Professional Documents
Culture Documents
This research is primarily motivated by the call for further vigilance and
effort to strengthen corporate governance. While it is uncertain if the
worst of the global financial crisis has passed, the expectation remains
that boards should not just monitor management, they should also take
full responsibility for their own performance to ensure business
longevity at the optimal level that shareholders also seek.
Key findings.
Where to next?
Aims of the Research
Stage One
Stage Two
Stage One
– We chose the largest companies on the basis they are usually at
the forefront of corporate governance. Our findings may not apply
to smaller companies
Stage Two
– Director interviews - our sample was not random which could
lead to bias. There are many reasons why directors might agree
to be interviewed which have to be balanced against the
difficulties of obtaining access
– Fund manager interviews – small sample was designed to
explore the issue of disclosure from both sides and was not
intended to comprise a stand-alone data source
Context
Internal External
Internal
Roles and responsibilities
External
Regulatory requirements
of directors Post-GFC reforms
Board
To promote proper debate in the boardroom, there are new principles on the
leadership of the chairman, the responsibility of the non-executive directors
to provide constructive challenge, and the time commitment expected of all
directors.
Over this time processes have been refined but, more importantly,
the exercise has become accepted as valuable practice.
Purpose
Board maturity
Industry changes
Cycle Subject
Process Content
External
Chair
Both
Individual v Team
Advantages Disadvantages
Everyone likes to get constructive Implies an ‘ideal’ director rather than
feedback embracing differences
– “There can be some skills that you don’t foresee that can be
extraordinarily useful.”
The Dysfunctional Board
CULTURE COMPOSITION
An adversarial atmosphere in the boardroom Skill deficits or lack of genuine independence
or an unmotivated board with a tendency to on the board
group-think
Chair
CEO
CHARACTERISTICS PROCESS
Conflicts of interest or factional interests on Poor chairmanship – a chair who is too weak,
the board, perhaps due to a dominant too autocratic or too close to the CEO
shareholder Poor processes leading to inefficient use of
time
The Effective Board
CULTURE
COMPOSITION
Honest, Respectful
Diversity
Transparent
Experience
Constructive challenge
Chair
CEO
PROCESS
CHARACTERISTICS
Secretarial support
Engaged Information
Non-adversarial Committees
Independent
Disclosure
Director history/profile
CEO appointments
New board?
Concept Entrenched board?
Industry changes?
Purpose
Subjects
Implementation Retrospective
Outcomes Disclosure Content Prospective
Links Aims
Action plan Criteria
External
Whole board
Internal
Feedback Individuals Method Alternate
To whom Who conducts
How What process
Timeframe
Other processes
Evaluate
How often
Key Findings
International variance
Flexible processes
Continuous improvement
Individual performance
Senior management
Key Findings
Informal discussion
External facilitation
Implementation