The good, the bad and the ugly of governance

It’s got to the point these days while poring over the raw results of board performance evaluations that we look across at each other and instinctively begin to hum that instantly recognisable theme tune from the movie ‘The Good, the Bad and the Ugly’, because that’s precisely what this potpourri perennially presents.

‘We’ happen to be Mel and Sascha, aka ‘the ladies behind the throne’ at Governance Matters, and our years of backroom experience in examining unsanitised results has given us what we believe is an if not unique then certainly different perspective on board behaviour.

We thought you’d be interested to learn what we’ve found to be the most common shortcomings of boards – and what’s surprising is not so much our list but the fact that these seemingly no-brainers make it onto the inventory in the first place!

Let’s start with strategy – or to be more precise, lack thereof. It’s staggering to think many boards still do not have a long-term strategic plan in place and our experience tells us that those that do – normally in the form of a comprehensive five-year strategic plan – invariably succeed.

Another constant is the size of boards and an inexplicable obsession with big. Less is often more and this certainly applies in the boardroom, where a relatively small board of directors usually turns out to be far more effective than the cumbersome cousin floundering in a world characterised by poor communication and dithering decision making.

Kate has mentioned the next one in a number of blogs and we wholly concur – the skill-set around the table is a game-changer. Have the right mix and you’re humming, have a collection of chummy and nepotistic appointments and your hum will soon develop a perpetual splutter.

In a similar vein, diverse boards with a substantial feminine touch outperform those of a more homogenous nature, with an analysis of ASX200 companies showing that since 2010, investors would have done better if they had put their money in companies that had at least 25 per cent female board representation.

Another astounding deficiency is boards bereft of quality governance policies, as many of these documents tend to be so ambiguous, verbose and intimidating as to be rendered pretty much useless. One wonders what became of the simple board manual, kept current and housing all policies and other important papers directors may need to reference from time to time…

At the risk of falling into the verbosity trap ourselves, we’ll bring this blog to a close by highlighting a final trio of failings.

There’s often a distinct lack of succession planning, along with an equally conspicuous absence of accountability. And, of course, a dearth of director training and development, with time constraints the hoary old chestnut lobbed in as the convenient excuse.

Well listen up, lads and ladies (yes, gender diversity delivers results!) there’s something called Board Minded, our very own online portal subscription that’s designed to keep time-poor directors abreast of best practice. Its suite of online presentations, delivered by some of the best brains in the business, allows subscribers to watch them, as a group or individually, as often as they please and always at a time that’s most convenient.

It has been good chatting.

Until next time,
Mel & Sascha.

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