Board Hot Spots
Current official enquiries and reports have all raised serious issues of corporate governance. They hone in on Board Credibility, Reputation, Visibility, Renewal and Structure. At the core of all is Core Purpose – that is, a commitment (or lack) to publicly make a stand for why the company exists. shift hot spots to advance the board potential
The Findings of the Commission into misconduct in the Banking and Finance Industries have confronted Board culture and practices across many other industries as well. It is time to attend to governance culture and practices that are no longer fit for purpose.
Board hot spots to rise to full intelligence as a super high-level governance team.
Board Hot Spots Framework
Companies are now taking the step of articulating their “Core Purpose” and publicly making a stand for why the company exists. A core purpose statement is not a clever advertising slogan; it describes how the company is present and committed to the communities they are part of. Core purpose goes beyond vision, mission, values and strategy. It speaks directly to the organisation’s constituent base. An example of core purpose from a traffic control systems company is this, “We save lives”.
Reputation is a fragile asset. The Banking Royal Commission highlighted the risks to an organisation’s reputation if conduct is below good governance standards and community expectations. Incidents that previously have gone unnoticed can quickly spread throughout the world via social media. It takes many years to build company reputation and only one incident to destroy it. Commentators estimate over 25% of market value is tied up in company reputation.
When an organisation acts in ways that are perceived as deceitful or dishonest by its stakeholders and the general public, it quickly loses credibility. Trust starts to decline and its authority and expertise is questioned. The Board sets the tone for their company’s credibility, made visible through good reputation and demonstrating the company core purpose.
Board renewal is not just about finding new directors. It also includes time out to work on the board as well as in the board, opportunities for self-evaluation, and fresh approaches to old problems with innovative thinking. This can be challenging and requires openness, flexibility and skilled or facilitated dialogue.
Most customers, employees, suppliers and other stakeholders see directors as distant people in the background. Being unseen and unheard means being unknown. It is easy to trust those you know and to mistrust those you don’t know. Visibility has strong links to credibility, better communication, and promoting trustworthiness. Being a company director is now an active role.
The foundations of effective board functioning are not always applied with agility and awareness. Company and industry changes may call for structural review and development resulting in innovation and adaptation. Structures and habitual practices also need adaptation and fresh eyes in times of change.