Corporate Governance is dead; long live Corporate Governance

Bob’s Blog published by the RSA (Royal Society for the encouragement of Arts, Manufactures and Commerce) on 6 April 2018

Corporate Governance turned up a blind alley some 15 years ago. It lost its initial focus on directors delivering the long-term health of their business and degenerated into a series of compliance-fixated, and short-sighted box-ticking exercises. This irritates even more an already angry and disenchanted public who see the consequent erosion of the credibility of their organisations in the private, public and not-for-profit sectors because of the lack of directoral professionalism.

The many international arguments tend to centre on the poor ethical behaviour of directors. And people can become very irrational when focussed on ethics. However, I argue from my experience of boards and directors in some 40 countries that the presenting 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. Put another way – directors do not see their roles as professional or even important.

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