Blog 27 small change: your main board
A shared Organisation PSB
- shared purpose,
- and behaviour in your organisation
- is key to its success
Blog 26 small change: your main board
Society, through its laws, grants your organisation a mandate to trade as a separate legal entity under the stewardship of your main board of directors who are appointed in accordance with those laws.
The nature of the mandate granted by society to organisations is undergoing rapid change in the 21st. Century.
Society is concerned about the conduct of boards – their behaviour over time – in respect of the impact of their decisions on the environment, society, and governance – ESG for short.
All the members of your operating board, which runs your organisation on a day-to-day basis, are not required to be legal directors of your organisation, although in many organisations “the real power” rests with the operating board, behaviourally.
Apart from in the smallest of SMEs, most CEOs, CFOs, and frequently COOs who sit on your operating board will also sit on your main board alongside non-executive directors.
In addition, your main board may have a company secretary. Sometimes, the General Counsel for your organisation will act as its Company Secretary.
Usually, your operating board will agree a target operating model (TOM) and a business plan to deliver it and seek your main board’s approval for that business plan and then your main board will oversee the implementation of that business plan over the life of the plan.
The behavioural issues which arise on your operating board, (already set out; see link), also arise on your main board. In addition, I have found the following issues are common on main boards:
- systemic absence of a shared organisation purpose, strategy and behaviour plan (Organisation PSB); by systemic I mean the PSB is driven by (usually) one person
- lack of clarity on personal PSBs, intentional or not
- significant conflict between Personal PSBs and Organisation PSB
- no process for managing disagreement or “calling out” unacceptable behaviour
- institutionalised bullying
- supine NEDs
- shareholders ignoring ESG and acting as if their investment creates their mandate
If I were to pick just one of the above as the standout issue on main boards it would be “supine NEDs”. By that, I mean NEDs who choose not to, or are afraid, to exercise their legal powers.
Frequently in my facilitation workshops, I’m told by NEDs that they have “influence but not power”, despite the fact that The Companies Acts make no distinction between executive and non-executive directors in respect of their duties.
Failure by NEDs to challenge their executive directors is at the heart of many company failures, corporate scandals and, in large part, of the Global Financial Crash in 2008.
How many NEDs on your main board would you say are supine?