“Good” corporate governance is a team activity and that “the team” incorporates the board and executive leadership team.
Australian Institute of Company Directors, May 2015
Donovan & Tunjic, June 2009
The Kay/Goldspink research recently released by the Australian Institute of Company Directors provides interesting insights on a range of governance issues. A key finding is that “good” corporate governance is a team activity and that “the team” incorporates the board and executive leadership team. This represents a change in the general approach that is adopted in exploring the topic of governance.
Based on their semi-structured interviews with 100 Chairs of Australian organisations, Kay/Goldspink stated:
Contrary to the stance suggested by agency theory, the Chairs more generally talked of the need for a high level of trust and collaboration between the board and the executive… The monitoring and oversight role, which is at the forefront of many approaches thinking about the role of the board, ran a poor second to the need for a collaborative and supportive relationship.
Kay/Goldspink noted that this is not to deny the importance of monitoring and compliance, but to distinguish these activities from a broader, more comprehensive notion of what “good” governance is. They observed that, viewed as a decision-making unit, the board provides the reflective capacity for the executive in order to improve the quality of decision-making.
The concept of governance as a team activity was also discussed by Tunjic and Donovan in their article 4 in 1: An obvious theory of directorship. Their understanding of “team” is even broader. They stated:
The CEO, executives, external advisors and other individuals all work in Directorship on a part time basis. They are not Directors and have full time jobs outside Directorship. But together with the Directors they form the Directorship team.
The authors outlined some important questions that arise when there is a broader understanding of the “team” that performs the functions of directorship:
- What is the right size and structure of the “directorship team”?
- What is the right mix of skills and experience for all the roles to be filled on the “directorship team”?
- What are the right processes between the board and other members of the “team”?
- What is the right behaviour between the board and other members of the “team”?
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