Time for Good Governance in Government?!?

An article in the FT yesterday reminded me of an experience I had with civil servants a few years ago.

The article starts "The poor quality of Westminster policy-making comes under fire in a report that will sound all too chillingly familiar.......and goes on.... a former secretary of state said he was stunned when he actually went round the room and asked civil servants for their thoughts on a policy he himself had some doubts over - only to discover that every single one of agreed that it was the wrong policy. A civil servant added that some ministers have been so scary and so unwilling to consider actual evidence that stuff has been withheld from them. Policies have sailed on without the benefit of that evidence."

Well I suppose we had always guessed as much!

A few years ago we were asked to bid for the continuation of some research for a Government Dept. We presented our proposal to a group of senior civil servants, showing them that the research that had been undertaken previously was flawed and what we would do in its place. Summing up at the end the most senior civil servant presents said "We can clearly see from your presentation that the previous research was flawed and I agree that what you are now proposing is the correct way to approch this. However, am I right in assuming that if we make these changes, the downward trend line would be reversed? To which we answered "yes". The civil servant then said "well in that case we can't do this because the Prime Minister has said this trend will go down".

So my experience certainly confirms the findings of this study in which a senior civil servant said of Whitehall "if we built aeroplanes the way we build policy, none of them would ever fly". This is stunning...isn't it? Is it any wonder our Country is not "flying"?

The Government is insisting on levels of good governance for UK businesses, how can UK businesses effectively insist on the same for the UK Government. The ballot box certainly seems to make little difference.

It is said that power corrupts and when you marry that with incompetence it is an unholy affair!

Zero women on over 40% of the World's largest Public Company Boards!

A new report from GovernanceMetrics International has found that more than 40 percent of the world’s largest publicly listed companies have not appointed even one woman to their boards. Even in major markets like Japan, Italy, the United Kingdom, and the United States women continue to be grossly under-represented on corporate boards.

What can be done? Quotas are almost certainly not the way. Personally, I believe the answer to be much more emphasis on Board Performance Evaluation measured against the Corporate Governance Code 2010. The Code does, in my view, provide a template for best practice and an external board evaluation done well will highlight the requirement for diversity on the board. Organisations are short changing themselves if they exclude women from the board - either purposefully or because of poor legacy practices. It is almost certain that many of the excessive risks taken by all-male boards would not be have got through an appropriately diverse board.

Director Development - Strategy

I am in the process of developing some on-line strategy development workshops for Board Directors. I would welcome your views on the approach I am taking and perhaps even your help.

To deliver the content in a vibrant and interesting way much of it will be video and I am thinking of:

• videoing the "talking bit" from various boardrooms around the Country
• showing some footage of real strategic facilitation days
• interviewing Chairmen, CEOs, Executive and Non-Executive Directors

If you are a Board Director: -

1. Is this something you would find helpful?
2. Does the approach generally seem right?
3. Would you allow filming in your board room
4. Would you allow filming of a strategy facilitation day (if the day was free!)?
5. Would your board be prepared to be interviewed?

If you are not a Board Director, do you know any that you could pass these questions on to?

Bank of England MUST raise interest rates!

Now if you borrow money you may not think this is good news, but it probably is! The whole financial system struggles with rates so low. If like me you don't borrow money, it is of course excellent news.

FT Exclusive comment:

The UK’s high inflation rate is not simply the result of “one-off” factors but reflects an overly-loose monetary policy stance that has resulted in rapid growth in nominal spending. An early rise in interest rates is necessary to prevent the overshoot being built into inflationary expectations, which would make an eventual return to target more painful to achieve.

Doves argue that inflation would be close to the target but for indirect tax increases over the past year. This is wrong. January’s figures show that consumer price inflation, excluding indirect taxes, was 2.4 per cent in January. This, moreover, is an underestimate of where inflation would be if tax rates had stayed constant, since it assumes that increases are passed on in full to consumers. A more realistic estimate of tax-adjusted inflation is 2.75 per cent.
http://link.ft.com/r/8P1R88/D40Y1A/11EP1/WL9OWI/18J6I1/E4/h?a1=2011&a2=2&a3=15

"Russian Dolls", "Alphabet Soup" and...Shadow Banking!?!

Great article in the FT 03/02/11. New to me, is the term "shadow banking", a practice apparently not new! A seemingly unregulated billion dollar business. The FT article picks up on this shadow banking, refering to "collateralised debt obligations" and "structured investment vehicles". Shadow banking previously refered to as "Russion doll financing" or "alphabet soup". I don't think anybody outside of the system would comprehend the complexities of what is going on, but it is worth (apparently) an eye watering $15,000bn, yes that's $15,000,000,000,000!!! It would seem that the regulators (like the rest of us - but then they shouldn't be...should they?) had assumed that banks are the only really important parts of the financial system. Some of these funds are said to have bigger loan books than Wall St banks.

For me at least this is raising the lid on another fascinating can of worms...is there no end...probably not!

What are the governance issues..........................

Straw Poll on Corporate Governance

I recently commissioned some market research, and whilst the sample was far too small to validate any specific conclusion, it would be fair to say that the following comments typified something like 50% of respondents' attitude to corporate governance and specifically the UK Code:

"We are reluctant converts"

"We tick all the boxes"

"They wouldn't opt in"

"A lot of it is frankly gobbledegook"

What use is UK's Corporate Governance Code?

I have been working with the application of business models for some 20 years now: TQM, BPR, TOC, BEM, EFQM, Lean, etc; all of which have been readily accepted by business and have enjoyed wide use in their time - all are generally seen as effective tools. In developing strategy I have worked with many widely accepted methodologies and tools: Boston matrices, Porter's work, Peter's, Handy, Cole, etc. etc., - all good and accepted with little argument.

"But these are all practical" I hear you cry - well to me, so it the Corporate Governance Code.

For me the Code is both a plumbline and a pathway for improvement. A board can use it to measure where it is, and to shine a light on where it could be - even outlining how! It is a board tool as opposed to a management tool and yet it is often passed to management to "deal with it".

What would it take to get boards to embrace the Code rather than just tick the boxes or shun it altogether? Answers on a post card...

No one is beyond improving their game and when we stop learning and developing we start dying. Even FTSE 100 board directors!

The results of poor governance?!?

Whilst most headline economic indicators might be positive, the above (FT 11/01/12) is definitely not!