Corporate Governance: Vibrant boards define success

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Vibrant boards are attractive. They are energetic.

They are likely to drive results.

While not a barometer of effectiveness, vibrant boards are more likely to succeed as compared to dull, easily pliable and well-mannered ‘Aye! Captain’ boards.

‘Vibrancy’ may be palpable from the energy in the room, ease and independence exuded by board members, conviction in voicing differing opinions, a questioning approach to executive decision making and a sufficient degree of clarity in providing feedback on proposals put forth to the board.

A board that sits well together, brings together diverse opinions, collaborates and is able to bring individual strengths and contributions to the table is more likely to succeed in the fast paced business environment. The openness and commitment exuded by a lively board encourages all members to contribute their best.

Board members who work together, talk candidly and address difficult issues are a force. Not only are they actively addressing issues and solving problems, they are creating a cultural framework for conducting business. Slowly, the modus operandi is likely to evolve into ‘this is how we do business here’. The culture at the top often trickles down into the lower rungs of the corporation.

New board members are more likely to be driven to positive action by such a board and contribute wholeheartedly. Bryan Stolle captures it well, ‘Being a great board member means being an active evangelist in the ecosystem, sharing your network, and keeping your eyes peeled for opportunities when you can best promote the company. It also means being actively engaged.’

But are these boards always born into greatness? Or is there something more deliberate to it?

In certain instances, challenges and difficulties may have led to the creation of something of a ‘Divergent’; the next gen human or reinforced super-being. Or it may be that their powers have been re-configured after a brief period of loss!

This new avatar may have morphed from a tumultuous past and there may be an element of ‘design’ in its splendid form. Certain CEOs, having seen the downside of a not so functional board may have decided to take active part in the recruitment, orientation and mentoring of new board members. Says Ram Charan, in this interview, ‘Let the new CEO decide what he or she needs — their effectiveness will be heavily dependent on the people they surround themselves with.’

The chair of the board might also choose to play a role. They understand what the organisation needs to succeed and may seek out board members that fit the bill in terms of skills and cultural fit. They can provide invaluable support and information needed for such candidates to adapt and flourish in the new environment. Lets not forget, however that it is not a single member but the interplay between the members, the chair and the CEO that will make a difference.

While other factors are needed to drive effectiveness, vibrancy and dynamics of board interaction is an important starting point.

Sometimes, all that is needed is the lack of barriers.

© Anu Maakan 2017

(Disclaimer: all views published here are the personal views of the author and do not represent those of any organization).

Organisational Governance & Change: Fishing for the right metric

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‘Total fish biomass varies by twofold within three regions of the Atlantic, and 8-10 fold across regions in the Pacific’, as per findings from a paper titled ‘Measuring change in fish communities: from monitoring to metrics to management’. This is part of a study conducted for the National Coral Reef Monitoring Programme. In recent years, ‘Fish Biomass’ has been used as a key metric to describe the status and trends of fish communities.

Even so, scientists involved in this study are not completely happy with the use of this metric to represent the status of a complex ecosystem. They are evaluating other metrics.

Earlier this year, France banned use of dangerously thin models, i.e. models with a low BMI. Super-skinny models will be banned from catwalk shows and advertising in France under a new law aimed at ending end the ‘glorification of anorexia ’.

Under World Health Organisation guidelines, the median body mass index for an adult population should be in the range of 21 to 23 kg/m2, while the goal for individuals should be to maintain body mass index in the range 18.5 to 24.9 kg/m2.

As seen here, BMI and Fish Biomass tell us a lot about the health of an individual and that of an ecosystem. There exist several million metrics, depending on what we want to measure and act on/ improve. However, are we sure we are measuring things optimally and not wasting precious time ploughing through mounds of irrelevant and distracting information?

Factors to consider when selecting a metric:

  • What is the metric trying to measure? Is the metric representative of what you’re trying to measure? ‘Businesses tend to measure the wrong things’, says Becher of SAP in this article in Forbes.
  • How it will be used? For example, in the example where French MPs have identified BMI as a measure, their overall objective is to combat anorexia.
  • Do the key stakeholders buy-in to the metric (for that will determine its credibility)?
  • How accurately can the metric be measured? I.e. is there sufficient data available to compute the measure?
  • Does the metric condense a considerable amount of information into one number, potentially losing a great deal of information in the process?
  • How sensitive is the metric to methodology, i.e. can its value be affected by the process used to compile the metric?
  • What are the other inter-related measures that must be examined alongside.Eg – ‘Time taken to deliver a software package’, might be meaningless if not juxtaposed against ‘Quality of the package’.
  • How does the metric impact behaviour? For example, poorly constructed incentive schemes can distort sales behaviour and encourage miss-selling and misconduct.

‘Metrics are used to drive improvements and help businesses focus their people and resources on what’s important’, says George Forrest in an article titled, ‘The Importance of Implementing Effective Metrics’.

Having scientifically designed metrics helps organisations in making appropriate decisions, measure and drive performance, deliver to expected quality standards, benchmark to competitors, focus change and improvement efforts, provide direction and shape strategy.

Not only should metrics be well-designed, they should be evaluated for ‘appropriateness and relevance’ on an ongoing basis; so as to stay aligned with changing corporate goals.

Remember that choice of metrics such as oven temperature and seasoning are imperative to getting your ‘baked salmon delight’ just right.

(*Body Mass Index (BMI) is a person’s weight in kilograms divided by the square of height in meters. A high BMI can be an indicator of high body fatness).

© Anu Maakan 2016

(Disclaimer: all views published here are the personal views of the author and do not represent those of any organization).