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Why Corporate Governance is not working

India Infoline News Service/ 08:29 , Nov 20, 2012

The author of Developing Directors claimed that to move on from avoiding risks to sustainable business growth we need to embrace ‘new governance’ which business leaders should want because of the clearly beneficial results it brings for companies, people and the planet.

Corporate governance has not delivered according to Colin Coulson-Thomas speaking at a global convention at London’s Lords cricket ground. The author of Developing Directors claimed that to move on from avoiding risks to sustainable business growth we need to embrace ‘new governance’ which business leaders should want because of the clearly beneficial results it brings for companies, people and the planet.
 
Having worked with over 100 boards to improve director, board and corporate performance Coulson-Thomas believes people have lost sight of the need for competent directors and effective boards which can innovate and build businesses: “Old governance has involved top-down command and control leadership with its emphasis upon directing, leading, motivating and monitoring. Too many boards have been formulating strategies and producing plans rather than making things happen.”
 
Coulson-Thomas questions whether corporate governance has been a placebo and distraction when so many boards bark up the wrong trees: “Effort is devoted to restructuring and corporate initiatives to address various challenges rather than creating opportunities and shaping the future. Costly, time consuming and disruptive attempts are made to change cultures and win talent wars when there are quicker ways of competing and winning with existing people, cultures and structures.”
 
Current corporate governance has not prevented scandals, bailouts and Government intervention to prevent the collapse of financial and economic systems. Another speaker Dr Jeremy Pearce reminded convention delegates that additional regulations “cannot prevent directors from taking poor decisions, attempting cover ups and not acting in the best interests of a company when they feel they can get away with it.”
 
Coulson-Thomas finds “Even supporters of corporate governance acknowledge there are missing elements. We need to address such realities as uncertainty, insecurity and a lack of business confidence in key markets. ‘Traditional’ approaches have also proved inflexible and costly, while priorities can change during implementation.”
 
The University of Greenwich Professor’s search for alternatives has involved issue surveys of some 2,000 organisations and critical success factor surveys of over 2,000 companies and over 500 professional firms. It included working with owners and directors of 50 businesses as a result of European Community support and evaluations of over 20 adoptions of new and better approaches.
 
The accumulated evidence is compelling and consistent. Coulson-Thomas reveals “Boards are overlooking focused and cost effective options that ensure compliance and deliver large returns on investment and multiple benefits including higher performance, faster responses, lower support costs, increased understanding, greater engagement, and reduced stress and risk.”
 
‘New governance’ includes such missing elements and focuses on the behaviours of directors and boards. There is more emphasis upon implementing strategy and providing performance support. New bottom-up leadership benefits people as well as organisations by helping them to handle uncertainty and excel at difficult jobs.
 

Developing Directors, a 366 page handbook for building an effective boardroom team by Colin Coulson-Thomas is published by Policy Publications and available fromwww.policypublications.com.
 
ISBN 978-1-87298-032-4
 
Other Policy Publications titles by Coulson-Thomas include Winning Companies; Winning People which summarises what high performers do differently and his latest reports Talent Management 2 and Transforming Public Services which set out how new leadership can provide a quicker and more affordable route to high performance organisations.

 



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