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    Diversity: what is the endgame?

    Governance Leadership Performance Societal Wellbeing
    Diversity is a topic that has gotten under people's skin, and rightly so. Much has been written, spoken and argued in recent times. Many blog rolls and column-inches have been expended by people arguing for or against various physical incarnations of diversity in the executive suite and boardroom. Clearly, the 'diversity' seed has sprouted. But for what purpose? What is the endgame? And, what should the endgame be?
    Many have argued that that the presence of women on boards is causative to increased business performance; others have argued that no such causation exists. Actually, the academic research is mixed: it shows positive, neutral and negative correlations. This should be of no surprise. That such a blunt stick (a single observable attribute: gender) might make a consistent difference in a complex, socially-dynamic system defies belief. I have mused on this in the past. 
    Thankfully, the argument is now starting to mature, beyond the physical aspects of diversity (gender, race, ethnicity, age, etc.) to the identification of underlying attributes and qualities of capable executives and directors, to understand how directors contribute and work together. However, another question lies in wait: the 'so what?' question. What is the purpose of appointing women onto boards and increasing the apparent diversity in executive suites? Is the motivation political (equality)? Or to maximise profit for shareholders? Or is there some other sustainable driver that needs to be brought into focus?
    Businesses exist to provide a product or service and, in so doing, provide a (hopefully!) healthy return to those who invested in the business in the first place. Is this the endgame? It might be for some. However, as diversity for diversity's sake is not sustainable, neither is profit for profit's sake. Shareholders do not live in isolation from others in the community. If shareholders 'win' (through the accumulation of profits), it stands to reason that losers will emerge elsewhere.
    The challenge for all of us to to lift our gaze beyond simple measures like the number of women on boards or quotas and, if we dare, beyond profit as the primary measure of business performance, to think about the endgame. Phil O'Reilly, CEO of Business New Zealand, recently said that the purpose of capitalism is greater than profit (although that is a reasonable and necessary output). He said that the objective was strong communities. Could that be the endgame we need to focus our attention on?
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    Paper accepted onto EURAM conference programme

    Conferences Governance Performance Research
    I am thrilled to announce that a paper written earlier this year, entitled Boards, strategy and business performance: Observations from inside boardrooms, has been accepted onto the programme of the prestigious European Academy of Management (EURAM) conference, to be held in Warsaw, Poland on 17–20 June. A copy of the abstract has been posted here. Some 1350 papers were submitted for consideration, so to be have been selected and asked to speak at the conference is truly an honour. Thank you to the reviewers and track chair who considered the paper sufficiently worthy.
    This conference becomes the third (of three) that I will be contributing to in June: 
    I will be on the ground in the UK and EU to continue the corporate governance discussion from 2 to 20 June, with some time available between conferences. If you would like to take advantage of my proximity—as a speaker or facilitator, or to seek some advice—please contact me.
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    On consultants and selling #corpgov short

    Accountability Governance Leadership Performance
    Why do consultants spend so much time on hobby horses, promoting their own capabilities and frameworks? Shouldn't the focus be on thinking about and promoting options that are genuinely in the best interests of the clients and marketplace they seek to serve? Take this example, which suggests that good governance is built on good information and data governance. The author cites several technical frameworks and acronyms (COSO and COBIT are mentioned), none of which I understand. 
    That a strong focus on standards and frameworks might be sufficient to ensure good governance (an oft cited but rarely defined term) is misleading in the least. Necessary maybe, but sufficient? No. The root of governance emerges from the Greek word kubernetes, which means to steer or pilot, typically a ship. This suggests governance is an activity associated with movement; with setting direction, navigating or guiding something—presumably towards a longer-term or major goal, or at least with a purpose in mind.
    I have no doubt that frameworks are necessary within organisations to support regular business activity. However, to imply that good governance (and, presumably, business performance, although the author makes no mention of this) will emerge from the application of standards and compliance frameworks is misleading. Looking backward (monitoring) or to standards (compliance) may satisfy egos that work is being performed, but to think that either will drive performance is folly. Compliance with standards can only ever achieve one of two things: compliance or dissidence. Compliance-based frameworks (Sarbanes-Oxley, amongst others) did little to prevent the GFC of 2007–08. Some say the focus on compliance may have contributed to the failures. If businesses expect to achieve certain desired outcomes, the board needs to look to the future by building appropriate plans (strategy); providing resources to the chief executive; and, monitoring and verifying the agreed strategy is being implemented and expected performance targets achieved.
    Consultants that continue to promote compliance-based technical frameworks as 'solutions' and associate them with 'good governance' are, quite frankly, doing their clients a disservice. Business leaders need to test consulting proposals thoroughly, by asking how (ask for specifics, don't accept general statements) the suitor's proposal will assist with the achievement of the business's strategy. This will probably be threatening to some consultants—but if it moves the focus onto business performance and economic growth, wouldn't that be a good thing?
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    "Completely overhauled" actually means "musical chairs", or so it seems

    Accountability Governance Performance
    I'm staggered. According to the Merriam–Webster dictionary, to overhaul something is to "to look at every part of (something) and repair or replace the parts that do not work". By extension, a complete overhaul is to repair or replace the entire system. The people I spoke with in the UK and the EU last week were consistent in their expectations: that many directors should be replaced with directors untainted by the failures of governance that have occurred. HSBC has a proud tradition, but a new start is needed. Sadly, this does not seem to be happening. The promised complete overhaul seems to be just a shuffling of roles—musical chairs if you will.
    How confident can or should investors and account holders be after hearing of these changes? A damp squib might be a more appropriate description of the proposed changes, but that wouldn't sell many newspapers or engender much confidence would it?
    HSBC has been under the hammer for several weeks now, as people have waited—expectantly—for news of what "completely overhauled" might actually mean. Then, late last week, the picture started to come into view: Several changes in the boardroom were announced.
    • Rachel Lomax, board member since 2008, becomes senior independent director
    • Sam Laidlaw, board member since 2008, becomes head of committees
    • Sir Simon Robertson "steps down", but remains deputy chairman for another year
    The headline implies a wholesale change, but the reality that seems to be emerging is somewhat different: it turns out that the promised overhaul might actually just be a shuffle. Consider this:
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    Oh the demand... 

    Conferences Governance Leadership Performance Phd Research
    Nine business days after arriving in England for meetings and speaking engagements in several English and Swiss cities, I am once more seated at Heathrow: this time to enjoy Air Zealand's service on the long flight home—and to sleep! Reflecting on fifteen meetings, eight hotels and many conversations, the main thought to emerge from this trip is "demand". Simply, the level of interest in boards, board practice and how to get boards doing the 'right' things in order to achieve the business performance outcomes expected by shareholders has been almost overwhelming. For example:
    • Professors from two English universities and one Irish university have offered to organise masterclasses to expedite healthy debate about boards and the difference they can make.
    • Two different groups of people, both based in Zurich, including professorial staff at unisg.ch, have said they want to organise teaching and learning seminars, to raise the bar amongst banks and international businesses.
    • The team at Ethical Boardroom has invited me to provide the editorial commentary for their summer issue.
    • Several (sorry, I'm not at liberty to disclose details) have requested advice on matters relating to board structure, apprenticing, strategy and business performance.
    That so many people are actively seeking help to improve business performance through effective contributions in the boardroom has caught me on the hop. After all, the public persona presented by boards and chief executives is that they have everything under control. However, when the conversation moves beyond platitudes, its seems most are worried. I have put myself at the service of all who are interested. If you would like to know more, or to schedule some assistance, please contact me.
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    Apprentice directors: an on-ramp to a successful career?

    Accountability Governance Performance
    The 'profession' of company director seems to be beset with an interesting challenge: how can or should young directors be introduced to boardrooms? In the eyes of the law, all directors are created equal. Young directors need to be competent and effective from the very minute they are appointed. Yet an important element of directing—experience and judgement—can only come from time spent in the boardroom. Do you see the Catch–22?
    I have been exploring this challenge with directors in London, Leeds and Oxford this week. The prevailing view is that the profession has a problem. Many senior directors are reluctant to retire (the stated motivations are interesting in themselves, but that's another muse), and they don't seem to be interested in blooding new directors. Solid answers were few and far between. However, one option that did emerge was the notion of an 'apprentice director': one who is exposed to the full workings of boards and board practice, but without the demands of holding a formal appointment. The people I spoke with thought that apprentice director schemes may well have merit, but only if certain parameters are adhered to:
    • Apprentices are of an age, whereby they hold sufficient 'life' and 'business' experience to make sage decisions. The general consensus was that those less than 40 years old were unlikely to be suitable (although there will be the odd exception).
    • Apprentices need to be members of a directors' institute and have completed a recognised professional development programme. The courses offered by the Institute of Directors, Australian Institute of Company Directors and the Institute of Directors in New Zealand were all mentioned.
    • That that board requests a legal opinion, to ensure that an apprentice is not caught by the 'deemed director' interpretation that those on so-called advisory boards are exposed to.
    • That terms of apprenticeship are established and documented, including a fixed term (twelve months was the most common suggestion).
    • That the apprentice is paired with an experienced company director to act in a mentor capacity.
    The notion of an apprentice scheme has considerable merit in my view. In-country directors institutes are ideally placed to take up the challenge of creating a scheme and of actively promoting its uptake amongst the boards of privately-held and publicly-listed companies. They should also consider 'accrediting' graduates (who would have to sit and pass an assessment), to provide a level of confidence to those recruiting directors. 
    If you have a view on this, as a director of a board that has considered or apprenticed a director, or as someone with an alternative suggestion to solving the inexperience problem, please share it here.