The views and opinions expressed in this article are those of the author.
As much as my cool friends might disagree, it’s an exciting time to be a board nerd. Governing bodies are growing sharper teeth, directors are playing increasingly active roles, external stakeholders are making themselves heard, and the rubber-stamping board of old is turning into a strategic asset. Who can deny that change is afoot when even one of America’s most influential business groups is announcing a new “statement of purpose” beyond shareholder primacy?
Yet, that feeling of progress was somewhat doused on Wednesday, when UK Prime Minister Boris Johnson announced he was suspending parliament for five weeks, in effect preventing its members from influencing his vision of the UK’s departure from the EU. Leaving Brexit’s merits aside (that’s one revolution my French self will gladly not partake in), such a decision indeed seems at odds with everything we — and the regulator — advocate healthy governance should look like.
Organisations have boards for a reason, and a country is no different
If the PM is UK Inc.’s CEO, and his government its Executive team, then Members of Parliament are its NEDs — here to bring outside expertise, different points of view, and guarantee a rich, independent debate in its Gothic boardroom. By cutting them out, the UK’s leader is committing something much worse than a hotly debated administrative trick: he’s damaging the quality of the decision making around the most important demerger since the End of Empire. Whatever side of the Brexit fence you sit on, this should be a concern.
“We have the highest-quality chamber in the world when it comes to breadth and depth in every field and it’s impossible not to learn if you’re there.”
~ Lord Karan Bilimoria of Chelsea, Chairman of Cobra Beer, life peer in the UK House of Lords
There’s no doubt that the country’s ability to reach a decision has been hampered over the past years, reflecting the complexity of the challenge at hand. But study after study has evidenced that diversity of thought leads to better outcomes, and that the only thing we can confidently say shouldn’t be up for debate is that things should be up for debate. While gung-ho calendar tactics by a freshly appointed CEO might break the gridlock in the country’s boardroom, they also remove the protections against groupthink embedded in UK Inc.’s corporate structure.
Is the government failing its own governance code?
Politics inflate passions, often leading us to brush aside acts we wouldn’t tolerate from the corporate world — and many would argue that today’s CEOs would end in jail if they misled stakeholders in the way politicians did in the 2016 campaign. But if the UK were, in fact, a company and treated as such, one wonders what its regulator would say. After seemingly ignoring the content of a leaked report to the board, and then suspending its internal governance process, would UK Inc. be discharging its statutory duties, notably around Section 172 of the Companies Act which requires to have taken stakeholders’ views into account? Colour me sceptical.
“Secretaries of State also do have more unfettered power than CEOs. This does mean that the Government can be nimble in tackling issues, but sometimes the quality of decision making is compromised by the absence of checks and balances that you’d see in a corporate structure.”
~ Mark Hoban, Chairman of Flood Re, former Member of Parliament
Just a few hours before the prorogation was announced, Elon Musk’s SpaceX successfully conducted a test flight of its Starhopper vehicle — a milestone on the company’s quest to land humans on Mars. Unlike Tesla, where Mr Musk was both Chair and CEO until a series of scandals forced a board change last December, SpaceX has had a separate President since 2002. This setup has provided a balance to the divisive engineer’s leadership style, sheltering the organisation from the governance mishaps that have plagued his other ventures — and enabling the rocket maker’s board to solve problems that pundits long thought impossible. There might be a lesson there for Mr Johnson, if he truly wants the UK to shoot for the stars.
Maximilien is Marketing Manager at Board Intelligence, and a member of our InfoSec committee. He holds a Master’s degree in Marketing, has spent most of his career at the junction of marketing and technology, and is a Boy Scout leader.