If you deal with boards, with board processes, discussions about ‘Best Practice’ are frequent. The subject cover a vast and diverse universe of topics: from the pros and cons of 1 or 2-layered boards (i.e. CEO being, or not, the chair of the board), to how to ensure sufficient information flow from execs to boards, board engagement with investors and stakeholders, about dos and don’ts of remuneration committees, to fiduciary duty, transparency and so on.
What is often forgotten however: Governance, and notably ‘good’ governance, stands and falls with people. ‘Best practice’ can prevent some of the worst mishaps and wrong doings, and enable basic functionality when board as a team is dysfunctional.
But ‘Best Practice’ can just barely circumnavigate either lack of qualification, but won’t ever manage to do so – much worse – for the lack lack of ethics and ethical values among board members.
And that’s the bit that in most discussions is being forgotten.
WHO sits on the board is at the very least as important as
HOW that board is set up to operate by its procedures and surrounding legal constraints.
The trouble with the WHO however is:
most selection committees of boards tend to look exclusively at the skillet as outlined on a CV / board profile, at best ‘team-fit’ is evaluated.
Rarely – if at all – an individual’s ethical values and integrity are scrutinized in depth. And yet this is of utmost importance. Most board scandals (Enron, Shell etc) happen despite a board’s skills, but because the group drive undermines integrity and ethical behaviour. Notably: without that the individuals notice that as such.
The How can remedy that to some extent, by forcing a corset of formal procedural steps – notably of risk assessment – onto a board. But this is a scaffold at best.
It requires a very astute perception and extremely strong value sets, plus a good portion of moral courage, to withstand and possibly go against the overall comfort level a board tends to develop amongst members. Hence, the WHO is truly essential for a board to play its top game, specifically at a moral and ethical level.
And that, sadly, is hardly a component that either recruiters or board nomination and selection committees tend to look into. One reason is, that many such individuals are ‘not mainstream’ and true lateral thinkers. Another reason: it’s really hard to find such people and convince them.
