How did things ever get so far?… It was so unfortunate, so unnecessary
These were the words spoken by the fictional crime family patriarch Don Corleone in the movie ‘The Godfather’ in reference to actions and counteractions between crime families. The same comments are also just as applicable to the revelations that continue to surface from corporate organisations in reference to their board governance and the damaging decisions taken by individuals.
In the UK the financial news is currently focused on the difficulties faced by the Co-Operative Bank, and Co-Operative Group, about allegations around behaviours of senior board leadership. As a self-styled ‘Ethical Bank’ the Co-Operative was considered the bastion of doing things differently and better than the financial institutions that were part of the cause of the 2008 melt-down or one of the many victims of the ensuing domino effect that followed.
Since that time there have been numerous in investigations, parliamentary committees, congressional hearings and financial re-regulation. However, while the rules and regulations have been tightened there has been scant attention paid to the leadership styles of those that were in the driver’s seat when the financial institutions hit the wall.
New regulations with the same leadership issues will not necessarily be enough to avoid future similar scenarios unfolding. The leadership styles, personal values and appreciation of leading in times of ambiguity should also form part of the outcomes from the multitude of new governance and financial regulatory guidelines.
I recently spent two-days learning about what it means to be an ‘Effective Non-Executive Director’ operating with a corporate board. The programme was great at reviewing the history of corporate governance, the multiple regulations and operating guidelines that have been established and also the dynamics that are present in a board room team. However, all the rules and regulations in the world will not make much difference, as the on-going press stories about individual lapses in judgement and leadership suggest, if the area of personal leadership style and values are not included in the dialogue.
One way to determine how senior leaders make decisions is to gauge their ability to operate in an environment of ambiguity and uncertainty. This is where I would argue our values-based thinking comes to the forefront instead of what any corporate rules and regulations list. Organisations are made up of people first and operating principles and guidelines second. The people need to be ‘road-tested’ on their ability to make clear decisions based on the available facts. The quality of discussions is a clear indicator of making better decisions as is the ability to create a team that is diverse. Diversity in thought and perspective rather than diversity defined as gender, ethnicity or other measures exlusively.
If the same people with the same leadership behaviours are operating at senior levels – no amount of regulatory framework or good governing practice guidelines will be enough to avert further corporate headlines and business crashes.
The unfolding of the situation at the Co-Operative Bank is testament to the need to change leadership operating guidelines in tandem with surfacing and enhancing personal behaviours and values.