Cutting Through The Grey

Board Effectiveness Principle

Build balanced Boards to promote challenge and chair them to consensus decisions.

 

The Chairman’s nature and motivations are largely responsible for determining whether the Board creates a ‘Spirit of Corporate Governance.’ Personal aggrandisement and Machiavellian game playing harvest fruit which may not be for the common good.

 

 

Each Board member determines what is ‘good’ and ‘right’ informed by their personal logic, interest, values and emotions. Healthy debate, orchestrated by the Chairman, considers diverse views in order to identify a range of options. Exploring both short and long term implications informs choice.

 

Consider the production company, obliged to reduce costs to mirror reduced revenues. In choosing between property and headcount, the latter are assumed to be the easier ‘quick win’ target and competitive capability is lost. While some capability remains in the marketplace, permanent loss is inevitable.

Leadership principle

Survive recessions by nurturing stakeholder relationships and closely monitoring cash.

 

The old adage ‘buy on credit, hold stock for the shortest time and sell for cash’ reduces organisational risk and exposure. Finance functions manipulate creditor and debtor payments to manage organisational cash flow. Their actions may be in direct conflict with Sales and Marketing functions, keen to stabilise and nurture supply chain relationships ready for the upturn. Ensuring that all efforts are aligned to a common purpose is a leadership challenge shared by all senior executives.

 

Balancing both internal and external perspectives is always critical but recessions tend to breed extremes of behaviour. Fear and uncertainty lead to a preoccupation with self preservation. Internal meetings multiply and navel gazing results.  

 

Picture the elegant reception of a FTSE 100 HQ. Business visitors wait to be guided through security. The reception team look embarrassed as they advise the third group that an internal meeting is over running … which will mean a longer wait….they leave….relationships falter.

Strategic Change Principle

Engage with all your stakeholders and understand what they expect from you.

 

Instantaneous global connectivity makes the task of engaging in dialogue with discrete audiences increasingly complicated. A message to one audience can be swiftly transmitted to all via a range of networking tools.

 

The best seller list includes multiple titles dealing with the impact of virtual ‘social’ networking on organisational strategy and the advent of cloud computing.

 

Technological possibilities can enable changes to the shape and nature of organisations and value chains but appetite for these changes differs. What stakeholders remember also differs. Corporate memory often resides in the minds of decision makers and their time in post is decreasing. Conversely, business ‘transgressions’ remain in the social memory far longer.

Hippocratic oaths

Context matters. In order to be effective leaders, we must develop situational intelligence to inform the choices we make, how and when we intervene and with what intentions.

Greek physician Hippocrates (c430BC) stated:

'It is far more important to know what person the disease has than what disease the person has.

Recognising symtoms is not enough. An holistic 'rich picture' must be drawn. If the patient is an organisation, pity the leader who simplisticly says 'I have seen this problem/issue/situation before; This is what I did; It achieved the results I wanted; I will deploy the same strategy.'

While at the helm of British Airways, Rod Eddington wisely said 'I may have seen similar situations at Cathay Pacific but I would be naive to believe that they could be addressed in the same way with the same results at British Airways.

Hippocrates is also informing management thinking at Harvard Business School, where graduates have sworn a 'Hippocratic Oath:'

'To serve the greater good by bringing together people and resources to create valuable goods and services for Society.'

In an attempt to clearly identify the complexity of ethical leadership, Harvard has created eight specific pledges concerning desired behaviour and attributes. Opinion is split over whether this attempt to define 'good' behaviour will substantially change the ethical environment.

Given that we are judged by how we behave and the concurrence between what we say and do, our personal ethics/principles are on continuous display and will determine the extent to which people trust us and want to do business with us. As we seek to create and maintain relationships along value chains, leaders will increasingly find this topic appearing on Board agendas.