The importance of tone at the top in times of uncertainty

Whether a business achieves sustainable success for the benefit of its stakeholders and wider society is critically influenced both by the board’s decisions and, also very importantly, by how board members act in the boardroom.

Boardroom behaviour has a crucial impact on corporate culture since how the executive and non-executive directors treat each other reverberates across the organisation.

Four types of board culture

We have identified four different types of board culture based on a 2×2 matrix that considers the degree of support and challenge respectively that exists in the boardroom. Ideally, there will be an ‘engaged’ board with high levels of both, but alas the three other options are also found in practice and in their different ways each will hold the business back from achieving its full potential: the ‘cosy’ board with high support and low challenge; the ‘us and them’ board with low support and high challenge; and, the ‘semi-detached’ board offering neither challenge nor support.

four types of board culture

1. The ‘engaged’ board

There will be strong degrees of openness and trust between board members on an ‘engaged’ board with high-quality information made available to the board and its committees in a timely fashion. There will be no issues ‘off agenda’ and challenging situations will be discussed at an early stage of arising with the collective intelligence of the board being brought to bear in determining the best way forward. Board meetings will be well-structured with time allocated for discussion and clear decisions taken after. In addition to dealing with regular board issues, time will be set aside for an annual ‘away day’ to provide an opportunity to review progress towards achieving the longer-term strategy and to consider other issues requiring significant time for reflection and discussion. The board also needs to know when it would be helpful to have external advice to assist in making decisions possibly, for instance, on issues related to cyber security or wider aspects of technology.

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Leading when only the unpredictable seems predictable

Any thoughts that we were moving away from a period of high risk and uncertainty in UK business vanished once it became clear that the snap election had delivered the UK a hung parliament. The existing uncertainty around Brexit and the economy in general has undoubtedly increased.

???????????????????????Furthermore, the current causes of high risk and uncertainty are not only political. Technology is also having a major impact on businesses whether through new entrants’ lean technologically-driven business models; growing online retail sales; opportunities provided by Big Data and artificial intelligence or the threats from cyber attacks. In addition, trust in business has not fully recovered since the financial crisis and with 24/7 communications, including social media, reputational damage following a crisis is likely to be more swift and potentially more severe than in years past. BA will attest to that. (more…)

The future board is a very different animal. NEDs should take action now.

Business is going through a period of huge change and uncertainty.

As advances in technology remove barriers to entry on a previously unseen scale, business models are disrupted and ‘old’ sources of competitive advantage displaced, many feel that we are still in the fairly early stages of ‘The Fourth Industrial Revolution’.

In addition, global warming is already affecting many businesses, particularly those in the energy, manufacturing and insurance sectors, whilst recent political developments, especially in the UK and USA, have shown a growing distrust of business and its leaders and there is also concern at the economic shift eastwards. And all of this easily and instantaneously brought to the fore with the relentless ‘24/7’ world of social media and other communications channels. (more…)

Two cheers for Green Paper on Corporate Governance Reform

Two cheers for the Government’s Green Paper on Corporate Governance Reform published last week. The first is for indicating that ‘we need to support strong businesses that focus on long-term value creation and command public confidence and respect’.The second is for focusing on strengthening the employee, customer and wider stakeholder voice in a relatively broad and open-minded way and moving away from the idea of compulsory employee directors just as it has implicitly accepted that there are no silver bullets when it comes to addressing the vexed issue of executive remuneration.

The missing cheer is because it has not grasped the opportunity to take a thorough look at how changes in corporate governance and investor stewardship could help facilitate a real drive by UK listed companies towards striving for long-term sustainable success which brings benefits to all their stakeholders and wider society. (more…)

Lithuania enhances its anti-corruption effort on its journey to join the OECD

During April, I was honoured to be invited by the Lithuanian Ministry of Justice to address an audience of Lithuanian private sector companies in relation to the new International Standard in Bribery Risk Management – ISO 37001.

In the 26 years since independence the country has come a long way and is a full member of NATO, the EU and the Eurozone. Lithuania now seeks membership of the OECD and must fulfil a number of pre-admittance requirements. (more…)

What is social investment and where does it fit in the spectrum of investment?

A lot is being said and written about social investment. In March 2016, Rob Wilson, Minister for Civil Society rightly said ‘Social investment is growing. It will play an increasing role in how the sector will be funded and there is a role for all of us in achieving this. Social investment can accelerate the growth of new businesses, transform the impact of our public services and support stronger communities to tackle the social challenges that they face’.

So what is social investment?

This blog uses an internationally accepted framework of investment to set the scene and place social investment in context. My preferred analysis is to look at seven models; three financial investment, three social investment and one charity. (more…)

What did the BBC’s Moral Maze say on charity and its use of government funding to lobby government?

In February, BBC Radio 4’s The Moral Maze covered charity in the UK.  The panel members were Michael Portillo, Anne McEvoy, Giles Fraser and Matthew Taylor, chaired by Michael Buerk.

Not surprisingly, the conversation covered charity and its relationship with government and whether charity should be able to use part of its funding from government to lobby government. 

These questions are important because charities receive government funding of £13 billion out of a total annual income of the sector of £40 billion (NCVO Civil Sector Almanac). 

In February 2016, the Cabinet Office announced that new and renewed government grant agreements with charities from 1 May 2016 will contain a new clause to ensure that ‘taxpayers’ money is spent on improving people’s lives and good causes, rather than lobbying for new regulation or increased funding’.  The government added that the new clause would not prevent charities in receipt of government grants from using funds from other sources for lobbying.  (more…)

What did the BBC’s Moral Maze say on charity and its relationship with government?

The Moral Maze programme on Radio 4 in February 2016 discussed charity in the UK. The panel members were Michael Portillo, Anne McEvoy, Giles Fraser and Matthew Taylor, chaired by Michael Buerk.

Not surprisingly, the conversation covered charity and its relationship with government and whether, in turn, charity should be able to use part of its funding by government to lobby government?

These questions are important because charities receive government funding of £13 billion out of a total annual income of the charity sector of £40 billion (NCVO Civil Sector Almanac).One line of thought is that charity should be ‘pure’ and independent of government, without any influence over government and without any government funding for its work. This is harking back to some ‘golden time’, which probably never existed, when ‘Lady Bountiful mopped fevered brows and carried on good causes.’ (more…)

What are the broader lessons of the collapse of Kids Company?

A great deal has been said and written about the failure of Kids Company, including a very negative documentary on prime-time television. What can we learn about the failing of a vibrant and passionate organisation, working with young people in the most challenging and vulnerable circumstances? (more…)

Is the UK less corrupt?

The 2015 Corruption Perceptions Index (CPI) that ranks countries by the perceived level of public sector corruption, was published by Transparency International on 27 January 2016.

The CPI has many detractors but is, nonetheless, read attentively by governments, companies and interested individuals around the world. One of the interesting facts about this year’s results is that the UK has re-entered the top ten of cleanest countries after an absence of more than a decade. (more…)