“The world is disgracefully managed, one hardly knows to whom to complain” – Ronald Firbank
This blog is about the increasing political interest in corporate governance through offices such as the Financial Reporting Council, author of Corporate Culture and the Role of Boards and using this as a vehicle to explore how change challenges.
Companies are being told to think and report more broadly, beyond the short term bottom line to issues such as longer term viability, culture and values. In essence thinking and acting more responsibly on issues such as gender and environmental concerns and evidencing this in their strategic reports.
Grant Thornton’s annual analysis of the UK’s FTSE 350 companies shows that, as with any new initiative, companies are still orientating themselves. There appear to be three broad camps; those that have simply failed to step up the plate, perhaps hoping it will go away. Those that acknowledge the requirements and meet the obligation via a shallow academic exercise, adding bolt-ons to their existing reports. Thirdly, those that have meaningfully engaged and embraced the spirit with distinctive reviewing of their broader corporate responsibilities.
Despite the research showing that the benefits are significant, including increased investor confidence, only 62% have full compliance and of those that do quality remains a mixed bag.
If it is not difficult to engage with a new way of working then the change probably does not represent a paradigm shift. Such shifts are disorientating and personally challenging for leaders with an investment in the old order of things – the rules have changed. Talking with familiar peers in familiar places often reinforces the existing group think, can encourage denial and a re-enactment of familiar and well rehearsed scripts adapted to the old order i.e. increase corporate risk.
Reaching out beyond the outer skin of the organisation or inviting guests such as coaches in to the inner sanctum can help to challenge, explore and identify how we do sometimes get in our own way. As Abba Eban said “History teaches us that men and nations behave wisely once they have exhausted all other options”.
But I guess that is not compulsory…