Board effectiveness: the truth beneath the surface
Simply tightening procedural rules for boards is barking up the wrong tree: the ‘social system that a board actually is’ needs to be addressed
In pursuit of our values-based approach to governance, culture and leadership we are often confronted by the inherent dysfunctionality of otherwise completely structurally sound boards of directors. This is not through a lack of development of carefully crafted remedies for failures of governance. In response to the King IV requirements of good governance structural remedies that focus on rules, procedures, composition of committees have been devised with the aim of producing astute and involved boards.
However, research conducted by Yale professor Jeffrey Sonnenfeld show that there were no board patterns of incompetence or corruption in great companies such as Enron, Tyco, WorldCom or Adelphi, which experienced unprecedented corporate meltdowns. Steinhoff is a case in point in the SA experience. In fact, these companies followed most of the prescribed standards of board conduct. Members showed up for meetings; they had lots of personal money invested in the company; audit com...
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