More on the Corporate Governance Crisis
You may not have time to read the two books on Corporate Governance by Bob Garrett, an International Corporate Governance & Board Development Consultant, but if you are contemplating being a director or non-executive director — a nonsense distinction as Bob explains — then investing the time to do so may well be the best investment you ever make.
His first book was “The Fish Rots From The Head”, the second was “Stop The Rot”, and Bob writes with real authority, based on 30 years of international consulting on board and director review and development in Europe, US, China & South East Asia, Africa, and Australia/New Zealand. He is also Visiting Professor at Cass Business School, University of London; and Professor Extraordinaire, University of Stellenbosch where he is Chairman of the Centre for Corporate Governance in Africa.
If I haven’t yet tempted you to invest some time, first try his myth busting article for The RSA: CORPORATE GOVERNANCE IS DEAD; LONG LIVE CORPORATE GOVERNANCE. In it he cuts to the chase. He calls out the “lack of directorial professionalism”. He goes on to say the “problems are not ethical alone but more based on ignorance of the legal roles of directors coupled with a lack of induction into these roles, and the non-development of directors’ critical thinking abilities in formulating Policy and developing Strategy.”
Bob also argues, “the key role for any director and board is to ensure the future of their organisation by taking thoughtful risk”. And later he adds, “few directors know their legal duties”. In the UK they are outlined in the UK’s Corporate Governance Act 2016 and apply to private, public and not-for-profits.
The Act outlines seven duties, but he notes that they are not enforced effectively. Layers of regulation of instead encouraged gaming of the rules and box-ticking approaches to compliance. The result, less organisational effectiveness. It leads to, “continuing directorial incompetence ensures that our organisations, the cement of our society, underperform to the detriment of that society.”
Whilst it might seem that Bob is highly critical of directors, he goes on to say, “Too much of the current emphasis and blame is laid on directors”. He argues that Owners, Legislators, Regulators and Public Oversight have acknowledged duties, and we need “a new national system of continuous learning within each of the five parties”.