Managers vs Leaders: the Limits to Board Effectiveness on Corporate Strategy?

An interesting short read on what makes a useful independent non-executive director. Thanks to Soula Proxenos for pointing out! It highlights the importance of the Board's contribution to #strategy: "...Effective Boards spend up to [12] days a year on strategy, compared with just [4] for low impact Boards which adds to the non-executive’s time commitment. These factors will result in the executive team genuinely valuing the contribution of the NEDs and being more willing to engage effectively with the Board..." I am not sure of the evidence base for "12 days". My experience tells me that, for Board contribution to strategy, #quality counts far more than quantity! The #boardofdirectors can give valuable shape and polish to a competent strategy process led by the executive. That requires visionary, principled and stakeholder-goal-congruent #leadership in the executive. Given an executive that is afflicted by " #managers" who can only administer and are absorbed with short term self-interest, the best Board in the world would be hard pressed to be effective!

"Time's Up?" - Evaluating the Value for Money (VFM) of Board governance

In principle, a Board's VFM to stakeholders is the ratio of gross value-added (GVA) to gross cost (GC). So, the evaluation of board effectiveness/VFM should ideally include the experienced and skilled estimates of both factors.

This GC research that is being updated contributes to that process and should be replicated in other contexts. Of course, the reasonable assessment of GVA is much more fiendishly difficult!

It is, however, increasingly evident that many traditional models of the evaluation of Board GVA are unduly narrow in scope and can benefit from the insights of modern social and business behavioural sciences. Given the increasingly worrisome impact of corporate behaviour on the sustainability of societies and on the natural environment, the time for 20th century evaluations of Board GVA must surely have ended. Nature's unleashing of COVID 19 is surely a declaration to humanity of "time's up"!

Responsible Boards will be demanding insights that deploy credible social and business science knowledge to assist them in the effective discharge of their duty of care to all stakeholders.

The Inconveniently Independent Non-Executive Director (INED)

A nugget of a 2018 article. Reminds us of the old drive for INEDs in the Global North: "...boards were...mere extensions of management, a kind of...business celebrity cheerleaders..." In parts of the Global South, the "cheerleading" view still prevails; perhaps due to cultures that hail "the chief" with disdain for "checks and balances". So, overconcentration of corporate power may be relatively unchecked. Mind you, Northern INEDs have had a hard time: "...when the shit hits the fan, [INEDs] are expected to move into high gear, forming special committees that essentially take control of the investigation while conflicted board members recuse themselves... " This is familiar to the unpopular, principled, INED on a Southern Board. When "cheerleading" is loudest, s/he is derided. When predictable trouble emerges, s/he has to salvage his reputation. Bottom line: a principled, competent and experienced, INED is worth his weight in gold to a discerning, stakeholder-serving board. I should know: I hired one for my start-up Board: a valuable "headache"!!

The Quality of a Board will be well judged by its Responsiveness to this COVID Crisis

The Quality of a Board will be well judged by its Responsiveness to this COVID Crisis

"... There will be many... key stakeholders to take into account...Regular communications and discussions with these stakeholders about emergency policies and actions will be critical...There is no single right way to do this, but many boards will establish a Covid-19 Crisis Committee. Responsibility for multiple and urgent day-to-day decisions can be delegated to the Covid-19 Crisis Committee [with] a clear written framework under which the Covid-19 Crisis Committee can make decisions, reverting to the board when decisions fall outside the framework.

In addition to the executive management, this is a time for the chair and non-executive directors to visibly assume and demonstrate governance leadership...For example, non-executive directors could engage with and report back to boards on the views of key stakeholders."