One Minute Governance

104. Compliance is not the same as good governance

Thinking of compliance as good governance is probably the most common, and distracting, false equivalency in corporate governance.

Background music is Of the Stars by KC Roberts & the Live Revolution

 

SCRIPT

I spent nearly 20 years running a project at the University of Toronto’s Rotman School of Management that resulted in a couple of different sets of what we called “board ratings.” Fundamentally, these board ratings were just sets of rules against which we would score the governance disclosure of big listed companies. If a company’s disclosure was in line with the rules, they would get a favourable board rating. Even just describing it out loud makes it seem kinda silly, doesn’t it? Applying generic rules to 250 different companies in different industries with different models, structures, sizes, and people. The implication being that somehow I – as the manager of the project – had come up with the single answer to what an effective board is, and thought I could measure it through public disclosure. Well, as absurd as that sounds, it’s basically the same as most of the rules, regulations, and laws that apply to corporate governance. And lots of corporations OBSESS over complying with all of them – even the optional ones like the board ratings I managed. It helps them to signal to the world that they have good governance. But when it comes to our definition of good governance, compliance is virtually meaningless. There isn’t a single regulation or law that sets corporations or boards up to make good decisions. That doesn’t mean compliance is bad or useless – in fact it’s probably pretty valuable for a lot of reasons. But good governance isn’t one of them.

103. What is BAD Corporate Governance?

If I'm going to give you a definition of GOOD governance, I guess we'll need one for BAD governance, too.

Background music is Of the Stars by KC Roberts & the Live Revolution

 

SCRIPT

In the previous episode, I suggested that we define good corporate governance as creating conditions that maximize the likelihood that effective decisions will get made. I’ve had months to sit with it, and you’ve only had a few days but it still gives us a useful starting point for a bunch of conversations. Including thinking about what BAD corporate governance might mean. The most high-profile conversations about bad governance – or good governance, for that matter – are usually triggered by big, sexy crises or blowups. Especially if there’s a criminal or systemic element to the story. Theranos, Volkswagen, Enron, the Financial Crisis…they all prompted interesting conversations about corporate governance and in some cases played a role in kicking off major policy changes affecting disclosure requirements, board composition, and more. But does bad disclosure mean you have bad governance? Does less-than-perfect board composition mean you have bad governance? What, really, do the Volkswagen, Theranos, and Enron cases have in common that they don’t ALSO have in common with lots of other organizations that have never had a crisis, and never will? Maybe I’m overstepping here, but could the definition of BAD governance just be the absence of good governance? In other words, the definition of bad corporate governance is NOT creating conditions that maximize the likelihood that effective decisions will get made. It’s a bit of a scary thought, isn’t it? What even ARE the conditions that make effective decisions happen? Before we get into it any further, let’s take a break for a few days and sleep on it.

102. What is GOOD Governance?

I'm putting a definition of "good corporate governance" out there just so that you know exactly what I mean when I refer to good governance. Feel free to let me know what you think.

Background music is Of the Stars by KC Roberts & the Live Revolution

 

SCRIPT

Welcome to season three of One Minute Governance. It’s been a long break, and it’s good to be back. I signed off the last season with a bunch of unfinished business, including a threat to write a book. Lots more to come on all of that very soon. In the meantime, let’s kick off season three by revisiting the heart and soul of what OMG is all about. You all know by now that I like to define corporate governance as “the way that decisions are made in a corporation…meaning ANY incorporated entity regardless of structure, purpose, size, or complexity.” A lot of people have a hard time with this definition because it doesn’t say anything about boards, or managers, or rules, or processes, or anything like that. Putting it another way, my definition doesn’t tell anyone what they should be DOING. I mean, decisions can just kind of happen, right? Without anyone thinking about or doing anything at all. Well, in my opinion, just letting things happen is still corporate governance, for better or for worse. But is it GOOD governance? What does GOOD governance even mean in the first place? I’ve thought about this a bit over the past few months and think I have an answer that will at least serve as a good starting point for season three. Here it is: Good corporate governance means creating conditions that maximize the likelihood that effective decisions will get made. There it is! It might not sound like much, but sit with it for a while before accepting or rejecting it entirely. I’ve had a couple of months to live with it and you know what? It grows on me more each day. Welcome to a new season of OMG.

OMG Season 3 Intro

Season 3 of OMG is finally almost here! I can't wait to dive back in.

Oh, and if you like the background music, the song is Of the Stars by my band KC Roberts & the Live Revolution. Check out the whole new album, Grit, here:

https://ffm.to/kclr-grit

 

SCRIPT:

Season three of One Minute Governance launches on Monday June 27^th, just a few days away. I’ve always thought of OMG as a platform for taking complex topics in corporate governance and finding ways to make them more accessible. Or even sometimes to find seemingly simple elements of corporate governance and showing that they might be more complex than they seem. If I have an overarching goal for the podcast, it’s to provide boards, senior executives, advisors, and other governance nerds a new lens through which they can ask questions, provoke discussions, or just sit and think about how organizational leaders might do things a bit better tomorrow than they did yesterday. In episode one, I’ll finally take an audacious stab at figuring out what GOOD corporate governance might be, followed in episode two with a definition of BAD governance that’s might be even more ambitious. We’ll do some, exploring, some storytelling, and some mythbusting, all a minute or so at a time. Oh and this year’s background music is Of the Stars, performed by my band KC Roberts & the Live Revolution from our new album Grit. If you like it, it’s available wherever you get your music.

101. Season 2 Finale

Thanks for sticking with me through two seasons and 101 episodes!  

100. Why do corporate governance experts think so small??

Episode 100 was supposed to be the season 2 finale, until something annoying came across my desk...

99. I think I might write a book...

We already established that learning about corporate governance can be embarrassing.  I think I might be able to help.  One way is by writing a book.  I'll tell you more soon, but in the meantime, send me positive vibes and any questions you think I could help to address.

98. Learning about corporate governance can be embarrassing

There are lots of reasons why successful and influential people might feel reluctant to go back and learn the basics of corporate governance.  That's OK, although I wonder if we might be able to find a way to make it more comfortable...

97. Some organizations that do really cool stuff

I rely on other, smarter people for inspiration.  To that end, I wanted to do an episode acknowledging some organizations out there that push my brain in new directions when it comes to corporate governance and leadership.  It's not an exhaustive list, nor is it intended to be a "best of" - it's just some folks who have been on my mind of late.  Please check them out!

www.the51.com

https://www.blackopportunityfund.ca/

https://www.futuredirectors.com/

https://fnmpc.ca/

https://filene.org/

https://neythri.org/

 

96. Why “where were the directors?” is still a good question

"Where were the directors?" was basically the question that launched the corporate governance "industry" in Canada.  Turns out it's still an important question...

95. Why does every little new governance idea feel like a BIG DEAL?

Corporate governance basically never changes, and every time any little thing happens it seems like a huge deal.  Why is that?

94. Helping founders buy in to “governance”

It can be hard to engage entrepreneurs in conversations about governance.  They have a lot of other important stuff on their minds.  Here are a few tips.

93. Subsidiary governance

I wish I knew a lot more about the governance of subsidiaries...

92. A new (to me) take on the board skills matrix

Board skills matrices have been around forever, but there's a new (to me) feature that I think would make them even more useful.

91. Are great board chairs really like orchestra conductors?

Lots of effective directors compare great board chairs to orchestra conductors.  I'm not so sure the analogy is so apt...