effective steerage and guidance.
    Has your board discussed AI governance in a genuine, systematic way yet? It not, it might be time to get started.
    About Dr. Cletus Kadzirange:
    Cletus is a pracademic in corporate governance and company law who consults, trains and writes on various aspects of corporate law, directors' duties and governance. His specific expertise lies in implementing forward-thinking governance frameworks and sustainable practices that foster long-term value and ethical stewardship.
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    Navigating fog: The board as your compass

    Accountability Change Corporate Governance Decision Making Leadership Performance
    I had the very good fortune to be in Boston recently, a brief visit to respond to a couple of enquiries ahead of the main reason for visiting the US East Coast, which was a keynote contribution at the International Corporate Governance Network annual conference in New York. When told Thomas Doorley III, the founder and now emeritus chair of Sage Partners, of my travels, he was quick to suggest we should meet up.
    Tom is a generous man. We have known each other for nigh on a decade now. I always come away from our conversations feeling enriched having sat with him and listened. So, when he spoke of his new project, a podcast series entitled, "Navigating the fog of change", and asked if I would sit with him, an affirmative response came easily.
    Our conversation, which explored the role of boards in times of great change, including the critical 'compass' role, is now available on the Sage Partners' YouTube channel.
    I'd be gratified if you would listen in. It'll cost you 29 minutes, that's all! And, once you've listened, if you have questions or comments, please feel free to reply below, or get in touch with Tom or me. ​
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    Who controls your board’s agenda? Who should?

    Accountability Corporate Governance Decision Making Effectiveness Governance Performance
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    I had a fascinating conversation yesterday, with an esteemed board chair I have known for some years. Our wide-ranging exchange saw us dip into several topics of mutual interest including family and my recent 'elevation' to grandfather-hood; an upcoming advisory engagement; the importance of ongoing education for directors, especially in relation to 'soft skills'; techniques to chair a board meeting well; and board agendae.
    During the flowing conversation, Robert (*) said he had recently chaired a meeting in which a couple recommendations within what he called the “QuarryGroup Report” (a board/governance assessment that I completed last year) were to the fore. 
    Referencing the recent meeting, Robert said the agenda was packed, and that management had put up many papers to support the agenda items and ensure directors were well informed on what it deemed pertinent matters. He added that the meeting agenda was too full for meaningful discussions, let alone informed decisions. When I asked how he handled the situation, he referenced the QuarryGroup report. He said three items stood out as having strategic implications for the business and decided that is where the board should spend its time. He spoke with several directors after the board pack was issued and, in board alone time immediately prior to the meeting, confirmed the three items would take precedence. Through this action, Robert asserted control over the board's meeting. Management had proposed an agenda and prepared papers based on what it had thought important, which is OK, but Robert and the board had a different perspective.​
    Some readers may wonder about Robert's actions. Is it reasonable for a board chair to propose ignoring items or altering an agenda? Surely, management understands the key issues that need attention better than the board?
    I suggest the guiding principle to inform a response is this: The role of the board is to govern (to steer, to guide, to pilot). And, if the board is to have any hope of providing effective steerage and guidance, directors need to understand their role, and they need to apply their minds to the major issues and opportunities that lie ahead and make decisions accordingly. For this, the board needs to drive the agenda and ask management to prepare reports accordingly. Research shows that if this does not happen, the likelihood of the board influencing the performance of the company is low.
    When I asked Robert how compliance reporting and historical performance was handled (the board's 'control' role), he calmly said, "That is what committees are for." I smiled, for I was in agreement.
    What are your thoughts on this? Does the principle described hear apply everywhere? 
    (*) name changed.