Leadership and Governance Matter
“Sometimes the right path is not the easiest one.”
Grandmother Willow.
‘Pocahontas’ (1995) Disney Studios.
In the Disney movie ‘Pocahontas,’ Grandmother Willow is a key influence on Pocahontas, inspiring her to listen, not just with her ears but her heart as well. The wisdom of Grandmother Willow is equally applicable and just as important, perhaps more so, to leaders of corporate and government organizations. In much of what we read about leadership; the notion of governance is sometimes implied but not always explicitly discussed. From the outset, it is perhaps worth noting what governance is and, for purposes of this article, what leadership is. Dr. John Maxwell explains leadership this way.
“After more than five decades of observing leaders around the world and many years of developing my own leadership potential, I have come to this conclusion: Leadership is influence. That’s it—nothing more, nothing less.”
Maxwell, John. C. (2018) Developing The Leader Within 2.0. Nashville, Tennessee: HarperCollins. Ch 1. p7 of 53.
Using this definition of ‘influence’ obviously takes us into the realm of not just the influence of people but the culture of the organization, its policies, protocols, and processes as well. A definition of governance widely used in Australia, including organizations such as the Australian Institute of Company Directors, is a definition that was used by the Australian Royal Commission of Inquiry into the collapse in March 2001 of HIH Insurance Limited, a major insurance company in Australia at the time.
“Corporate governance-as properly understood-describes the framework of rules, relationships, systems, and processes within and by which authority is exercised and controlled in corporations. Understood in this way, the expression ‘corporate governance’ embraces not only the models or systems themselves but also the practices by which that exercise and control of authority is in fact effected.”
The Hon Justice Owen (Commissioner: HIH Royal Commission of Inquiry) (2003). THE FAILURE OF HIH INSURANCE: A corporate collapse and its lessons (Volume I). Canberra: Commonwealth of Australia (HIH Royal Commission). pxxxiii (see also p101).
The HIH Royal Commission report is in 3 volumes. Volume 1 looks at lessons to be learned from the corporate collapse of HIH Insurance. Justice Owens makes it very clear in Volume 1 that governance is the province of the Board and its Directors. He also noted that the Senior Executive Team, which traditionally reports to the Board, also plays a significant role in the governance of the organization. One interesting point made by Justice Owens was that due to the complex structure of HIH Insurance, there were in fact, middle leaders that also had governance duties and responsibilities, some of whom seemed to have roles, not unlike a Director or Senior Executive. As a footnote, there were court cases that ensued from the collapse, and some Directors were found liable for their actions. From an Organizational Anthropology perspective, the HIH Royal Commission highlighted the importance of Role and Role Theory within organizations, particularly large and complex ones. It also highlighted that governance is a shared responsibility. Devolution of authority is fine, but it must have structures of accountability for the purposes of good governance.
The HIH Royal Commission reported its finding to the Parliament of Australia in April 2003. The one clear lesson from Justice Owens is that leadership and governance are two sides of the same coin. If a leader is not across what is happening in the organization, if the Board doesn’t have appropriate oversight of the operations of the organization, without micro-managing the staff employed to ensure the smooth functioning of those operations, then they are not influencing the culture, the people, the policies, protocols and processes of the organization. They are simply marking time until the next crisis.
Of course, every jurisdiction has different laws and regulations around governance. They also have their own case studies of failure in governance, leading to the failure or, at the very least, the paralysis of the business or organization. The case of Wells Fargo Bank in the United States of America is another often-cited example. One thing that COVID highlighted was the extent of the connected world in which we live and work. It would suffice to say that many our data, personal and commercial, are stored electronically. When we hear and see reports of major companies experiencing data breaches, we rightly become concerned. It highlights why good governance is essential and must include governance around Cybersecurity / Information Management Security.
Broadly, the categories of risk are as follows:
- Health and safety
- Compliance
- Reputation
- Financial
- Community experience
- Human resources
- Delivery of core operations and capabilities
- Service delivery
- Information management and security
- Governance
Corbett, M. (2017). What is the director’s role in evaluating an organization’s risk appetite? Sydney: Australian Institute of Company Directors.
How does all of this intersect with leadership? As mentioned previously, if senior leaders, in fact, if all leaders throughout the organization, are not influencing their area of responsibility, then the question must be asked, what are they doing? Influencing must ultimately be about engagement with people within the organization and external to it. Leadership, in many ways, is a contact sport; you have to engage with other people. Research from the Australian Institute of Company Directors, which interviewed 100 Board Chairs from organizations across all sectors: Publicly Listed, Private, Not-for-Profit, and the Public / Government Sector, reinforces the concept that governance and with it leadership, is very much a team activity.
“‘Good’ corporate governance is a team activity…‘The team’, as a single unit of analysis, should be conceived of as the board and executive leadership team.”
Kay, Robert, Goldspink, Chris. (2015). When does good governance lead to better performance? Sydney: Australian Institute of Company Directors. p5.
Good governance is about ensuring the viability of the organization and, in turn, the jobs of every person employed
Good governance is about ensuring the organization’s viability and, in turn, the jobs of every person employed, directly or indirectly, by the organization. Often, we forget that beyond the people the organization employs directly, there is a plethora of people employed indirectly. Whether it’s the person at the coffee cart outside the front door, the local cafe owner, the local electrician, plumber, contractors, are all reliant on the organizations they serve for their livelihood. The organization’s reputation is not just built up through excellent service to the customers or clients and what they say to friends, but it is also created or destroyed through the recommendations of people indirectly employed by the organization. Engagement with employees and external stakeholders is critical to leadership and successful governance. Tom Peters, in his excellent book, ‘Excellence Now: Extreme Humanism’ talks extensively about ‘Extreme Employee Engagement (EEE).’
EEE turns “customers” into “fans.”
EEE makes it safe to take risks and make mistakes, which in turn generates and maximizes innovation at all levels of the organization.
EEE underpins and spurs teamwork.
Peters, Tom. (2021). Excellence Now: Extreme Humanism (eBook). Chicago, Illinois: Networking Publishing. p183.
Fundamentally, knowing the people throughout the organization and knowing your client base, is important but engaging with them and ensuring they are highly engaged with the organization, is a highly effective way of ensuring good governance throughout the organization and the viability of the organization. It can create an iterative scenario in which those involved stay involved, it makes planning (annual and strategic), more straightforward. In his excellent book ‘Lead From The Heart: Transformational Leadership For The 21st Century’, Mark C Crowley explains why the problem of engagement is dire. If this were a maths problem, we would make use of the associative law, it does not matter how you group them, governance, leadership, and engagement, the outcome is still the same.
“Gallup found that 61 percent of global workers are “not engaged”—meaning their general objective is to keep their job by doing the bare minimum required work. And 19 percent of workers have grown so unhappy (and often angry) about how they are treated they’ve become “actively disengaged,” effectively motivated to undermine what their manager and company are trying to achieve.
To fully comprehend these grim stats, imagine a crew team out on the Thames River where two people are rowing their hearts out, six are taking in the scenery, and two are trying to sink the boat. It’s hard to conceive how any organization could thrive when so few people are working to move it forward.”
Crowley, Mark C. (2022). Lead From The Heart: Transformational Leadership For The 21st Century (eBook). Carlsbad, California: Hay House. Ch 2 p26-27 of 41.
In essence, improved engagement reflects improved leadership and improved governance, which can lead to a flourishing organization with flourishing employees and customers/clients, who may find that it helps their flourishing as well. For more thoughts on ‘Leadership and Flourishing,’ you can read my article on the topic.
The research by Dr. Robert Kay and Dr. Chris Goldspink (2015) for the Australian Institute of Company Directors found that the notion of listening and engaging with people across all aspects of the organization was a critical part of governance and leadership.
“The key attributes of an effective ‘governance’ team were:
- Diversity of view and experience
- Independence of mind (as distinct from structural independence)
- Openness to alternatives
- Trust
Of these attributes, trust between board members and the executive was seen as the most important factor. It enabled the other attributes.”
Kay, Robert, Goldspink, Chris. (2015). When does good governance lead to better performance? Sydney: Australian Institute of Company Directors. p6.
The last point is poignant. Trust underpins all healthy relationships, personal and professional. If leadership is defined as influence, it is hard to conceive how a leader influences in the absence of trust. It aligns perfectly with the work on trust, leadership, and organizations by Stephen M. R. Covey.
“A groundbreaking study from LRN gathered data from more than sixteen thousand employees in seventeen countries to glean insights about both organizational and individual behavior and how they impact performance. They categorize three archetypes of governance, culture, and leadership based on a continuum: “Blind Obedience,” “Informed Acquiescence,” and “Self-Governance.” The results showed a dominance of what I describe as Command & Control. For the purposes of what we’re exploring here, I submit that “Blind Obedience” is comparable to traditional or Authoritarian Command & Control, while “Informed Acquiescence” is comparable to Enlightened Command & Control, inclusive of the incremental progress that has been made. What the study refers to as “Self-Governance” contains what I call a Trust & Inspire style of leadership. Only 8 percent of the organizations studied could be described as Self-Governing or Trust & Inspire. The other 92 percent are some variation of Command & Control.”
Covey, Stephen M.R., Kasperson, David., Covey, McKinlee., and Judd, Gary T. (2022). Trust and Inspire (eBook). London: Simon & Shuster. p54.
So, at the intersection of good governance and good leadership is trust. This marries well with the longitudinal research of James Kouzes and Barry Posner in their groundbreaking work, ‘The Leadership Challenge.’ What they found across decades of research is that the top four ‘Characteristics of Admired Leaders’ from around the world are: Honesty, Competent, Inspiring, and Forward-Looking (p42). It is hard to see how these are achieved without Trust is the foundation of leadership and, as we have seen, governance. In managing risk, senior leaders and board members must be able to trust the advice, the data, and the information they are being given. The trick here is to triangulate it, don’t just rely solely on hard data. Anybody that has studied Statistics will know that correlation does not equal causation. There needs to be a healthy balance between the use of quantitative or ‘hard’ data and qualitative or ‘soft’ data, which can build the context that the quantitative data sits in and is drawn from. The use of qualitative data means talking to people and observing what happens. Then look at related data to see if it gives more clarity to the issue. Ultimately it comes back to engagement with staff and stakeholders and an understanding that governance and leadership is a team activity.
“Another crucial truth that weaves itself throughout every situation and every leadership action is that Personal-Best Leadership Experiences are never stories about solo performances. Leaders never make extraordinary things happen all by themselves. Leaders mobilize others to want to struggle for shared aspirations, and this means that, fundamentally, leadership is a relationship. Leadership is a relationship between those who aspire to lead and those who choose to follow.”
Kouzes, James M., Posner, Barry Z. (2017). The Leadership Challenge (6th Edition) (eBook). Hoboken, New Jersey: John Wiley & Sons, Inc. p39.
For leaders and for those aspiring to leadership, the pursuit of excellence in leadership and governance should not be an ambitious pipe dream. It should be a daily undertaking. It’s important to shoot for the stars and to have high expectations of oneself and of the organization. Being across the organization and its workings is important, but so too is being across the people within the organization, the people that actually make the whole thing work. If you are going for a leadership role within an organization, consider how you can have an impact so that when your time with the organization has come to end, people can truly say that the place was better for you being there. When that happens, we might all join in chorus with Captain John Smith from ‘Pocahontas’ and say:
“Well, that was refreshing.”
Captain John Smith.
Want new articles before they get published? Subscribe to our Awesome Newsletter.
CAREER ADVICE
GOV TALK
