Tags

  • Published on

    The Independent Chair: what is going on?

    Governance Performance Societal Wellbeing
    I'm a strong believer that function trumps form, especially in matters of governance. However, I maintain a close watch on trends in research and practice, because things can change, and one needs to maintain an open mind. A case in point is that of the Independent Chair, a trend that has been developing over the last decade or more (actually, since the 1992 Cadbury Report), which appears to have hit a speed bump recently.

    This week, an article published on the Pensions and Investments website reported that, in America, support for Independent Chairmen had declined in 2013, despite a "bumper crop of calls" for independent chairs. I was somewhat flummoxed by the information presented in the article. How can increased demand lead to fewer appointments? Is this a new trend, or just a one-off blip? Who is in control, or, more directly, who actually has the power?

    Corporate governance in America, as in other jurisdictions, appears to be awash with power games. Calls to separate the Chair and CEO roles appear to be founded on concerns that too much power is concentrated with one person. Yet that very power seems to hold sway. It's as if holding on to the 3P's (position, power, prestige) is more important than a fourth P—the one that actually matters —performance. When will Boards and shareholders wake up and act?
  • Published on

    Boards of directors: is form or function more important?

    Governance Management Performance Research Societal Wellbeing Strategy
    Much has been made in the business press in recent weeks of the possibility of splitting the Board Chair and CEO roles at JP Morgan. Arguments for and against have been made, and now a non-binding shareholder vote is imminent. I can't help but feel disappointed by all this rhetoric, because arguments about Board form (structure) miss the point.

    For the last 40 years or more, researchers and practitioners have searched for "the ideal Board structure" through which high performance will occur. Despite considerable effort, attempts to produce an ideal structure, or explain how Boards contribute to business performance, have failed to produce definitive results. If we pause and reflect, this lack of clarity should not be a surprise. Governance is a complex, socially dynamic phenomena, not a predictable closed system or a mass of separable attributes. As such, empirical knowledge (of the past, or of form) cannot be used to credibly predict future performance.

    Rather than continue to argue over form (that is, argue over structural variables including Chair/CEO duality, gender diversity, non-executive directors), attention needs to move to the holistic consideration of governance itself, and what Boards do (how they function). Then, and probably only then, will we start to gain a clear understanding of how Boards actually contribute to business performance. But is that asking too much of the JP Morgan Board and other Boards? I guess time will tell.
  • Published on

    Company directors: what are your real responsibilities?

    Governance Management Performance Readings Research Societal Wellbeing
    Two posts on corpgov.net have caught my eye this week:

    Together, these articles present a significant challenge to the corporate governance community, and company directors in particular. To most Boards, the purpose of the company is to achieve growth and to maximise shareholder value, period. But is this narrow focus appropriate? Does it help society, or does it add to its burdens?

    As I read the articles, I found myself thinking about the relationship between economic growth and societal wellbeing. You don't have to be a rocket scientist to understand that a narrow focus on profit or growth is a rather selfish win/lose strategy. Shareholders win and the rest of us lose. Is that fair? Perhaps Boards should be compelled to take account of wider societal factors as they fulfil their important role. What do you think?
  • Published on

    Is it time for our business schools to get closer to business?

    Management Performance Research Societal Wellbeing Teaching
    Acclaimed businessman, Rob Fyfe (formerly CEO of Air New Zealand), was reported this week as saying that business students don't understand leadership in the real world, and that universities should take a more authentic approach to leadership study. I agree.

    Over the last two years, I have been immersed in post-graduate study—initially a post-graduate certificate in business, and subsequently doctoral study. In so doing, I have observed some rather interesting behaviours and patterns that, quite frankly, trouble me.
    • A large percentage (perhaps the majority, even) of the academic researchers and tutors I have come in to contact with seem to have a very relaxed attitude towards time. The importance of time that pervades business is not apparent in academia. 
    • Many of the students I've met (both under-graduate and post-graduate) seem to lack any real appreciation of how business is conducted. Consequently, their ability to appreciate management concepts and theories, and think about them critically, is compromised.

    The consequences of these behaviours and patterns appear in the assignment submissions, theses and research reports produced by students and faculty. Much of the material is technically correct but either hard to understand or lacking in any applicability to real-world situations. It's almost as if the "so what?" question has never been posed, let alone wrestled with.

    In my opinion, all aspiring business students should be required to undertake at least five years practical experience in a relevant field before they are accepted into any post-graduate programme. Also, faculty should be required to do a significant period of field work on at least a sabbatical basis (every seven years). This type of requirement would ensure students and staff have at least a basic understanding of business in the real-world. Such a model may well be threatening to some faculty who sit comfortably in their learned environment. However, I suspect the quality and practical usefulness of the research produced, and calibre of graduates re-entering the workforce, would increase markedly.

    What do you think?
  • Published on

    Readings: to keep the mind ticking over...

    Readings Societal Wellbeing
    This week I'm on holiday with my wife at Caloundra, on the Sunshine Coast just north of Brisbane, Australia. The weather is supposed to be pleasantly mild at this time of the year, with warm sea-breezes and partly cloudy skies foretelling the easing of the summer heat and the arrival of cooler temperatures. However, this week, the weather is not doing what is it supposed to. We've had passing showers every day until today, when steady rain has been the norm. Fortunately, the temperature is still hovering around 20 deg C. Anyway, wet weather provides a nice benefit: that of relaxing inside with a good book. This week, I've started reading two books. Both have gripped me and caused me to think quite deeply about a few things. I thought I'd share them with you, even though I have not finished reading them yet. 

    Thinking, Fast and Slow (published 2011) is Daniel Kahneman's latest book. It was an impulse-buy in mid-2012, while buying some research books at Amazon, one that has been sitting on my bookshelf since. Snippets from the flyleaf: Kahneman takes us on a groundbreaking tour of the mind and explains the two systems that drive the way we think. System 1 is fast, intuitive, and emotional; System 2 is slower, more deliberate, and more logical. Kahneman reveals where we can and cannot trust our intuitions and how ewe can tap into the benefits of slow thinking. He offers practical and enlightening insights into how choices are made in both our business and our personal lives—and how we can use different techniques to guard against the mental glitches that often get us into trouble.

    A Long Walk in the Himalaya: A trek from the Ganges to Kashmir (published 2007) was written by Garry Weare, an explorer and writer. Long Walk caught my eye while I was passing the time in a second-hand book store a few days ago. Although I've never been a tramper or trekker as such, I have long harboured dreams of undertaking long journeys on foot, be they pilgrimages like the trek across northern Spain to Santiago de Compostela, or indulgent hikes in Yosemite, Kakadu or Fiordland National Park. While I've visited some of these places, I'm yet to tackle any long journeys as such. Anyway, to Long Walk. This book provides an account of Weare's five-month trek from the source of the Ganges—through valleys and over mountain passes—to Srinagar in Kashmir. On one level, the book is a straightforward travelogue. One another, it provides a rich history of the region. On yet another, it stimulates spiritual and socio-political thought, of the type I've not experienced from reading a book like this before. 

    I'm partway through both books, and not normally wont to make recommendations. But in this case, I'll make an exception. If you are at a loose end, and are looking for something that will stimulate your mind, you could do far worse than read either of these books.
  • Published on

    Twelve months on: living the dream

    Governance Management Performance Phd Readings Societal Wellbeing Strategy
    Today is an auspicious day (well for me anyway). Musings was created twelve months ago today. At that time, I wanted (needed?) an outlet through which new ideas, thoughts and reflections could be expressed as I began to grapple with the demands of a PhD. 

    When I set out, the goal was entirely personal: Musings was a vehicle to share my thoughts and ideas about governance, strategy and societal wellbeing. I had no idea whether Musings would make it beyond a few months (or a few entries for that matter!), or whether anyone would read the entries. I wasn't really bothered either. To my surprise, my motivation to share ideas remains intact, somewhere between 50 and 200 visitors view the site each day (that number is slowly growing over time), and quite a few people have either posted comments or contacted me directly.

    Looking ahead, I plan to continue writing, because the process helps me refine my (doctoral) thoughts. The focus will probably narrow slightly (to strategy, decision-making and governance), as these topics start to dominate my thinking time (I've discovered doctoral research does that to you). One twist though: I'm going to move from writing for my sake, to trying to provide "value" to readers. To do this, I'd appreciate some feedback. Are there some topics or themes that you'd like to read about in the coming months? If so, please post a comment! In the meantime, postings will continue at the pace of 2-3 postings each fortnight.