Recently I led an ISACA lunch time thinktank on the confusion that exists in many minds as to the role of governance as opposed to that of management.
A group of some 16 met for this discussion and discussed the issue for around 90 minutes.
One of the conclusions that we came to was that the knowledge, capability and leadership of organizations was an essential element in achieving successful governance and management of all organizations.
I personally would go further and add that personal and organizational values underpin activity and performance. Thus, I am sceptical that prescriptive legislative approaches such as Sarbanes-Oxley are truly effective as they are legal, mechanistic frameworks.
It was with much interest then that I read a comprehensive post by lawyer Stephen Franks today on governance issues.
Stephen recounts a recent presentation which he attended, and the nature of some research findings, by Professor Andrew Kakabadse, Professor at Cranfield University School of Management
Apparently amongst other findings is the following:-
Some tenets of popular Governance Codes have little correlation with the success of organisations.
The quality of the chair matters above all. While there is an enormous diversity of types of successful board, nominal diversity within a board is not correlated with success.
Quality can come from in house appointments, with an executive chair, or from outside. Age helps, as does experience in business and as a director. Having worked under a good mentor helps.
But the key requirements are high intelligence, the ability to set boundaries (of responsibility, behaviours and to draw difficult distinctions) courage, diplomacy or ability to influence, and humility (to value and elicit challenging contributions).
Social intimacy is important. Dinners and other social time together help people to know and therefore to trust each other. Without that trust it is harder to raise hard questions in ways that leave relationships intact.
Boards need members who are independent challengers of orthodoxy, but they stay useful only if they learn how to be more than gadflies.
Finally and this resonated very strongly with me, given my views on the issue:-
But most of all he emphasized that good Boards come down to the personal qualities of the people on them, and in particular how they are led, and that success is not correlated with the promulgation and observance of codes and formal governance policies.
There is a place for codes and policies, but they must be tempered with leadership, integrity and strong corporate and personal values – where the emphasis is on ‘doing the right thing.