Governance has been on my mind quite a bit, what with the well-documented machinations of large media organisations, my own experience as a trustee and director, and a fascinating conversation I had with a friend who works in corporate sustainability. He talked about the tensions between profit and purpose many organisations he encounters are grappling with. And then I read a piece in McKinsey Quarterly entitled Boards: When best practice isn’t enough, which asks:
Why is it that despite all the corporate-governance reforms undertaken over the past two decades, many boards failed the test of the financial crisis so badly?
Good question, one that exercises many of us to this day, and which may equally be re-framed and asked of, for example, trustee boards of organisations currently faced with gearing themselves up to fill the gaps created by a curtailing of Public Sector service provision. Simon Wong’s article offers three ‘Simple Rules’ to assess whether a Board is fit for purpose:
- Do our directors think and act like owners?
- Does our CEO have a collaborative mind-set?
- Does our board guard its authority and independence?
It was lovely to read someone from a big consulting firm making the case for organisations paying attention to human dynamicS, and to pay attention to the collaborative (i.e. relational) skills of CEOs. Yet woven into the fabric of his model are two assumptions that need challenging.
Ownership
The idea that directors should foster a ‘owner mentality’ is interesting. A few years ago, when I acted as Company Secretary for one of my clients and sat on their Board, I was offered the chance to invest in the business. After much wrestling, I declined, and the primary reason was that I noticed that becoming an ‘owner’ would fundamentally cloud my judgement and prevent me from acting as a ‘critical friend’, which for me is the primary purpose of Directors and Trustees. If you ‘own’ part of something, and are invested in its success or failure, whose needs are you attending to? Equally, it cuts against the evidence: as Daniel Pink, amongst others, has pointed out, carrot and stick motivation just doesn’t work and is ultimately counter-productive.
How boards some behave beneath the surface?...
Challenge vs Conflict
Good boards are pretty uncomfortable places and that’s where [sic] they should be.
What does ‘uncomfortable’ mean? There is a difference between robust dialogue as part of a culture of learning, and macho posturing. Years ago, a teacher I knew said that shouting at children was pointless if the goal was ultimately to encourage learning. All it did was scare them rigid and kick-start the fight or flight mechanism and flood their brains with adrenalin. Hello knee-jerk reactions, good-bye critical thinking.
So to bring it all back to dancing, I suggest good governance is more likely to emerge from, say, Capoeira than the culture of the corporate mosh pit, and the Simple Rules for good governance need a bit more work. As an alternative, and an article I have referred to before, Jeffrey A. Sonnenfeld‘s What makes great boards great? from the Harvard Business Review (2002), is hard to beat. Unless you prefer moshing.
Hi Steve, one of the things that I think contributes to this is the difficulty in conceptualising and communitcating the breadth of complexity and subltities that exist in a governance context at the moment. E.g. how do you reconcile/align business information with strategy with culture and relationships?
Vlatka and I are exploring this over at the Performance Ecosystem…
http://performanceecosystem.com
Have a good weekend…
I agree. Which begs the question: what’s the answer? For me, the starting point has to be curiosity, and a willingness to let go of what we believe to be certain.
I think there is another question/issue that emerges from your comment, namely that this type of inquiry requires space and time to do it justice, certainly supportive conditions of some kind, yet when governance is in a challenging phase, the conditions for open dialogue often get compromised.