Above: CEO of Converge International, Dr Lindsay McMillan is a keynote speaker at the 2012 Better Boards Conference
By Keryn Curtis
Organisations whose boards are not actively and meaningfully engaged with their various stakeholders risk floundering and failing, according to a corporate governance expert.
The CEO of Converge International, Dr Lindsay McMillan, a keynote speaker at the forthcoming 6th Australasian Better Boards Conference 2012, warns that meaningful, high quality relationships between boards and their stakeholders are critical to an organisation’s success and should never be assumed.
He says the board is the custodian of all relationships between an organisation and its stakeholders and in this regard it is an element of board responsibility that should be properly prioritised and understood, not just paid lip service to. Yet frequently, he says, its importance is overlooked.
“Boards may proactively have an item on their agenda that asks how the board is going with relationships but often it goes like this,” says McMillan.
“Someone asks the question, so how are we going in our relationship with the government, for example. How’s that relationship? And someone else will answer the question with a list of all the people and organisations they have on their network list and say, the relationship is going really well. And the person who asked the question will say, great.”
“But that’s no indication of the quality of a relationship. For instance, how often does the board communicate with that stakeholder? And what forms of communication does the board use? Is it by email, by phone or text? Does the board ever meet in person with the stakeholder? And if so, where? In a coffee shop? At their office? Or yours?”
McMillan says boards need to have trusting relationships that are mutually beneficial to all partners and these kinds of relationships are not a given.
“We commonly make wrong assumptions about some of the most fundamental things we do – like our relationships. Many of us believe our relationships are intuitively driven but we need to look at them much more systematically, in the same way we look at our finances and other elements of our business,” he says.
“Numerous case studies indicate that the most fundamental driver of a successful board and its functioning is the quality of the relationships; the attention that is given to nurturing and preserving good will and the outcomes that emanate from those relationships.”
McMillan points to the outcome of the investigation into the Mexico Gulf oil spill disaster in April 2010 in which 11 people were killed and oil gushed into the ocean from a broken well-head for three months before it was finally capped.
“The fundamental cause of that disaster was a breakdown in relationships between the five major companies involved and their respective boards. They all believed that the relationships were intact and working well and clearly this was not the case.”
McMillan says his presentation on this topic at the Better Boards conference will provide delegates with an effective ‘lens’ for analysing and measuring the effectiveness of the relationships between board directors and their stakeholders.
“It’s called the ‘relational paradigm’ and essentially it’s a lens for evaluating these relationships across five measures which are qualities that must be present for a relationship to thrive.
“For example questions that will be addressed are: Do you practice directness in an encounter? How strong is the continuity of relationship over time? How deep is the shared commitment among the board?
McMillan says that strong stakeholder management is critical to achieving successful outcomes in the not for profit sector.
“We need a strong relational board with strong relationships with its stakeholders. And we need to work at building the relationships of trust. Some commercial boards around the world, notably in South Africa and the UK, are saying they need to measure the quality of the relationships as stridently as they measure their financial results.
“In the not for profit sector it all comes back to relationships because that’s the value and what binds us together. And the research is clear: high functioning boards will have high functioning relationships. In the future, successful organisations will need to ensure their relationships with their stakeholders, their fellow directors and executive teams are intact and transformational.”
Exclusive offer for AAA enews readers:
AAA is exclusively giving away three registrations for the Better Boards Conference at the Melbourne Convention and Exhibition Centre from 27-29 July 2012. We have one seat to give away today for the CEO Day , an adjunct event for the conference, on Friday 27 July. Already sold out, this is a day of presentations and discussions specifically for chief executive officers, executive officers, general managers, managing directors and executive directors. As well as providing thought provoking keynote presentations and panel discussions, the day will have a strong networking focus, and will aim to create quality opportunities for chief executive officers to discuss issues, ideas and solutions together.
If you are a chief executive officer, executive officer, general manager, managing director or an executive director and you would like to be in the running to attend the CEO Day on Friday 27 July, please use the comment box below this story, to provide your name, position and the name of your organisation. A randomising program will be used to decide the winner, who will be notified by email on Thursday 31 May.
AAA will be giving away two registrations for the conference proper – the weekend of 28-29 July – in the next week.