Governance, fraud and the leader’s confidante

Last week’s 10th Annual Conference of Corporate Governance (#wccg09), explored alternative, hopefully more effective, means of corporate governance. What emerged clearly from the presentations and the discussion was that our current approaches to governance miss the mark. They are targeted at corporates rather than individuals, at the workforce rather than the directors, at catching rather than preventing, and are a shotgun approach when a rifle is needed.

My own paper was used to start the conference. This is a slightly modified version. I have split it into two parts for posting here.

Click here for Part 1: Governance and Fraud

Part 2 – The role of the management confidante

In recent years, we have seen a growth in the field of corporate responsibility (CR). When it began, it was called ‘corporate social responsibility’ (CSR), and it was about helping those who lead large organisations to see that they have a responsibility towards the societies in which they operate.

While CSR has continued to evolve and there are many excellent initiatives and third-party interventions that do genuine good for the world around us, internally it has struggled. My experience is that, in some wave of euphoria, positions were created within these businesses that have come under threat when the ‘luck’ I mentioned earlier has become less common.

Under pressure, the well-intentioned, individuals who filled them have had to dumb down their plans and redirect them on what should really be basic operational issues – the ways and means of reducing energy costs, limiting the risk of prosecution for environmental damage, and so on. While they were once, champions of a higher set of values in the leadership of enterprises, today they are too busy dealing with simple abuses. A few had the ear of the leaders, but most were chosen from within, for their breadth of knowledge of the business and its technical dimensions, rather than their independence, the robustness to challenge those in positions of power, and their understanding of emotions, and the emotional component of individual decision making.

Back in medieval times, a landowner, would employ a confidante – someone they knew was educated, understood the human dimension to work, worked to a set of reasonably defined ‘higher values’ and was not afraid to challenge the wisdom of decisions – such was the calibre of the confidante – at a time when, for others to do so, would often mean summary execution.

Of course, the role was open to abuse, and the risks were known, but were outweighed by the potential benefits – better decisions, more highly motivated staff, a greater appreciation of the softer arts of leadership, and access to an independent analytical mind. In those days, such advisers often came from monastic communities as these were the bases of education and the cultivation of personal values. The popularity of the Arthurian legends with their Merlin, of Gandalf in Tolkien’s stories, of the Norse God, Odin in his wandering habit, and others indicate the degree of trust people place in this wise advisor role.

The role of the ‘chaplain to a household’ continued until the late Industrial Revolution. There were clearly some whose impartiality could be questioned, and whose personal circumstances made their objectivity doubtful, but such relationships were under constant review.

When armies were drawn together by personal allegiance, the chaplain to the household, would often accompany the troops, and in the Boer War and especially the First World War, chaplains became an essential integrated part of the Army. Their job was not simply to counsel the young soldiers facing death, or to minister to those who had died, but to act as confidante and advisor to those in power – bringing an emotional and spiritual dimension to decision making.

While the British military stick to fairly conventional definitions of faith and religion in defining the role of chaplain, the US has opened up considerably, recognising the importance of a far wider grasp of ethical, emotional, and spiritual issues in service decision making, and while they still have a shortage, their chaplaincy today recognises and tries to represent nearly 250 different paths to the role.

While the respect once held for Faith has diminished, and many people are no longer happy with established religions and their creeds, surveys suggest that most people now see the benefit of a wider emotional and spiritual contribution to the ways in which we govern our society. Even in the fictional world of Star Trek, the Captain of the Enterprise had his own spiritual counsellor, Deanna Troy, who provided precisely this understanding.

I am certainly not proposing that chaplains, per se, should become the guardians of morals within corporates, but I do believe that by making it the norm to have identifiable individuals with clearly credible skills, acting as emotional and spiritual advisors to the leaders of larger businesses should become an important aspect of their public governance.

Many public bodies, such as NHS Trusts, already appoint such individuals as non-executive directors. There are a growing number of businesses appointing Quaker advisors to their management boards.

Is it unreasonable for us to expect the annual Company Report, to document the specific actions that each director has undertaken for their continuous professional development? Is it unreasonable to include in this a record of the number of hours of ‘supervision’, as the psychological profession call it, and perhaps even the credentials of the supervisor in the fields of emotional, spiritual and ethical development?

Whatever the title of these confidantes, I believe it is time for us to try different approaches and I hope that above all, these crucial aspects of management will be incorporated by future generations. The new generation, Generation WE, is demanding a new approach, and they explicitly mention spirit in their manifesto. It is up to us, baby boomers, to respond.

Best wishes

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