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Good Governance
Tēnā koutou katoa. In need of some lockdown reading? Edition 76 of Good Governance has you covered.

This is our last free newsletter. Future editions will contain some premium content, so subscribe here to keep reading in full.

In this edition we lead with a useful article that looks at how Boards can do less to be more efficient.

We share our recent reading on - 

Finally from our archives we share eight expectations a CEO has of his or her Board.  

Until we see you next, stay safe and well. E noho rā.

In developing board effectiveness, less is more.
Few governing boards have meetings that are not under time pressure, which is part of a bigger problem—continual demands for greater accountability.

This extends to matters to which boards have never traditionally paid much attention, such as organisational culture, money laundering, cyber risk and social licence to operate.None of these can or should be side-stepped. They all affect organisational wellbeing, and many carry legal requirements with serious penalties (and often personal liability) for non-compliance. For boards taking their organisational leadership role seriously, however, these new demands can be overwhelming.

How should boards respond?
By holding more and longer meetings, perhaps? Whether a well-paid corporate director or a volunteer board member, expanding the amount of time applied to the role seems neither attractive nor likely. Many people are already on too many boards—or at least fully committed with other demands—so this is not a realistic option, beyond a little more stretch at the margin.  Nor is it desirable. Holding longer meetings, or more of them, creates other kinds of problem. Without an uncommon level of discipline, many boards unconsciously use the extra time to expand into the management domain. It is too easy for a board to forget that its role is to ensure the organisation is well managed, without doing the managing itself.

Another concern about longer meetings is concentration span. It is debatable that any group—not least a board of directors, each anxious to attend to other matters competing for their attention—can concentrate on a cognitively demanding agenda beyond 3 or 4 hours.

Another option is to try and push more agenda items into a ‘normal’ length meeting. This is hardly a solution either. By cramming the board agenda, most boards set themselves up to fail. When board meetings become a race against time, even the most important items on the agenda are unlikely to get the attention they need. This deficiency increases as the meeting closure time looms.

When meetings do little more than tick off items on a long agenda, board members leave with a sense of frustration rather than accomplishment. They know that, once again, important conversations about matters central to the board’s responsibilities and the organisation’s success have been cut short or not even begun. Important questions were not only unanswered but unasked. Much of their valuable board ‘face time’ was simply frittered away.


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The best of what we have been reading lately
We read and research on matters related to board effectiveness. Our aim is to sift through and share the best of it with you. In these articles we highlight the key points. If it takes your interest, we provide links to the original material.
A Field Guide to Bad Directors
Many published surveys of directors point to concerns about a fellow board member who is a poor or even negative contributor. In acknowledging that a similar problem probably also exists on your board, if you cannot easily name who that person is, it may be you.

As we’ve probably all been that person at one time or another, it may be helpful to be more mindful of the risk. To help with that, there may be no better starting point than Michael Pocalyko’s ‘A Field Guide to Bad Directors: How to identify them. How not to become one’.1

Pocalyko suggests there are four key features that are the collective defining characteristics of bad directors:

  1. Inattention to detail: They are all big picture, all the time, and they  say so.
  2. A narrow field of focus: They have their own agenda, one at variance with the general corporate agenda. They always know the one best way—theirs.
  3. Entitlement: Their attitude is that they deserve to be in the boardroom. Directorship is about arriving, position, authority and power.
  4. Inadequacy: They display incompetence, a lack of currency, a dearth of integrity and many other shortcomings. They carefully curate confidence and gravitas as masks of inadequacy.
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Noise; A Flaw in Human Judgement
Book Review: Kahneman, D. Sibony, O. Sunstein, C. William Collins 2021

We are big fans of Kahneman’s Thinking, Fast and Slow, frequently citing it as essential reading, so this new collaborative work was eagerly anticipated.

Thinking, Fast and Slow explores the influences on us as less than rational humans. It considers two modes of thinking: type one, fast, largely preprogramed (red means danger); and type two, the considered approach. As Kahneman observes, we are lazy by nature and often avoid the effort required for type two thought.

In Noise, the authors explore the consequences of our often hasty thinking, as evidenced by variation (noise) in judgement and decision making. Judgement is described as ‘a form of measurement in which the instrument is the human mind’.

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What kind of diversity does your board need, and why?
A recent blog pointed out that there are many reasons why boards should cultivate a broad spectrum of demographic attributes and characteristics among their members.

Beyond fairness and corporate social responsibility, heterogeneity in director sexual orientation and gender identity should help boards connect better with employees, consumers, and shareholders.1

When it comes to other dimensions of board effectiveness, however, particularly problem-solving capability, cognitive diversity may be even more valuable. British research has demonstrated that cognitive diversity is as likely to come from a group of demographically and culturally alike individuals as it is from one that is diverse in those characteristics.2

In ‘Teams Solve Problems Faster When They’re More Cognitively Diverse’, Alison Reynolds and David Lewis describe their research into problem-solving capability with executive groups. Groups in their experiments were required to formulate and execute a strategy to achieve a specified outcome against the clock.

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From the Archives
There are over 400 articles published in the earlier editions of Good Governance. In each edition of this new version we bring you something that still resonates today!
Eight Basic Expectations a Chief Executive Has of His or Her Board
We increasingly hear about chief executives being replaced prematurely because they have failed to meet their board’s expectations. Unfortunately, probably at least as many, if not more, chief executives are let down by their boards.

For that reason, we have previously advised prospective chief executives to ‘look before they leap’—to do ‘due diligence’ on the board of any organisation they are considering an appointment to.
Here we list a few important, but not commonly fulfilled, expectations chief executives are entitled to have of their boards and their individual members. These eight expectations are core performance criteria for any board attempting to improve the relationship and working partnership it has with its chief executive. Underlying these expectations are important basic assumptions about the culture of the board and the honesty, integrity and diligence of its individual members.

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