In trying to reconcile the true value of governance in any organisation, the rhetoric of the highly publicised “governance” references in the media really provide very little practical assistance to an organisation.
The leadership of a listed company or a smaller organisation which may not be a company, (such as a partnership of trusts), have the same fundamental challenge to succeed. It is this question:
“How do you drive an organisation forward to ensure its continuing success whilst also ensuring that it is under prudent control?”
Unfortunately I see an emerging new industry of consultants espousing governance expertise where the quality of advice and genuine skill is, regrettably, inconsistent. It’s almost like your business consultant, accountant or coach is too frightened to omit the concept of “good governance” from their marketing material for fear of being trumped by a slicker public message from a competitor.
Governance is the new buzz word.
Governance as a Compliance Tool
For governments and the public regulators, the response to voters is to increase the number of regulations which is the only weapon of the politician.
On the basis of instilling fear of prosecution for contravening a regulation, this approach has the same basis as our criminal system based on deterrence and restriction.
Regulation in a business sense can regrettably also;
- deter entrepreneurial flair;
- restrict decisions based on acceptable risk; and
- take away the focus from establishing learning systems that deal with human behaviours and values.
It is easy for a board or a committee of Management to spend their limited time trying to fit into increasingly inappropriate, onerous and complex set of compliance rules than to deal with corporate culture, based on stewardship between the board and the shareholders (or members), and implementing culture as a learning system rather than simply being used as a passing reference by a board of leadership or included in the business plan compiled annually by an executive management team.
I see public statements referring to “culture” by board representatives “talking the talk” of good governance, when perhaps the true test of how the employees of the organisation make their decisions in accordance with sound values would fail to match the rhetoric.
Culture Driving Performance
If a board or committee of management wants to influence whether the culture is practised within an organisation, then they really need to focus on whether they can be confident with their managers and their executives actively implementing that culture.
- Are the performance drivers and values throughout the organisation consistent?
- How was culture maintained under pressure and through the difficult process of change?
- Is the culture consistent in all areas throughout the business or does it rest with a senior management team who don’t implement the important values with their downstream staff to build a bottom-up culture adopted throughout the organisation?
Another tactic I see employed by boards who want some reassurance of cultural consistency because they don’t have a clue how to measure the culture in the organisation is to employ a person to implement this task. I question: “Is this effective?”
Given the first quality of leadership is to demonstrate and live the values that underpin all decisions, actions and behaviours, how can a manager or a consultant hope to influence culture throughout an organisation without the hundred percent commitment and buy-in from the CEO and their executive team?
Certainly leadership is a top-down influence on an organisation whether it is positive or negative. After all, a fish rots from the head!
Perhaps any public demonstration of commitment to governance is better served by focusing internally on genuine organisational efficiency improvement and leadership training for middle managers, rather than less certain outcome through expenditure on high-priced individuals with HR backgrounds with resumes featuring the mandatory “Governance” core competency.
I don’t suggest that these individuals brought in to help the Board sleep at night cannot make significant headway towards improving the culture of an organisation, but I can say they won’t succeed if they can’t get top down commitment to cultural change.
