My brother-in-law is fanatical about ‘use by’ dates on grocery store items. He would rather die of thirst than drink milk two days beyond its so-called expiry limit. little extreme perhaps, especially when he then points out to the store manager which items should no longer be on the shelves. But then again, “used by” is supposed to provide some assurance of currency.
And currency is what troubles me when I look at the committed and engaged directors who run many of New Zealand companies. If not knowing what you don’t know is truism, then surely not knowing when you don’t know enough must run pretty close second.
We all have skills that were, we hope, at their peak at some point. But these can go stale if they’re not constantly refreshed, benchmarked against the best in the industry and, developed. So, how do we make sure that we remain in peak condition in order to lead firms that stakeholders assume we have the skills to build, sustain and grow in competitive world?
Any director worth his or her salt would agree that the legal requirements for diligence and performance have changed significantly in recent years. We expect directors to actively seek the answers they need to make informed decisions. This additional work means more time spent on due diligence, requires greater awareness of the early signs of trouble, and the development of greater director sensitivity to self-preservation – in addition to doing the best possible job for the client.
Similarly, the diffuse notion of sustainability has moved to complex triple-bottom line approach for testing social responsibility, environmental respect and financial stability. Few managers know how to compile corporate TBL report, so how are directors expected to supervise the process?
We now expect directors to be adept at networking, connecting with friends, professional acquaintances and even peers overseas. They must understand the competitive landscape beyond their own business and ward against being too inward-looking.
So what is the solution to keeping up? There are few local opportunities for directors to get booster shots of governance training. Between the Institute of Directors, Massey University and Waikato Management School, the nationwide offerings are limited. That means directorship do-it-yourself time.
Tip 1: Find local expert. That might be professional with accounting or legal skills. Find director from company that has faced challenges similar to those now confronting you. I always respect the individual who calls me up and says: “Look, you don’t know me, but I know you care about good governance. Can I buy you coffee and ask few questions?” I have yet to turn down the coffee. Directors usually relish the opportunity to exchange views and simultaneously upgrade their business world knowledge.
Tip 2: Spend some of your monthly board meeting discussing the quality of your decision-making. Circulate list and, confidentially, ask each director how well he or she understood the material presented at the meeting. Honest responses will identify the areas where booster session and hour or so of training might help. Asking each director where the skills gaps exist and then acting on it, demonstrates to everyone that you take your role seriously and realise some details are beyond your immediate grasp.
Tip 3: Look for excellence in your industry and beyond. Spend few moments on the web to help understand why business in Helsinki that sells similar products, has great reputation. How did they get there? What long-term visionary leadership skills helped their directors arrive at this stellar point in their life cycle?
I like reading case studies. Not the 14-page academic Clydesdales, but the racy four to six page ones written by company insiders. There is something wonderfully educational about being voyeur and learning how other businesses develop core competencies and govern for long-term success.
If year from now, someone asks how you made the very board decision that is today in question, you will point to the process that kept you and the other directors razor sharp and focused. In law, it is seldom the decision that is in question, but rather the basis on which the decision has been made – the diligence, the competence. There are many ways in which to hone your directorship skills: Go and freshen up!
Professor Jens Mueller is governance expert at Waikato Management School. He sits on the boards of several multinational firms and works with many New Zealand businesses to develop sustainable governance strategies. [email protected], www.muellerjens.com
