As protesters vent their outrage on Wall Street and in other financial districts around the world they are not alone. The dominant theme in corporate management conferences this past month has been to address the mess exposed by financial fault-lines.

There is no shortage of hindsight. There are many opportunities to point fingers. There are plenty of blameworthy business behaviours.

Governments and their appointed sector regulators are also in the firing line for their tolerance of extreme inequalities driven by adherence to market ideologies – notions that in the cold light of recessionary fall-out are suddenly recast as primitive.

And at the heart of these debates, Groupe Intellex Associate Prof. Colin Coulson-Thomas has been arguing the case for better governance, for boardroom balance and for finding cheaper and more effective routes to higher boardroom performance.

At the 2011 Business Performance Summit in Berlin he attacked outmoded conventional approaches to performance transformation. ‘Boards’, he said, ‘are barking up the wrong trees’ when they adopt costly corporate initiatives that ‘conflict with each other, distract people and cause confusion’.

Focus on Success Factors

Reviewing his research programme identifying critical success factors and what high performers do differently, he showed the Summit delegates how to liberate and build the talents of both ordinary and exceptional people.

The most cost-effective and proven routes towards higher performance in uncertain times are revealed, he says, once organisations really understand how, in often complex areas, the superstars have risen above the fray. The truths revealed may well run counter to perceived processes and policy but once identified they are easily and inexpensively replicated. But the focus must first be on finding those critical success factors.

Balance in the Boardroom

At the Global Convention 2011 in London last week (the 11^th International Conference on Corporate Governance) Prof. Coulson-Thomas also took the opportunity to review the challenges of balancing board membership.

In a hard-hitting appraisal Coulson-Thomas observed that willful ignorance of the dominance of ‘short-term perspectives and greed’ contributed to the 2008 financial crisis. In his address to the conference he contrasted ‘dangerous’ and ‘effective’ Boards.

‘Dangerous boards’, he said, ‘are often at one end of the spectrum. Effective boards know how to balance contending factors – such as the interests of different groups of stakeholders. Take the balance between head and heart. Directors should act on the basis of how people are, rather than how they might prefer them to be. Ignoring short-term perspectives and greed contributed to the 2008 financial crisis.’

‘Too many directors’ he said, ‘go with the crowd, rather than thinking for themselves and challenging where appropriate. The focus of corporate governance needs to change from board structures to the conduct of directors.’

‘Many independent directors are inwardly focused on governance arrangements and compliance with codes. They concentrate on the remuneration of executive directors rather than on what they do. Inadequate attention is paid to people and their performance, and external issues such as mutually beneficial relationships with customers, and impacts upon the physical environment.’

‘More balance is also needed in board membership – what about business and social entrepreneurs, or people from academia and the media who question and probe? Financial institutions at risk are invariably led by “A list” directors. Far too many of them come from large, bureaucratic and quoted companies.’

‘Some directors behave as if they have been paid to turn up, look distinguished, say the obvious to show that they have read the board papers, and agree with what the chairman and/or chief executive would like to do. The criteria employed to recruit them could actually have been used to show them the door.’

‘Bringing people onto a board because of their networks, experience and contacts is counter-productive if they have been moving in the wrong circles, meeting yesterday’s people, and discussing outdated ideas. Maybe they have had a long experience of barking up the wrong trees, and voting through corporate initiatives that do not deliver.’

‘Direction should be about thinking as well as doing. Activities like ticking a checklist box can be dangerous when they take the place of thinking, and especially thinking about what is best in new circumstances. Adopting a standard model of board can kill evolution and innovation in new governance models and approaches.’

Coulson-Thomas pointed out that, ‘the details of derivatives, and the risks posed by slicing and dicing, seem to have been beyond many bank directors. Yet, when their own remuneration is at issue, these same people are often capable of absorbing small print, raising pertinent questions and seeking relevant advice. The primary focus of directors should be the best interests of the bodies on whose boards they serve.’

‘Other balances to get right are those between aspiration and achievement, rhetoric and reality, and the formulation and implementation of strategy. Far too many boards hope for the best rather than make things happen.’

‘Direction is more than visioning, establishing goals and values, and ensuring the right capabilities are in place. Boards need to ensure relevant capabilities are applied to what needs to be done to achieve corporate objectives. In short, the balance needs to shift from words to deeds.’

‘Boards are opting for complexity rather than simplicity. Far too many directors have only known large, expensive, disruptive and time consuming ways of transforming corporate performance.’ The evidence shows, he said, ‘that they overlook simple, focused, and proven alternatives such as performance support that can quickly and simultaneously deliver multiple objectives, including huge returns on investment in a matter of months.’

Colin Coulson-Thomas also highlighted the critical need for balance between compliance and avoiding risk, and the growth and development of a company. ‘Excessive avoidance of risks can lead to missed opportunities, stagnation and decline. Smart boards look for practical solutions to such dilemmas.’

‘Building controls into performance support can both liberate key workgroups, and prevent actions that cause commercial, technical, quality or regulatory problems. One can set people free, and at the same time reduce risk. One can also simultaneously boost productivity, cut costs, speed up responses and ensure compliance. Organisations, individuals and the environment can all benefit.’

Prof Coulson-Thomas is currently working on a report that will show how embracing performance support can avoid many of the dilemmas faced by boards.

‘Take’ he said, ‘the choice between performance today and capability tomorrow. It is possible to deliver both, and remain relevant, competitive and vital throughout a journey into the unknown.’

‘We should only want energetic boards when their strategies are sensible, stretching and achievable. Marconi was destroyed when a determined chairman and CEO pushed through a mistaken strategy. It was the wrong strategy, and they attempted it at the wrong time. Other companies survive in spite of their boards, because ordinary sensible people ignore half baked corporate initiatives.’

In conclusion, Coulson-Thomas urged delegates to abandon the ‘struggle with historic dilemmas, management of change initiatives and corporate programmes that fail to deliver.’

‘Smart boards’ he said, ‘can help key workgroups to excel using approaches that are right for the age we live in.

We can create high performance organisations that avoid traditional trade offs, deliver multiple objectives, and provide people with relevant 24/7 support wherever they are.

Average workgroups can be helped to excel at key corporate activities. Ordinary boards - even low performance boards – can build high performance organisations.’

So whilst protesters in New York, Madrid, London and Athens may express the widespread discontent with the behaviour of big business (but seem to have no clear agenda for remedial actions) business leaders themselves, addressing the very real issues of managing change, are facing up to the practicalities of restoring growth and performing better in the future.  

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Notes: 

Prof Colin Coulson-Thomas of the University of Greenwich, and author of Developing Directors and Shaping Things to Come, is chairman of Adaptation, Bryok Systems and Cotoco.

He gave his talk on building and leveraging a high performance board at the Global Convention 2011 which was held at the Radisson Edwardian Hotel in London. The convention incorporated the 11^th International Conference on Corporate Governance and the 2^nd Global Conference on Sustainability.

Colin Coulson-Thomas also spoke at the 2^nd Annual Business Performance Summit at the Maritim proArte Hotel, Berlin, Germany. His opening plenary presentation was on “The smart performing company – which methods, factors and behaviours create performance success.” The approach he outlined at the summit will be set out in his forthcoming report on the future of talent management and performance support.

Prof. Colin Coulson-Thomas is also the author of Winning Companies; Winning People and a new report on talent management and creating high performance organisations.

He is an international consultant who has helped over 100 boards to improve board and corporate performance.. He can be contacted via http://www.coulson-thomas.com. Reports covering his investigations are available from http://www.policypublications.com