Blog : BOARD TALK
|Posted on March 7, 2016 at 7:55 PM|
An awful lot of 'stuff' around the boardroom, ethics and corporate governance now lands in my inbox every day - sadly, very little of it is new, or interesting.
This is an area that excels in moving about in polite circles....I would argue because there are so very many vested interests, and so little incentive for change. But dispensing palatable advice is often good business for the person or persons dispensing it.
'OUCH '- I hear some of my confidantes around #CorpGov on Twitter say. Well, there is good news to report.
In December last year a workshop of senior regulators, company directors, executives and investors convened by them considered ways of identifying early warning signs of a 'weak culture.'
This is an issue that excited me to report here in October last year after a strong sense I might have attended far too many events discussing it.
But today, a report is published that gives hope. It contains the conclusions of the December workshop by the International Corporate Governance Network (ICGN), ICSA: The Governance Institute, and the Institute of Business Ethics. (IBE).
Interestingly, the workshop found that a major source of corporate stress occurred when "corporate leaderships imposed short-term targets which staff found difficult to meet."
The organisations involved say in a press release; "This could exacerbate a rift between staff and management. In such cases the board was often unable to get an accurate picture of what was going on."
This, at the end of the report Red Flags (no links yet), is what excites me:
"Joining up culture with the values needed to deliver performance brings the discussion back to the business model. How the company makes its money will always reflect the core values of those in charge. An overarching requirement may be to encourage companies to be more articulate in describing their business models. Then, as the underlying values become apparent, a judgement can be made on the culture and sustainability of the business and also on its prospects for performance.
This leads on to a final point, which is that there will sometimes be a tension between expectations of short-term returns and the long term sustainability that is delivered by healthy values and culture. This is especially true when companies are operating in extremely competitive markets where others are behaving badly. So the question of whether lower short term returns are compensated for by the reduction in risk is an important one – even though it goes beyond the immediate objectives of the session."
There is much else to commend in the report. I am afraid I am just very impatient with repetition. But it is exciting that 'corporate culture' is at last being directly linked to 'how the company makes its money.'
May I please direct you to the launch of the Centre for Progressive Capitalism at the end of this month in London for more thinking on such matters. I also covered seemingly joined up global thinking on the need for business engagement with the people who are expected to achieve its goals on Forbes recently.
Full disclosure: I am a member of the steering group for the Centre for Progressive Capitalism. ICSA's software arm also sponsors this blog, but with no editorial control.
And - shameless plug; ICSA's 2016 Two-Day Corporate Governance Conference starts tomorrow (expansion of time committed to #CorpGov has to be a good sign.....I think - ) you can follow it on Twitter at #icsaconf16