Men without hats!

Men without hats – confused roles, chaotic responsibilities and corrupted/convoluted thinking – the current position of directors!

Without being too dramatic or overstating the case I believe there is a need for a radical redress and review of the commonly accepted thinking around directorship or business leadership.

Many people who occupy positions in companies – be these private companies, public companies, for-profit or not-for-profit entities – hold a range of misleading, and often dangerous preconceptions and assumption about their roles. They are effectively believing a set of ‘lies’ about what their role actually is, what responsibilities they actually carry and as a result their thinking is, maybe not corrupted (the world starts with a ‘c’ so it worked best in my title), but certainly is in many ways seriously distorted. And if thinking is distorted than decision making, which flows out of thinking, will also be distorted and disjointed.

The types of thinking I regularly encounter tend to fall into a number of broad categories. These may manifest in different ways across different types of companies but they are common despite organisations being very different in underlying structure and purpose.

Three types of this thinking, broadly speaking are;

  1. Representative thinking. This is the classic agency problem.  The director with this thinking actually never considers their own voice or position but only the party/ies that put them in that position. The fact remains that across a range of companies there do exist parties, who technically sit outside the company, like shareholders, political or regulatory authorities,  who are entitled to appoint directors to the board of companies. They tend to continue to yield a measure of control over the directors that they appoint, or worse still, the appointed directors consider their role on the board to simply represent the voice of ‘another’ – the appointing party! This becomes dangerous in the boardroom since as a result the boardroom is invaded illegitimately by a set of interests that should not be there. These interests could be shareholding interests or political interests or even in the case of non-profit-making companies.
  2. The second type of thinking emanates not from the misconception that they are there to represent someone else but they are actually there simply for themselves.  This thinking is predominant where either directorship is seen as a status symbol or that it is seen as the next step on a career ladder.  To challenge the status myth many of these people sit bolt upright when they realise the extent to which they can be held personally liable for the actions and impact of the company they direct  – too often I have been asked (and not always in jest) how quickly they can resign. The career ladder fallacy is similarly challenged but fortunately many of these people have a genuine desire to be better directors, in order to be able to continue to climb the ladder, so, while also shifting in their seats, they tend to pay more attention and set their minds on further learning.
  3. Thirdly there are directors who are not actually there! Don’t get me wrong they may even be at board and committee meetings but due to the fact that these, along with all their duties as directors, are squeezed into already overflowing schedules they may be there in body but are not really all there in mind. They are not fully engaged and tend to simply go through the motions. This is unacceptable especially since the liability they carry must be carried with a commensurate level of not only skill, which I am not debating, but also diligence and care.

When these types of thinking are evident it is often true to say that ultimately both the individual and the company are at risk. Directors are primarily decision makers – decision-making requires not just good information and process but also engagement of the decision makers at the right level and in the right way. Sad to say the thinking reflected above does not normally demand good information,  stick within effective decision-making processes or engage fully!

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