Boards, Governance and Stewardship

Research into 12,500 top teams and 5,000 boards (Kakabadse, 2015) shows that:

  • 34% of top team members are divided on mission/purpose, value and strategy
  • The long-term sustainable future lies with the purpose/mission based enterprise
  • 66% of top teams are inhibited and find it difficult to address uncomfortable issues
  • 85% of Boards are out of touch with no common view on what constitutes competitive advantage
  • 82% of organizations do not engage business unit general managers in strategy development, resulting in half-hearted execution of plans they do not believe in
  • Where engagement is highest, organizations enjoyed predictable gains

Life has never been more challenging for a Board of Directors.  Following the publication of numerous reports and the experience of numerous failures of leadership, the Financial Reporting Council (FRC) produces and updates guidance on corporate governance, stewardship, culture and the role of business in society, financial and other reporting and so on.

The UK Corporate Governance Code of April 2016 makes it clear that the responsibilities of the Board include setting the company’s strategic aims, providing the leadership to put them into effect, supervising the management of the business and reporting to shareholders on their stewardship.  It highlights the requirement to comply with both the letter of the Code and with the spirit of the Code.  

The FRC Codes place new and clearer responsibilities on Boards and their Chairmen to ensure the long-term sustainability and success of their companies, especially with respect to ‘Board work’ and the management of ‘Leadership Risk’ — including an annual Board Effectiveness Evaluation.

Governance does not simply mean compliance, monitoring protocols and box-ticking exercises.  Self-confident, consciously inquisitive, independently minded NEDs on the Board ensure that compliance takes care of itself. What is also required is the mentoring form of leadership that challenges, nurtures and guides the executive leadership team and provides stewardship of the enterprise.  Research into "dynamic governance" has concluded that two realizations are required:

  1. Leadership starts at board level —the board sets the standard and tone for the CEO and executive top team.
  2. Governance is means of enabling and driving business performance.

In dynamic governance, the executive top team own the strategy and its execution (this does not mean the board is disengaged from strategy execution); and the board owns the organization's culture.

We have been the architects of ‘best practise’ in the management of Leadership Risk and Leadership Consulting since 1995 and we have a wealth of experience on which to draw.  We will help you to effectively manage leadership risk and meet your responsibilities to your shareholders, to the wider community who, through government regulation, grants you a licence to operate, and to the FRC.


© Tozer Consulting Limited 2012  Leadership - Strategy - Execution - Change