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    Attributes vs. activities: changing the research agenda

    Governance Phd Research
    For decades now, researchers have been searching for the link between governance and performance that supposedly exists. Most of the research has investigated isolated attributes of governance—things like Board size, gender diversity, the inside/outside director balance, and CEO/Chair duality. The results have been mixed. Some researchers have suggested correlations. Others have disagreed. Despite considerable effort—over an extended period—researchers seem to have reached an impasse.

    I was thinking about this while watching a motor racing programme on television yesterday, and concluded we've been looking at the wrong things.

    Do cars go faster because they have a male driver or red paint, (for example)? Of course not. Rather, they go faster because of the way they are prepared and what happens on the race track. Racing drivers win because of what they do (techniques, decision-making), not who or what they are (gender, fitness levels, red car). 

    We have much to learn from this analogy. If a link between governance and company performance exists (as several well-regarded scholars have postulated), it will, in all likelihood, be due to the activities of the Board as a whole—what they talk about, the decisions they make, the way they monitor performance. If progress towards exposing the elusive link between governance and performance is to be made, the research agenda needs to change—from attributes to activities. Does this sound plausible to you?
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    Hello 2013

    Phd Research Time Management
    According to the calendar on my desk, today is 4 January 2013. However, in my mind's eye, today is "day two" of 2013—because yesterday was the first day back at my desk since about 18 December.

    The two-week break has been refreshing. I spent a lot of time on the three 'R's: reading, riding, relaxing (with family and friends). However, now it's time to "get stuck in" again—to what is shaping up to be a huge year of data collection, analysis and (hopefully) writing. 

    I spent the morning reviewing my doctoral journey to date, and sorting out the priority items that need most attention over the coming weeks. Here's what emerged:
    • Prepare an ethics application, for consideration by the University's Ethics Committee (all research involving human participants must be approved before it can proceed).
    • Recruit three companies to participate as cases in the research.
    • Review and rewrite the literature review I conducted last year.

    So, hello 2013. As I proceed, I'll draw strength from Isaiah 40:31.
  • Published on

    On compensating directors...

    Governance Management Phd Research
    Should directors receive performance-based pay for their contributions?

    This is an interesting question. Performance-based pay has become commonplace amongst senior executives and sales staff in the last decade or so. The model is straightforward: perform well (by achieving agreed objectives) and get paid a commission, be awarded stock or receive recognition via some sort of bonus. Performance standards are generally set by a more senior manager. The system seems to work reasonably well. However, an increasing trends in recent years is the implementation of similar performance based reward systems in the boardroom. But is this smart? Do performance-based pay systems motivate the "right" behaviours amongst directors?

    Whereas management and staff are directly responsible for implementing strategy and achieving performance goals that are determined by a more senior party, the Board is not. In addition to their role being quite different (to determine strategy, monitor performance and manage risk), the link between what Boards do and company performance is tenuous, at best. Simply, we do not understand how Boards contribute to performance. Further, Boards are endogenous—they largely set their own agenda and determine the company's objectives. In establishing performance-based pay systems for themselves, Boards are immediately conflicted. One way of ensuring performance-based payments are made is to set artificially low targets (for example). I'm not sure this is a good way of maximising company performance, or motivating healthy behaviours, but it is a way of being paid(!)

    My preference is towards rewarding directors through fixed fee payments for their contribution. If they are contributing, they receive their fee. This would be the default. However, if they are not contributing effectively, this should become known through a formal Board review process. Shareholders should have access to review documentation, and only re-appoint directors that are contributing. 

    This sounds remarkably easy on paper, however the topic of today's muse is hotly contested amongst practitioners and academics alike. What's your view?
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    What is the purpose of economic growth? 

    Phd Readings Research Societal Wellbeing
    Note: This Muse is somewhat different from many previous entries. Whereas most prior entries record aspects of my doctoral journey, or make suggestions about a range of topics, this Muse simply poses a question: "What is the purpose of economic growth?".

    I'm raising this question now because I realised, while re-reading some PhD notes today, that a statement that appears several times in my papers is heavily loaded. The statement is: "High company performance is an important contributor to economic growth and societal wellbeing". Today, for the first time, I realised this statement somehow assumes that economic growth and societal wellbeing are some how "good", and therefore worthy of pursuit. But why? What is the purpose of economic growth? What is the underlying driver? 

    Before you get too excited, I'm certainly not devaluing economic growth as such. Rather I'm asking why we humans pursue it. I don't have a clear answer right now, but I will ponder this question over the coming days, do some reading, and try to form some views.

    To kick the discussion off, Benjamin Friedman, the political economist, writing in 2006, asserted that "Economic growth—meaning a rising standard of living for the clear majority of citizens—more often than not fosters greater opportunity, tolerance of diversity, social mobility, commitment to fairness, and dedication to democracy. Ever since the Enlightenment, Western thinking has regarded each of these tendencies positively, and in explicitly moral terms."

    What do you think? I love to hear your ideas—considered, wacky or otherwise!
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    Smelling the roses

    Governance Phd Research
    I had an interesting day at the office (so to speak) today. Today was the day I was scheduled to present and defend my PhD research proposal to the Confirmation Panel at Massey University. After a pleasant 90-minute drive to the campus, I arrived with sufficient time to collect my thoughts over a coffee before meeting with the panel. The presentation seemed to go OK, but the defence was tough going and I struggled to answer a few questions as well as I should have. The Panel identified several rather significant holes in the proposal, most notably around the proposed methodology and the linkage back to the research question. In their view, the proposal was far too ambitious—it described a "lifetime's work". The Panel also asked me to think hard about the type of contribution I hoped to make, because the proposal wasn't 100% clear. So, I have a fair bit of soul searching and critical thinking ahead—to get to grips with some of the Panel's comments and suggestions, prior to reconceptualising (the Panel's word) the proposal over the coming weeks.

    Notwithstanding the criticisms, the Panel agreed the research was very worthwhile, and that I was capable. Consequently, they decided to confirm my enrolment, subject to the rework being completed. Yes! The panel's decision means I've achieved a major milestone in my doctoral journey—the status of a fully fledged doctoral candidate! Woo-hoo!
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    Reading: The history of humans is the history of technology

    Governance Phd Readings Societal Wellbeing
    Over the last 18 months, I have subscribed to what seems like an increasingly eclectic range of newsfeeds, on-line magazines, blogs and podcasts. Some of the material relates directly to my governance research (OK, quite a bit does), and some of the subscriptions are pure indulgences—to take my mind off the former. I've discovered that, in reading widely, I've learnt a little about a lot of things. Interestingly, some of the "unrelated" material has actually been helpful in terms of piecing together disconnected research ideas that I've had floating around. On the flip side, several of the subscriptions have turned out to be "noise" to me, so I've cancelled them.

    One article that arrived in my Reeder application today was entitled The history of humans is the history of technology. Titles like this tend to catch my eye, if for no other reason than they are quite provocative.  I quickly discovered the article was an interview with a writer I've not heard of before—Robin Sloan. Hope Mills, the author of the article, interviewed Robin Sloan via email. Yes, via email! In her introduction Mills writes: Robin Sloan is the kind of writer/thinker you want to take out for a beer and ply with questions. About writing. About reading. About life. He is frightfully creative and incredibly open-minded. He also happens to tell really good stories. Below is our conversation, conducted over email, about stories, technology, and giving up the iPhone. 

    With an introduction like this, I was hooked. I read the article right through—twice—and have come away with much to ponder. If you can spare a few minutes over the weekend, grab yourself a coffee and read the article. It just might set you thinking as well. If it does, I'd love to hear what you got out of it.