A New Year board resolution?: “The board agreed, unanimously, not to repeat the bad decisions we made last year.”

decion picPicture: http://bdellium.com

How many decisions did your main or operating board or function team make in 2018? How many were good? How many bad? How can your board avoid repeating the errors of last year?

However, before answering those questions, can you all agree on what constitutes a good or bad decision? If your board decided to fire X, hire Y, spend A, not spend B or launch C are you sure you know who on your board agreed with those decisions and who didn’t?

Did you all vote? Did the CEO decide? Did the Chair hold sway? Did the CFO nobble the CEO? Did the GC even get a look-in? Might any of last years’ decisions land your organisation in legal trouble or onto the front pages next year?

Against what benchmark were those decisions judged? Short, medium or long-term? Were the decisions based on financial criteria only? Alternatively, were environment, society and governance (ESG) issues taken into account?

Who on your board is coming back from their Christmas break holding a silent and bitter grudge against a decision taken last year? Who has left your business who could damage it later? Do you know? If not why not?

Above all, even if the most forceful personality on your board took the decisions and you were too scared to speak up, does that person have anything approaching a decision-making process?

The theme for 2019 should be decision-making processes. If I were PM, I would pronounce 2019: “Decision-Making Process Year”. DMPY for short. Rolls off the tongue, doesn’t it?

In business, politics, sport and religion 2018 was an annus horribilis in decision-making terms.

A parliamentary report drew sharp criticism of KPMG, Deloitte, EY and PwC, saying they operated as a “cozy club incapable of providing the degree of independent challenge needed”; Parliament failed to take a decision on Brexit; perhaps Mr Wenger should have decided to leave earlier and the Pope missed a golden opportunity in Dublin to demonstrate, rather than assert, that the Vatican is serious about its corporate governance overhaul.

So what should your main or operating board, ExCo or function team do in 2019?:

Step 1: Acknowledge your default decision-making process, or change it

If your board doesn’t act as a board in the collective decision-making sense then why not just admit that? If one person makes all of the decisions, why not call that out at the start of the year? At least don’t pretend for another year. That would be dumb.

If you want to change to a proper collective decision-making process then do so, without delay, in January.

Step 2: Agree on a purpose, strategy and behaviour (PSB) plan against which your board will judge its decisions

If the purpose of your organisation is to maximise profits and screw everyone else, at least admit that, take responsibility for it and judge your decisions against that benchmark.

If on the other hand, you want to balance profit with the environment, society and governance issues then don’t pay lip service to those issues – agree, up front to what extent, ESG will figure in your decisions.

HBR gives CEOs a 20% weighting for ESG in their Top 100 CEO rankings. I believe this is as small as it is arbitrary. Why not 50%? Why not #ESGP?

Step 3: Appoint a Devil’s Advocate by rotation at each meeting

How many meetings did you attend last year during which you remained silent about an issue or a behaviour on which you felt strongly? How many times did you stand by and watch a colleague being bullied or wronged and didn’t speak up? How many times did you witness hard work go uncelebrated and failed to call it out? Or which business decisions did you disagree with, but didn’t feel able to fight?

A simple way of solving this problem is to appoint a Devil’s Advocate by rotation at each meeting who has permission to call out whatever he or she likes about whomever he or she likes, or not.

No chance, I hear you say, on your board.

If true, then expect next year’s decisions on your board to be as good or as bad as last year’s. Nothing will change unless you make it happen.

Why not start with small change? What would constitute a small change on your board?

#smallchange

Ciarán Fenton

Why Mrs May and her “NEDs” should (re) read Chilcot on decision-making, today

Even CEO/owners of private companies with boards should consult them properly on key decisions, if only for selfish reasons. The risks of not doing so are high.

Prime ministers are not running private companies. They are acting on our behalf. The bar on following good decision-making practice must be set at the highest level.

Mr Blair ignored this requirement during the Iraq crisis. Instead, according to The Chilcot Report, he used a ”sofa-style” decision-making approach using a small number of close advisors. The disastrous results are etched on his face to this day.

Mrs May is repeating this error. There is no evidence of thoughtful collective decision-making, with input from Devil’s Advocates and with consideration of the needs all stakeholders.

History will judge her harshly. The worst damage is done, already. Over the next year we will merely experience the impact of her solo decisions over the last two.

But her ministers, who are behaving like complicit NEDs on a board dominated by a dominant CEO, will also be thrashed by the inevitable public inquiry into Brexit.

They, like so many NEDs, could stand up to her but are afraid. Afraid for themselves. Afraid they won’t be supported by other ”NEDs”.

This has nothing to do with the rights or wrongs of Brexit. It’s to do with its implementation.

There was zero focus on facilitating a shared purpose for the people of The United Kingdom of Great Britain and Northern Ireland and its relationship with neighbours after Brexit.

As in business, zero shared purpose in politics means there’s lots of activity but little progress.

It’s not too late for a courageous ”NED” – that is, a minister or even an MP seen as a supporter of the Prime Minister – to man or woman up and say what might feel like the unsayable:

”Prime Minister, as you know I have been a long time loyal supporter. But I can no longer support the process you are using to take key decisions. And I am not resigning. Every day you fail to use Cabinet and Parliament properly I will publicly protest that failure.”

It will never happen, you say. It didn’t happen in the Blair government nor in many high profile corporate scandal – RBS or Carillion to mention just two.

But I detect a shifting mood within moderates in politics and in business. This reflects a shifting mood in society which is saying: we’ve had enough of powerful people impacting our lives, unchecked.

Moderates who want to limit the damage should act, this week. Or else.

Three change management lessons for CEOs from the #Brexit story, so far

manufacturing_erp-change_management_checklist_mobile

Whether you are a Leaver or Remainer you will agree, I’m sure, that Brexit is a change management project gone badly wrong.

No side can be happy with its leadership or management. The Brexit Crisis – and a crisis it is – is destined to become the Suez of our time, only worse.

Most historians agree that the core failure in the Suez Crisis was hubris. No one looked at the issues from Nasser’s point of view; Eisenhower was ignored and kept in the dark about the British/French/Israeli deal until it was too late and the campaign was disastrously executed.

But at least the Suez own-goal was scored thousands of miles away. The Brexit process is a hat-trick scored at home.

First, no one checked or cared about all the facts that might impact the outcome. For example, the Brexit leaders appear not to know or care what happened in 1921 between Mr Lloyd George and Mr Collins or its consequences. If they did they would understand why the EU can’t simply “bin the backstop” and if it does what might happen.

Second, they ignored the 70/20/10 rule of change management. This rule of thumb is that 10% of people are usually stars of change and should be celebrated; 20% are resistors and should be ignored, if not sacked. Finally, 70% are on the fence and should be wooed. That’s right, wooed: enticed, incentivised or properly sold. Neither Remain nor Leave campaigns did any wooing. Had they done, the outcome might have been different, either way.

Third, neither side presented a vision for the future around which most people could rally – a shared purpose if you like. That would mean confronting the UK’s past. And that’s a no-go subject. Sooner or later a truth and reconciliation process on this matter is unavoidable.

These three errors were compounded by a refusal to take decisions using good corporate governance codes. The Cabinet was forewarned. The Chilcott Report into Iraq called out the decision-making weaknesses of Mr Blair’s “sofa-style” processes. Lord Faulkner only last week said that full legal advice should have been disclosed.

Mrs May doesn’t appear even to use a sofa. People were forced to the Supreme Court and to Motions of Contempt to get her to share her decision-making. And yet she is praised as “resilient”. Another decent word ruined.

While there’s little you can do to prevent this nightmare ending in a disaster, you can prevent your board from emulating these mistakes in your business. So,

⁃ agree a shared purpose

⁃ use the 70/20/10 rule of change

⁃ allow all directors, especially NEDs, to see all legal advice, in full

Then your board will be in a better position to avoid avoidable crises. The alternative is playing out in front of your eyes. And it’s about to get much, much worse.

Ciarán Fenton

#smallchange consultant