What should/do Boards and directors do?

Our current Premier, Mr Weatherill, has stated that South Australia’s 400+ government Boards and Committees will have to justify their existence or be axed.

Whilst it is admirable for a head of government to declare an attack on unnecessary public expenditure, it is entirely another to successfully do something about it, and without creating serious negative unintended consequences.

As a good Labor man (ie without the ‘u’), the Premier would no doubt oppose unfair dismissal wherever he found it. Any Board/Committee member who lost their position as a result of this initiative would very likely have (moral, if not also legal) grounds for an unfair dismissal claim, on the grounds that the required performance has never been specified, nor actual performance assessed and communicated. How can you be axed for not performing to standard, if the standard has never been set out?

This is my most fundamental point – the Premier’s announcement, taken at face value, simply demonstrates that the current government doesn’t really grasp what Boards/Committees are supposed to do, and what ‘good performance’ looks like. (I am, of course, leaving aside the purely political aspects of creating political cover for Ministers, and using appointments to these Boards/Committees as means of rewarding party and loyalists…on the latter, if you creatively Google for a while, you will see what I mean).

All Boards/Committees – state government, not-for-profit, private sector, etc – should periodically ask themselves: ‘Over the past year or so, where have we as a Board/Committee, ‘made a difference?’...what has been our ‘value-add?’…and has this been more than the cost, reasonably assessed, of having us?

A good practical way of approaching this question is to ask the hypothetical question: ‘Imagine the organization did not have its Board over the past say year, with the organisation’s management running things…then consider that the Board was indeed in place – what was materially done better because the Board was in place?’ That is, where did the Board (as a whole, through its Board sub-committees, through individual directors, the Chair) intervene to make a difference?

For those inexperienced in Board/Committee roles, this seems to be a fairly straight forward question. For those quite experienced in this area, the question can be particularly subtle. For example, a Board/Committee can tell its CEO not to do something ie stop a bad/inappropriate thing happening. They might provide relevant experience from their other involvements that are taken on board by management; they can go into problem-solving-mode with their management team to use collective wisdom to crack a truly wicked problem; or perhaps in workshop-mode with management, a new plank in the organisation’s strategic or policy direction emerges.

These ‘interventions’ can be broadly sorted into two general types – firstly, ‘telling’ management what to do/not do (which involves the Board exercising its power under the organisation’s constitution, which may be an Act of Parliament in the case of a state government Board). Secondly, ‘influencing’ management, through guiding, counseling, questioning, challenging, providing input etc (in fact everything other than giving instructions), albeit done in the context that the Board can indeed ‘tell’ if it so decides.

Another way to sort or segment the Board/Committee ‘value-adds’ is into ‘negative’ (eg ‘CEO, you’re fired’…the ultimate Board intervention) and ‘positive’ (eg the Board and its senior management team working as a collective to determine how to address a particularly complex and difficult issue).

In over 20 years of working with Boards/Committees and directors as an advisor, performance reviewer, educator, and practicing director, I can without hesitation say that the best Boards are those that find a way to have the great majority of their ‘value-adds’ as ‘positive influencing’ types, and work the ‘Goldilocks’ principle of governance well – not too many interventions, not too few, just right.

Unsurprisingly, where this is the case, the Board members almost always say that they enjoy a high level of satisfaction in their Board role, and when asked to give brief descriptors of the culture of their Board, report strongly positive words – robust and respectful; collegiate; all feel comfortable to express their views; and similar.