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The stuff company directors can’t be taught formally in classrooms

Mike O’Donnell Director, writer and strategy adviser

One thing I have learnt after 10 years of being a columnist is that you can’t tell which columns will make a big splash with people and which will sink with barely a ripple in the pond of public opinion.

Last week’s column about The Killers’ Auckland concert and the use of future directors made a bit of a splash. It was one of those columns that seemed to write itself, with words tumbling out and dispatched without too much thought. To my surprise I was contacted by a bunch of people interested in the practice of trainee directors and wanting to know about the Institute of Directors’ programme. Then I got asked to speak at a conference next year.

I also heard from a very passionate Killers fan who was outraged I failed to understand the hidden meaning in Mr Brightside. Sorry about that, Seth.

Talking it through with some directorial colleagues this past week I realised that my column had missed a trick. I had overlooked perhaps the most important thing that real world boardroom experience can bring to an aspiring director.

Specifically the stuff that can’t be taught in a classroom or in online modules, and that is the stuff about human dynamics and the mental odour of a boardroom. Formal learning about governance operations tends to concentrate on compliance, risk and process; but there is little about the human factor.

And it is the human factor along with the dialectic of board dynamics in Aotearoa that is the guts of Henri Eliot’s new edition of Board Shorts.

Eliot is an iconoclastic Canadian who made Godzone his home after a career with JP Morgan, PwC and the Bank of Montreal. He set up Board Dynamics – a governance consultancy – in 2009. He is irreverent, funny and passionate about governance – both the objective side and the subjective side.

The new edition of Board Shorts is broken into four sections, and draws on real world observations and anecdotes about the hundreds of boards he has worked with. It is the last section – inside the boardroom – that I found particularly interesting.

It starts by digging into an overheated boardroom. A boardroom where directors have stopped playing the ball and are just playing each other. Instead of focusing on putting their best feet forward, they just focus on putting the boot in. Henri traces this to a set of root causes including weak chairpersons, a lack of confidence in the chief executive, and personal reputation concerns. Often the first of these – weak chairpersons – can be accompanied by chief executive capture, whereby the chief executive ends up being both chief executive and de facto chairperson.

Then the book digs into family businesses, the boards that try to govern them and the family feuds that can erupt. These are situations that make up a large percentage of mid and large sized businesses in Aotearoa where one or more members of a family both own and manage the business, and boards of siblings act as de facto executives rather than arm’s length governors.

This can be extraordinarily successful, as I have seen in some Hawke’s Bay and South Canterbury businesses, but more often it can be a disaster. The useful insight the book flushes up is that founders in such companies often feel they are a family with a business, rather than a business that happens to be owned by a family.

When nepotism overtakes strategy, then you know you are in trouble. As noted in the book, it is important for the younger generation to know it is not their birth right to simply leave school and start working in the business and end up on the board one day.

There is also an interesting chapter digging into the mantra that directors should be ‘‘noses in, fingers out’’ and how it applies in Godzone.

More specifically it says that directors are likely not doing their job if their path into the affairs of the company is from the front door, to the boardroom, to the lunchroom and out the front door again.

Rather there is a strong push for directors to spend more time on the shop floor, something I feel a lot of empathy for. Spending time on the shop floor allows directors to gain a better understanding of company culture and working conditions. Plus the water cooler talk is invaluable for picking up the good oil that gets strained out of the board papers.

Another benefit – so long as you are not a dickhead about it – is that it is useful in breaking down boundaries between the coalface and the board table, and that staff appreciate the opportunity to have an open discussion with directors.

The book finishes with five future focus areas it reckons directors need to be all over. As we look down the barrel of a recession-cursed 2023, it is useful stuff to put on your Christmas break reading table.

These are: the impact of climate change on your company; retaining great people; cyber-security; the recalibration of the global political order; and the accelerated pace of disruption. Things you should be across if you want to kill it in the boardroom next year.

Business

en-nz

2022-12-03T08:00:00.0000000Z

2022-12-03T08:00:00.0000000Z

https://fairfaxmedia.pressreader.com/article/282041921154925

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