High Performance Boards

CHAPTER 17Board Leadership and Values

Corporate governance does not exist in a vacuum, but in a social context, and that alone demands that governance systems not be divorced from a sense of purpose and values. In addition, governance builds on a number of disciplines – law, regulatory policy, control, economics, management, and leadership – all of which are influenced in one way or another by moral philosophy. Today, the intensifying calls for good governance have once again underlined the fundamental importance of values, ethics, and morality in social and public action.

As boards continue to reel from spates of corporate scandals in all contexts and economies, and increasingly make the front pages of newspapers for the wrong reasons, a painful realisation has dawned on them. Yes, the metrics, documents, and other instruments of board activity and power may appear formidable and well-structured. Yet these may prove to be powerless and wholly ineffective when ethical breaches lead to corruption and the destruction of shareholder and social value on an unprecedented scale.

When the media later dissect the boards of collapsed companies, the most distressing part of the story was often the apparent normality, even banality, of their pre-scandal activity. There were nomination and governance committees distributing reports and updates, and in many cases a large proportion of the directors were independent, including luminaries from other industries, apparently unconflicted, and ...