Business success equals delivery of value! A company exists for a specific purpose of creating and delivering value – a purpose realized as its mission and sustained by its vision!
Is it, however, adequate for the successful leader to fulfill the corporate mission and realize the corporate vision by “all” means and at any cost?
Extensive global research shows that this is impossible in the medium and long term. It could be possible in the short term at the detriment of most, if not all, stakeholders until the organization collapses under the weight of its own weaknesses and wrongdoings!
The successful leader needs to operate in a culture based on corporate values and governed by ethical rules –rules that comprise the Corporate Code of Governance.
Governance unfortunately has become another ill-treated business term.
Governance is not synonymous with compliance and monitoring, questionnaire answering and belated reporting.
Governance is a coin with two sides: the smart leader needs to
- establish and cultivate the necessary corporate culture via mentoring and coaching and in parallel
- ask for compliance, monitoring and reporting.
Applying governance demands deep understanding of its meaning and its application in difficult situations and dilemmas.
Furthermore, it demands inquisitive minds, diversity of thinking and independence.At the board level, it demands in-depth dialogue on all issues, interrogation of arguments from various angles, open challenge without prejudice and fear of insulting colleagues and exhaustion of discussion until full understanding and wide consensus are achieved.
This must be done under the leadership of the Chairperson with full participation of the non-executive members so as to mentor and guide the executive team.
Ideally, this should cover the second level of executive management under the joint leadership of the Chairperson and the CEO. Otherwise, it should be done by the CEO –with the assistance of the Management Committee.
As many recent international and local incidents have shown, placing emphasis on monitoring at the expense of managing the culture and mentoring is insufficient and leads to mechanical box ticking and reporting with grave results.
Research shows that many of the big corporate scandals happened despite the exemplary formalities and protocols and “full” compliance to formal codes of governance such as the ones enforced by Stock Exchange Authorities. It even shows that in many cases individual board members knew or suspected that “something” was not right, but didn’t have complete information and preferred to keep silent instead of raising the right questions!
Once again, a wrong “pseudo-solidarity” spirit and a need-to-know and “do-not-disturb-what-is-good” culture in the place of a genuine team culture proves to be catastrophic.
The latest tendency in tackling this widespread problem, appears to be “Dynamic Governance” (for which more in our next article) and placing emphasis on “enterprise fault lines”, i.e. the hierarchical lines between various levels, such as between board and top executive team, between top executive and general management and between general management and operational management – and between corporate centre (head office) and national branches of international organizations.
In summary, research shows that best practice dictates that
- the Board of Directors should own the culture while
- the Executive Management should own the execution of the mission and the realization of the vision and hence the strategy.
13.11.2015