Insights

Why company “governance” may not be so boring after all 😉

“Governance” is for any size company, and how well governance is carried out can affect company success.

If there is a Board of Directors, then overall governance is the Board’s responsibility. If there is no Board – common in smaller companies – then governance is still needed but is fully the responsibility of company owner(s)/leaders.

The triumvirate of mission, values, and vision is the foundation for any effective company and for effective governance. A clear picture of mission and values guides establishing vision and evaluating progress.

In a recent insight, we looked at the how any company can implement values more effectively and demonstrated in everyday work.

This time, let’s look at how to ensure meaningful results for key company stakeholders.

For long-term success, a company must balance needs and success of three basic stakeholder groups: customers, employees, and owners/shareholders. A company cannot exist for long without customers, employees to effectively serve the customers, and company finances that allow the company to serve those customers and employ those employees.

Adding a fourth group makes sense for most: any significant other stakeholders to which the company is committed to a mutually beneficial relationship.

We now have, as Blanchard and O’Connor termed in their book Managing By Values, the “C.E.O.S.”:

• Customers,
• Employees,
• Owners/Shareholders, and
• Significant other stakeholders.

The ”S” is where communities, key vendors, environmental concerns, etc. would go if desired … including the “E” and “S” in ESG (Environmental, Social, and Governance). A company can elevate one of these separately to the level of C.E.O.S., but that must not detract from business basics. Definitely don’t have two separate planning, tracking, and evaluation processes … this would lead to confusion and dilution.

The C.E.O.S. factor into governance in many ways.

• One way at the strategic level is a cross-check against company values. Do the values provide benefit across the C.E.O.S. or primarily one stakeholder category?
• Another top-level check is against strategic plans. Do plans and related metrics target all the C.E.O.S.? Some or one group? If the latter, is this temporary to rebalance or is a rethink needed of company focus?
• Tactically, projects can be checked against the values and C.E.O.S. And values should certainly apply to performance management.

There are many ways that values and the C.E.O.S. should be woven into the company’s being.

More in the next insight.

📩 If you’d like information like this via email instead of the hit or miss of social media, send me your email and I’ll add you to the list.

👉 Need help with making your company governance more effective? Contact us to discuss how to do that.

Why your company “governance” may not be so boring after all 😉

Actions for any size company … including some illustrations from the SVB meltdown.

“Governance” is for any size company, and how well governance is carried out can affect company success.

If there is a Board of Directors, then overall governance is the Board’s responsibility. If there is no Board – common in smaller companies – then governance is still needed but is fully the responsibility of company owner(s)/leaders.

The triumvirate of mission, values, and vision is the foundation for any effective company and for effective governance. A clear picture of mission and values guides establishing vision and evaluating progress.

In a recent post, we looked at the how any company can implement values more effectively and demonstrated in everyday work.

This time, let’s look at how to ensure meaningful results for key company stakeholders.

For long-term success, a company must balance needs and success of three basic stakeholder groups: customers, employees, and owners/shareholders. A company cannot exist for long without customers, employees to effectively serve the customers, and company finances that allow the company to serve those customers and employ those employees.

Adding a fourth group makes sense for most: any significant other stakeholders to which the company is committed to a mutually beneficial relationship. We now have, as Blanchard and O’Connor termed in “Managing By Values,” the “C.E.O.S.“:

• Customers,
• Employees,
• Owners/Shareholders, and
• Significant other stakeholders.

The ”S” is where communities, key vendors, environmental concerns, etc. would go if desired … including the “E” and “S” in ESG (Environmental, Social, and Governance). A company can elevate one of these separately to the level of C.E.O.S., but that must not detract from business basics. And definitely don’t have two separate planning, tracking, and evaluation processes … this would lead to confusion and dilution.

The C.E.O.S. factor into governance in many ways.

• One way at the strategic level is a cross-check against company values. Do the values provide benefit across the C.E.O.S. or primarily one stakeholder category?
• Another top-level check is against strategic plans. Do plans and related metrics target all the C.E.O.S.? Some or one group? If the latter, is this temporary to rebalance or is a rethink needed of company focus?
• Tactically, projects can be checked against the values and C.E.O.S. And values should certainly apply to performance management.

There are many ways that values and the C.E.O.S. should be woven into the company’s being.

There will likely be interesting case studies coming out of the Silicon Valley Bank (SVB) failure.

One key aspect will be independent of politics, pro- vs anti-ESG views, etc.: how governance can affect company success.

In SVB’s case, there seem to be some disconnects.

For one, there doesn’t seem to be any meaningful connection between the values and strategic or ESG plans as evidenced in their website, annual report, or other filings. Also, their values appeared to be ultimately meaningless and not practical or useful from the perspective of day-day decisions and behavior … how values are demonstrated in everyday work and the level of diligence in doing so. (more in an earlier post)

Things don’t appear to be much better from the C.E.O.S. – Customer, Employees, Owners/Shareholders, and Significant other stakeholders – perspective.

The C.E.O.S. aren’t explicitly identified in SVB strategic plans (again from their website, annual report, or other filings) nor any analysis of how the stakeholder groups are balanced in any factors. While the currently available information does allow some assumptions to be made, assumptions are not clear governance.

Matthew Sekol did an interesting analysis on SVG’s treatment of ESG in a recent article (link in comments). NB: don’t let “The ESG Advocate” title turn you off from the considering some of the governance analysis, even if you disagree with his viewpoint or opinions, or with ESG in general.

• A key point of his for this discussion: “nowhere do they tie this information [ESG strategic initiatives and related stakeholder types] back to the core of the business.”
• Also in his analysis, the ESG strategic initiatives did not explicitly identify which of the C.E.O.S. would benefit … Sekol had to make some assumptions. And the assumed representation was C.E.S. with governance being the only factor that would cover the “O.”

Assumptions do not make for good governance.

Sekol sums it up by saying “Governance will get you every time” … for better or worse.

Your turn … how is your company doing governance-wise?

Can you easily tell how the company has done regarding:

• Achieving its mission? Vision?
• Living its values?
• Serving the C.E.O.S.?
• How what you say you believe (or the company broadcasts) compares to actual performance?

Can the employees easily tell? Stakeholders?

What actions do you need to take to improve?

👉  Need help with making your company governance more effective? Contact me to discuss how to do that.

 

P.S.  📩 If you’d like information like this via email, send us your email to be added to the list.

“Without a solid grounding in the numbers, you’re at the whim of someone else’s narrative.”

Lots of good explanatory info now coming out about Silicon Valley Bank’s demise … one of the best pieces of advice the quote above from Rich Falk-Wallace.

One could add to the “numbers” watching what execs and others are doing … the backstory beyond the pure balance sheet/P&L.

In the age of social media, the velocity of opinions can be supersonic (or with a lot of hype, “hypersonic” ;-).

One of the best approaches to help your thinking and decision-making is the same as in the past:

👉  Don’t make major decisions based on a lot of data or complex scenarios swirling in your head.

👉  Write down what you are thinking, including assumptions and scenarios about the past, present, and future.

👉  Get feedback from trusted others (or a coach if you have one) about your thinking, then decide.

This gets the whirlwind out of your head and into something manageable … and “manageable to” and communicable if you are in a leadership position.

It also enables learning by everyone involved as assumptions are tested going forward … which is almost impossible if thinking is just kept in your head. And our head likes to correct/rationalize the narrative as we go along 😉

The caveat to the above is if a decision is needed right now … but those are fewer than most people think. The hype/hysteria can create a “need to act now” mentality when, with a little analysis, even a decision to not act might be better.

Michael Strong posted in LinkedIn about how students often turn around after a bad school experience … and the similar applies to employees.

His point: “You realize, all it takes to improve their lives is to give them love, attention, agency, purpose, and a positive peer environment.”

Translated a bit for business:

All it takes to improve employee lives (and business results) is to give them appropriate respect, attention, agency, feedback, purpose, and a positive peer environment.

Could be refined depending on what words you choose (e.g., Does “agency” imply “trust”?) and so on … but the core concept is there and hasn’t changed radically over time.

Pay attention to the Customers, the Employees, the business (Owners and shareholders), and any Significant other stakeholders (C.E.O.S.) … not one alone … and continually work toward long-term balance and “returns” for all.

Are “assistants” no longer needed?

It all depends on the assistant role.

A Wall Street Journal article “Executives Lose a Coveted Status Symbol—Their Assistants” suggests that the age of assistant might be over.

If the role is merely a status symbol or “perk,” and that’s how the person in the role if viewed, well, then the business need was never there in the beginning. Other than maybe recruiting. And calling a person a status symbol or perk says a lot about the culture of the company.

And if the role is viewed as just a cost, there was also a problem in the first place.

If the role is substantive and meaningful, there is still a need.

From my experience, a good assistant provides enough value to justify both the assistant position and magnify my value to the company … a 1 + 1 = 3 type of thing. Ideally, the assistant has strengths in areas where I am not strong. The assistant takes care of things that need to be done, that don’t require me in particular, and allow me to be of higher value.

Also, assistants are also typically regarded as only for executives or other top leaders.

Not so!

An economic argument can be made for other roles to have assistants as well.

For instance, assume the company has a top-level programmer that is paid $200K/year (not unusual and not even counting benefits, and could be way higher). Would I want that person to do tasks easily done by say, a $50K/year person? No way. First, the $200K person should be doing $200K-level tasks. Doing $50K tasks means getting less return on that pay investment. Second, the more $50K tasks the $200K person does, the less focus/flow on $200K tasks. This further reduces the return of the $200K person investment.

Assistants aren’t “old school” or relics of the past … thinking of them in terms of status and just “overhead” is of the past.

• If the titles are getting in the way, change them.
• If you have an assistant and haven’t established their economic value to the company (and you), do it NOW.
• If you are an assistant and don’t know your economic value to the company, work on it now. Make sure it is reflected in your job description, any performance management measures, etc.

If you can show a positive ROI then eliminating the assistant role actually worsens the company financial position. The opposite of perception.

Don’t disregard the economic realities in order to cater to wrong perceptions … and reduce your own value in the process.