Many corporate boards are destroying rather than creating value according to Prof. Colin Coulson-Thomas.
The leader of the British isles-based, Winning Companies: Winning People, research program reports that, Billions are devoted to fashionable activities and acquisitions that reduce shareholder returns. They benefit professional advisers but not investors, customers or employees.
The Winning Companies: Winning People investigation has identified critical success factors and what high performers or winners do differently in areas such as winning business, pricing and purchasing. According to Coulson-Thomas, Many corporate initiatives miss critical success factors and encourage losing behaviors.
The findings - summarized in Coulson-Thomas new book Winning Companies: Winning People, the differing approaches of winners and losers - are encouraging. He explains: Every one of over 2,500 firms participating in the program could significantly increase individual achievements and corporate performance by putting additional critical success factors in place and adopting more winning ways.
Both for-profit and nonprofit companies are required to have a Board of Directors that acts as a governing body. The Board has the role of overseeing the activities of the organization and providing direction, structure and establishment of strategic goals and priorities.
In addition, they have the role of advising the company president and senior leadership team in creating, retaining, and motivating a strong organizational staff to carry out the objectives set by the Board. They are also tasked with managing and advising about the resources and assets of the organization and determining how they can best be used to meet the mission of the organization.
Finally, they are responsible for accounting to the public for the services and products produced, the donations or revenues received and the expenditures made by the organization.
However, the Adaptation Chairman finds many boards have lowered their ambitions: Because past management fads have failed to deliver, many directors now operate behind prison bars they themselves have created in their own imaginations. They are preoccupied with ensuring compliance - not boosting performance. No wonder so many entrepreneurs see boards as costs rather than contributors.
Coulson-Thomas also found the following problems with boards in his research:
- Many directors ignore opportunities, fail to exploit corporate know-how and follow false gods. They acquire where they should build. Collaboration, not ownership, is the issue; rather than growing organically through mutually beneficial relationships with customers, employees and other stakeholders.
- Many boards do not pursue organic growth strategies because they are unaware of how to help average performers to adopt the approaches of superstars. Most directors do not know that critical success factors and winning ways have now been identified in areas vital for corporate success.
- Corporate performance depends primarily upon what boards actually do and how their members behave. Winning boards are distinguished by the attitudes and conduct of their members. Corporate governance arrangements are often a symptom rather than a cause of board effectiveness.
- The board should be the heart and soul of a company, the source of its ambition and drive. Whether or not a company competes and wins, sustains success and remains relevant usually depends upon its board. Without a sense of purpose, a sound strategy and the will to achieve, well endowed corporations wither and die.
Coulson-Thomas identified several characteristics of a winning board including the following:
- They display the will to win and are driven to succeed. At the same time, their actions demonstrate they care. They understand what is happening in the business environment and are sensitive to marketplace trends. They anticipate events. They confront realities, take a longer-term view and provide strategic leadership.
- Directors of winning boards dont look for excuses or blame others. They assume personal responsibility and collective accountability for their actions. They appreciate the distinction between direction and management, and understand their directorial duties and responsibilities.
- Winning boards focus on what is important. According to Coulson-Thomas, They concentrate upon the external, strategic and business development aspects of corporate governance. They strive to benefit shareholders by delivering additional value to customers. They provide and communicate strategic direction, a distinctive vision, a compelling purpose, achievable goals and clear objectives.
- Winners focus upon the critical success factors for competing and winning. They develop additional income streams, new capabilities and fresh intellectual capital. They invest in director development and the professional selection, appointment and induction of new directors. Their chairmen consciously build effective boards of competent directors.
Coulson-Thomas believes Urgent action is needed to improve the competence of directors and the effectiveness of boards. Identified success factors must be put in place and winning behaviors introduced where required. Nomination and selection committees should look beyond current holders of directorships with their experience of losing ways, and identify people who know how to win.
Details of reports presenting critical success factors and winning ways identified by the Winning Companies; Winning People research program and related bespoke benchmarking reports and workshops can be obtained from Prof. Colin Coulson-Thomas via firstname.lastname@example.org or from www.ntwkfirm.com/policy-publications/.