Have we got in a Silo over Silos?

Thinking about Risk - Time to Change

Wed, 19 Mar 2025 08:18:55 GMT

As a small boy my Gran told me “ Never to confuse worrying with thinking ”. Genius advice for life. She didn’t think that worrying was necessarily bad, but a bit like her favorite tipple, which is almost an anagram of Genius, she felt that worrying should only be done in moderation.

Worrying is a perfectly natural thing to do and probably healthy to do for a little bit. Yet it’s thinking that helps us to make the best choices.

Whatever role we are in, the number of things that we have to get our heads around relating to risk at the moment can seem overwhelming and discombobulating. Where to focus and prioritise? Which risks are the ones that are most likely to affect us? How to plan for them? How to figure out what’s controllable and what’s not and to deal with both? How to keep things in proportion? How best to think about the combination of risks and how they interact? How to communicate effectively about risk and get the balance right in recognising risk, being clear how we will deal with it and what we need from others?

Doing all of that effectively is challenging. Especially when we feel deeply responsible for the livelihoods and well-being of others and when these risks can have potentially significant personal as well as organizational impact.

If we are not careful, sometimes individual worries can aggregate and compound and, before we know it, we can end up with what Harvard Health describe in their excellent When to Worry about Worrying article as Generalized Anxiety Disorder (GAD). They identify symptoms of GAD including:

Persistent, excessive worry about several different things for at least six months
Fatigue, difficulty sleeping, or restlessness
Trouble concentrating
Irritability
Muscle tension
Feeling tense or "on edge"

Having the self and collective awareness to recognise these symptoms when we are experiencing a little “GADiness” and then using that knowledge to trigger thinking can be very helpful. It seems logical that if we don’t, then GAD may also make us vulnerable to some common traps when thinking about risk. These might include:

“It’ll be alright on the night” or “Heads in the sand” syndrome. We find the situation so overwhelming that we just hope that it will go away. In practice through ignoring things and effectively abdicating responsibility we place our organisatiosn and ourselves at even greater risk.

Slaves to Process . Believing that a good process is enough protection against risk. If reinforced with a spoon of siege mentality induced Groupthink, then the result is often a collective judgement by-pass. Professor Eugene Sadler-Smith’s fascinating book “ Trust Your Gut ” talks about the importance of building intuitive muscle power as a possible antidote to this.

Not getting the data and information that we need to inform making the best choices. Or being Data Drunk , where we’re at the end of what feels like a data fire hose and find it hard to see the most important things and what they mean.

Planning for events rather than consequences. Many risk matrices are event based when so often the risk is not really about the event but the consequence of an event. E.g. What happens if there is no internet for a prolonged period.

Not enough focus on Risk in the work of our Audit, or Audit and Risk Committees . This can be through not having the right composition, terms of reference or direction from the board.

Confusion between the Controllable and Uncontrollable. Controllable being where we can both influence the probability of the risk arising and mitigate its effect when it does. Uncontrollable being where we can’t do the former but can possibly do the latter.

Focussing on an overall risk appetite rather than considering appetites for specific categories of risk. For example, if you’re going to take significant market risk then doing so with low levels of financial, capacity and capability risk.

Unhealthy risk aversion. Being too rooted to prevailing assumptions and too susceptible to anchoring or status quo bias. This can lead us to analysis paralysis and over emphasising risk and under-emphasising upside.

Being dominated by one major risk. Because of what we perceive to be one or a few major risks we ignore a group of other more moderate risks. They seem inconsequential compared to the big ones. However, in combination they have the potential to significantly impair our ability to deal with those major risks.

Not using the best approaches to help us make the right choices. In SAP Concur's CFO Guide to Building a Future Focused Finance Team there is an emphasis on the need for finance functions not just to be lean but also to be agile. As an indicator of the opportunity for this, they quote from Digital.ai ‘s 17th State of Agile Report. “Whereas 69% of IT teams use agile approaches only 13% of Finance teams do”. Gary Goodenough, SAP Concur ’s Regional Sales Director points to examples of in an SAP Concur report Emerging Trends in Expense Management and Audit Controls ”adopting innovative audit practices, such as those leveraging AI to filter out low risk items can significantly enhance both efficiency and compliance.

Failing to strengthen our core. Not doing what’s going to help the most in most circumstances such as building capabilities, relationships, financial strength and general resilience.

Not ensuring that we really understand the most important “Dynamics” and how they are shifting. For example market, organisational, financial and stakeholder dynamics and, most prominently recently, the geopolitical dynamics that are relevant to us.

Learning from others . Not capitalising on the wisdom of others, especially those who have encountered the risk situations we are most concerned about, and finally;

Too much Testosterone : In Robert Sapolsky’s brilliant book “Behave” he notes that although the influence of testosterone is context dependent “Testosterone increases confidence and optimism, while decreasing fear and anxiety. It boosts impulsivity and risk taking, making people do the easier thing when it’s the dumb ass thing to do. “ This suggests age and gender diversity on our boards might be helpful in achieving a balanced approach to risk.

In its 2024 update to the Corporate Governance Code the UK Financial Reporting Council said that “ A board should establish an audit committee ” and that “ part of its role and responsibilities is reviewing the company’s risk management and internal control framework, unless expressly addressed by a separate board risk committee."

The Spencer Stuart 2204 Board Index noted that 35 of the constituents of the FTSE100 companies now have combined a combined audit and risk committee. Most of the others have “ Overseeing risk management ” as part of their terms of reference of their Audit Committee and some include relevant categories of risk oversight in their other committees such as Nominations, Remuneration or Sustainability.

After having been an enthusiast for the combined Audit and Risk committee for many years, so that Risk has equal prominence and consideration in the committee’s work, I am now shifting that view. It feels that for many organisations, especially larger and more complex ones, that a separate overarching and beefed up risk committee may be the right way to go.

Why? First, to help the board to have an overall rather than compartmentalised view of risk. Also because experience suggests that when embedded within an Audit or an Audit and Risk committee, risk still doesn’t get the right balance of time and attention. Those committees also tend, for perfectly understandable reasons, to be populated by financial people of a similar age and as a consequence tend not to focus as much as may be necessary on non-financial risks. Of course many might argue that all risk ends up being financial risk but I think that misses the point.

Gary Goodenough reinforces this “ In today’s complex business environment, where risks range from data overload to an over-reliance on rigid processes, the call to separate risk management from traditional audit functions is particularly resonant" .

At the very least it is time for all of us, whether we are on a board or not, to have a think about “ How we do risk ” . There’s some very useful advice in the Risk Coalition’s latest free guide: Raising Your Game which comes at the topic from the healthy perspective of seeing and thinking about risk as a strategic enabler rather than simply downside management.

Finally, if you ever need a reminder to stop worrying and start thinking, hum Bobby McFerrin ‘s 1988 hit and legendary earworm tune “Don’t Worry, Be Happy” because “In every life we have some trouble, But when you worry you make it double”. Something the construction workers of the RCA building in New York having lunch in the legendary 1932 photo above maybe pushed to the limit!

Patrick Dunne OBE

Experienced Chair, author of the award-winning book Boards and co-author of Five Generations at Work: How We Win Together, For Good

This article has been sponsored by SAP Concur industry-leading technology that automates travel, expense and invoice spend processes.

The fee will be donated to ESSA-Education Sub Saharan Africa , a charity which is using evidence to transform educational outcomes through systemic change and to make educational systems more resilient.

Reflective Powers What? Why? What? How?

Thu, 05 Dec 2024 08:09:43 GMT

Our capacity and capability to reflect is such a precious thing. Helping us to maximise potential as well as to minimise risk and to make life less stressful.

Recent global events, cultural, social and technological shifts and a range of other factors are increasing the need to reflect in order to make wise choices. They are also piling on the pressure, giving us less time to think and crowding our mind-space when we do get that time. “ Send ” or “ Spend ”, “ Regret ”, “ Moral Regret ”, and the many other types of regret we feel from poor choices can all be reduced with reflection.

I’ve deliberately avoided prefacing “Reflect” words with “Self” as, although self-reflection is a highly valuable and essential element of reflecting, I believe collective reflection is underappreciated and can be equally powerful. Moreover, if you have arrogant or narcissistic tendencies, then reflecting alone without the calibration of others may only serve to amplify those unhelpful traits!

Balancing the need for Agility and responsiveness with rigour is tough, yet fundamental to making wise choices. Especially when the stakes are high. Many decisions go wrong, even when we have chosen the right thing to do, through poorly thought through execution. Our individual and collective reflective powers can not only help us to make good choices but also to maximise the outcomes arising from them.

Often the dominant driver to reflect is a focus on eradicating failure rather than adopting a Maximising Mindset and learning from success. As many solutions arise from considering what has gone well as well as what has gone badly. Especially in turnarounds. Deciding what to focus on, playing to strengths, liberating talent and unleashing unloved and underinvested businesses and processes is much easier if you’re on the look-out for good as well as bad.

When it comes to reflecting on specific situations and reflection more generally I find four simple questions helpful What? Why? What? How?

What is reflection?

Definitions of reflection in the context of our thought processes tend to focus on thinking about things that we or others have done, as well as situations that we have encountered. The general aim being to look back, to learn and to do something differently as a result.

In Physical Science, reflection is defined as “ The return of light or sound waves from a surface ”, with two main types “ Specular ”: Light reflected from a smooth surface at a definite angle, and “ Diffuse ”,: From rough surfaces that tend to reflect light in all directions. My experience suggests that a lot of our human reflections are diffuse!

Reflecting on things from different angles can be helpful in calibrating our thoughts. Which triggers another thought. In Maths the angle of incidence, the angle that a ray or wave approaches equals the angle of reflection when light or sound waves hit a flat surface. It seems logical that the better you approach something the better you will deal with it when you encounter it, and the more that you can get yourself straight the more predictable and controllable the result is likely to be. Tennis players are masters at this in their racquet positioning. Reflecting upon prior experiences beforehand and getting ourselves in the correct position can help us achieve an improved result next time.

Why can reflection be so powerful?

Potentially through:

Boosting self-awareness: enhancing our understanding of strengths and weaknesses and our real impact on others.
Helping us to understand: making sense of what's happened and why.
Learning: for individual or collective improvement
Contributing to building a healthy culture: and in avoiding Arrogance
Helping to build alignment : as well as knowing if you haven't got it when you think you have!
Swifter recovery and more rapid replicating and scaling of success: from poor choices or benefitting from replication and scaling of successful ones.

What can we specifically do to increase our powers of reflection?

Apart from using the What? Why? What? How? approach and doing all we can to increase our individual or collective self-awareness there are several other well-established frameworks that can be used to help us effectively reflect. For example: Bain’s 5 R Framework (Reporting, Responding, Relating, Reasoning and Reconstructing with its emphasis on reasoning – making sense of what happened, The Gibbs framework with its emphasis on what we were thinking and feeling at time and how that might help guide future action, Kolb’s active experimenting approach to enable us to learn more swiftly learn and adapt.

Whatever approach or framework we use it’s important to ensure that we have the time to regularly reflect, in a place, at a time and with the time that’s conducive to doing so. My own two favourite places are while travelling or walking.

If we haven’t had it, getting training on giving and receiving feedback can also help.

As implied earlier, reflecting doesn’t need to be a solo sport. When reflecting collectively, apart from travelling or walking with others, as a Chair I love those 15 mins we set aside at the end of each board meeting to reflect on how we did and to ask whether we rushed or took too long over anything, made the best use of the wisdom in the room, how we left the executive feeling etc.

The other very specific thing to ensure is that we don’t confuse worrying with thinking. Worrying is a perfectly normal thing to do but thinking things through and genuinely reflecting is so much more useful.

Figuring out What happened in a specific situation?

Improving our powers of observation and being an active rather than passive listener and observer helps enormously when figuring out what happened in specific situations. Doing so means that we see and hear so much more. “ Listening to what people think as well as what they say ” can be incredibly helpful.

Clarity over what’s a fact and what’s an interpretation is also useful. Leap Confronting Conflict’s FIDO (Facts, Interpretation, Decision and Outcome) technique increases our ability to respond thoughtfully to achieve a better outcomes, especially in highly pressurised situations. By starting with figuring out what the facts are and what you can interpret from them and other inputs you may have you can slow yourself up enough to avoid a hasty reaction. This also enables us to work out what outcome we want and what might be realistic in the specific situation. Then, finally, motivated by having our eyes on the prize, making the right choices to achieve it.

Working out why something happened?

Understanding why something happened is as useful as being clear what happened.

High self-awareness helps enormously. Low self-awareness can be a granite anchor on moving forward.

Knowing as much as we can about the context in which we are engaging, understanding the objectives of others, their behavioural characteristics and preferences, what we think they believe our objectives and behavioural characteristics are, is helpful in achieving this.

What hard data do we have to guide us? How reliable is it and how data driven and savvy are those we are interacting with?

Cassie Petrie from SAP Concur regularly discusses data and the issues that come from not analysing it effectively. She believes that failing to use data effectively leads to poor decision-making for a business. It means missed cost-saving opportunities, and inefficient processes.

But also, if we don’t have the visibility over data, it is difficult to reflect on the decisions we make and their outcomes.

We may feel we are data driven and rational in our decision making, but are we? If we are how do we act with others who are more instinctively driven? Do we really understand the stakeholder map and where the power lies?

We may feel that we are also empathetic, have good antennae and listening skills but do we? If we do then how do we interact with those less empathetic. I’m travelling a lot at the moment and overheard a woman in the lounge the other day at Heathrow obviously trying to stop a colleague abruptly resigning. “ Look Sally a ******* he may be but I actually think he’s got a really good point if you can look beyond the horrible way he said it ”. Her next call was to Mr Wit who she gave a masterclass in messaging, saying that although he had a great point he completely blew his credibility with a number of colleagues over the way he spoke to Sally. She then gave him some fantastic tips on how to learn and recover from the situation.

Deciding What we do as a result of our reflection and How?

Having figured out what happened and why, the answer frequently emerges as a result. The more sophisticated, especially those who have mastered the art of coaching, call this self-discovery. But what happens if it doesn’t and we end up with a dilemma situation where all ways forward appear to mean discomfort or pain for us or others?

The stakes matter here. Many reflections that we have are about fairly minor things but it’s important not to diminish their importance. In aggregate and over a long period these marginal individual gains are capable of delivering significant benefit. Arrogance is a judgement slayer in this and so many other regards. The arrogant often feel that their overall brilliance means that they don’t have to bother with such small things but for most of us mortals it matters a lot.

No matter what the stakes we need to be clear what our choices are. Reflection helps us not only to do this but to expand the possibilities. In doing so we need to avoid the dangers of overthinking and focus on what we want to achieve and whether it is material and worth the effort.

Finally, a little trick that I use to trigger me to R-E-F-L-E-C-T , before any big decision or after a moment I feel has gone well or badly. To hum the iconic R-E-S-P-E-C-T by Aretha Franklin and go loud on the line “ Work out what it means to me ”!

Patrick Dunne OBE

Experienced Chair, author of the award-winning book Boards and co-author of Five Generations at Work: How We Win Together, For Good.

This article has been sponsored by SAP Concur industry-leading technology that automates travel, expense and invoice spend processes. You may find their latest Travel and Expense Predictions 2025 blog of interest.

The fee will be donated to Leap Confronting Conflict Leap Confronting Conflict a charity which gives young people and the adults in their lives the skills to effectively navigate conflict.

If we are not Agile then we are Fragile

Fri, 06 Sep 2024 11:09:53 GMT

As with many leadership words “Agility” has many meanings and components. Yet, when used, it is often mistakenly assumed that we all have the same understanding. Whether that’s about mental, physical, verbal or other forms of agility. Unsurprisingly, for a word applied to so many contexts, we frequently don’t.

Mobilising people with different perspectives and feelings towards change is easier for all involved if we have a clear understanding of what we mean and why. It also helps to understand the inhibitors and enablers as well as the metrics that we might use for diagnosis and to track progress.

Mostly to avoid misinterpretation, but also because when I hear it used vaguely and without context my inner “Bullometer” starts to squeal, I try hard not to use the “A” word without saying what I mean and contextualising it. Probably the result of helpful scar tissue from an early career moment where an extolling leader uttered “We need to be more agile” evoking the spirit of leaping gazelles which those of us listening translated as “Another round of cuts and even more work for us then” .

When agility is such a powerful and positive concept and critical to our ability to survive and thrive in disruptive and uncertain times it’s a real shame that the word is frequently misused and abused. The positivity that flows from agility can be a powerful magnet for customers, talent and investment, as well as a driver of innovation. The lack of it is often a reason why people don’t want to buy, will leave or don’t want to invest. Organisations of all sizes and types with a Maximising Mindset quickly adapted and found new ways of doing things as a result of the pandemic. Those that should have and could have but didn’t, floundered and failed or became zombie businesses. High agility today feels more of an imperative than an option. Put simply- If we’re not agile we’re fragile.

Sometimes there is confusion between productivity and agility. Agility has the potential to increase or decrease productivity. Savvy leaders understand the difference and, most importantly, find the sweet spot on their value curve so that if there is a productivity cost it is more than compensated for by the premium and enhanced loyalty that a better product or service deserves. There are a range of practical e-books available through SAP-Concur's Creating Business Agility through Transformational Leadership Resource

Increased agility can also drive or be driven by cultural change. The combination of empowering local decision making and detailed process engineering change can lead to both. An example being the rise of the “Cobots”. Collaborative robots, that are sharing data in real time to boost flexibility, reduce defects and deal better with last minute changes on production lines. They are simply mimicking human practice from ancient manufacturing working methods.

In their fascinating work on culture, MIT Sloan Glassdoor picked out 9 Big Cultural Values to measure and track an organisation’s culture. These were Agility, Collaboration, Customer, Diversity, Execution, Integrity, Innovation, Performance and Respect.

Their definition of Agility being that “Employees can respond quickly and effectively to changes in the marketplace and seize new opportunities. To be Flexible, Nimble and Fast moving." Fascinating that the onus was on employees and didn’t include the board, leadership, and partners. It’s hard for employees to be agile if they are constrained their board and leadership team, or where the equipment or systems that they use or key suppliers and partners slows them down.

Customer Focus, another of the “ Big 9 ”, is a big driver of agility. Cassie Petrie , SAP Concur's EMEA Managing Director for Small and Medium Sized Businesses supports this view, citing a large mobile network example where:

“Processing a change which was taking 8 hours across 8 days was reorganised to make it all happen on one day. The result, a week off the time from the customer’s perspective."

In Cassie’s view,

“Greater use of customer or user experience to prioritise sequencing of tasks will increase agility and deliver better outcomes for customers as well as strengthen competitive-advantage and margins”.

Interpretations of agility tend to combine speed with movement, combining a mindset, capabilities and characteristics which are used intentionally and produce a well-developed set of reflexes to help us both succeed and avoid peril. Like the dancers in the image above and as we have seen from winning teams in the recent Paris Olympics and Paralympics, agility as a group also depends upon trust and teamwork and moments of calm as well as dynamism.

A good friend, ballet dancer and brilliant Pilates trainer, Maria Sasaki says that to be agile you need “Core strength and stability, combined with suppleness of body and limbs” . She also emphasises the importance of developing balance. Agility is not about jumping aimlessly around all over the place, enjoyable though that sensation may be. Stability and control underpin agility and provided the strength to stretch. Core strength which in an organisation means strength in all aspects including financial.

Cat lovers at work may be trying to emulate their favourite feline’s ability to land on its feet no matter where it jumps or falls. Love or loathe cats, Scientific American's Why Do Cats Land On Their Feet? may have you wishing that you and your organisation had a few more feline features. Especially, the “Righting Reflex” which helps to work out which way is up when you are falling and how to reduce our moment of inertia.

For Birders, it’s the Goshawk’s clarity of purpose when flying at speed through a wood in pursuit of its prey, combined with its power and suppleness, its ability to process vast amounts of data at speed and make thousands of adjustments to its shape and route, that may be their ultimate exemplar of agility.

But we’re a different species. We may have many things in common with other animals. Yet we have quite different individual and organisational physiques, capabilities and challenges beyond our basic needs. So, what are the inhibitors and enablers hindering or helping us to be more agile and what do we need to think about when developing metrics to help us understand how agile we are.

Inhibitors:

The many potential inhibitors to agility include:

Mindset and culture. Best typified by “We’ve always done it this way” and the dangerous feelings of invincibility which may emerge following a period of success;
Rewarding a lack of agility and driving out the most agile. Agile people by their very nature will be demanding colleagues and test their boundaries;
A lack of diversity of thought and Group Think;
Arrogance - The Judgement Slayer , especially when it comes to spotting when it is time to change;
Not doing the training - failing to build the muscles, develop the control and techniques to have the strength and capabilities to adapt;
The complexity of getting things done, usually down to poor process;
Not having the data and systems to inform swift and robust decision making. This also can be a reason for staff churn due to frustration with systems and their impact on getting things done;
An understandable but erroneous invested capital bias which causes us to avoid a sense of abandonment and failure; and
Short term distractions.

Enablers:

Happily, there are many enablers to agility including:

Building the right board for the next phase of development - it may be very different from before. It’s amazing how often the addition of one or two board members can catalyse an organisation, especially in the Chair role;
The right mindset and culture: Whatever your favourite attributes, defining your desired culture and placing emphasis on meaningful agility will help. A mindset which is always learning and curious to know what other organisations are doing in and outside of the sector;
Thoughtful restlessness should be valued and encouraged rather than punished. The human spirit of exploration, desire for discovery and strengths in problem solving are incredible if freed to flourish;
Strengthening our core and the suppleness of our body and limbs. This comes through practice and through stretching when you don’t need to because you won’t always know when you will need to;
Being actively open minded as well as listening actively. Not just for what you want to hear or for confirmation;
Diversity helps to develop agility and the rise of Nextgen boards which is covered in the latest book I have co-authored with Rebecca Robins Five Generations at Work: How We Win Together, for Good , which has numerous examples of how this works;
Finally, being technologically savvy and understanding the advances being made in AI, and other technological developments should enhance the speed and reliability of decision-making and reduce unjustified prevarication.

Metrics:

Metrics, by definition focus on quantitative rather than qualitative measures and, in some sectors, it can be more challenging to track long-term metrics for agility, especially in volatile circumstances or where identifying attribution is hard. For this reason, many of the quantitative metrics used for agility have qualitative conditions attached to them. For example, “ Speed to recruit a new employee-who stays more than a year ” or “ Time to resolve a customer complaint-successfully ”.

It’s exciting to think what AI might bring to whole world of agility metrics and I expect we will see some interesting developments on this soon. In the meantime there are diagnostic tools already available to assess things like how agile you are on things like controlling costs .

Commonly used agility metrics are often split by “ Proactive ” and “ Reactive ” agility. Obvious examples of the former being the speed to get a new product to market or gain critical mass in a new territory and the latter being time to respond to changing market conditions, regulatory changes etc.

Six points to sum up:

Agility feels more of an imperative than an option, both to thrive and to survive.
Improving personal or collective agility relies upon ensuring that we all know what we’re talking about and approach it with a Maximising Mindset.
Developing the power of our antennae, ability to process data and turn it into intelligence is essential in knowing when and how to adapt.
High self-awareness individually and collectively informs our ambition and choices and helps us make the most of them.
Clarity over the cultural change required as well as how we are going to achieve and track it underpins success.
Enhancing core strength as well as suppleness of body and limbs before we need to use it makes us more nimble when we do.

Patrick Dunne OBE

Experienced Chair, author of the award-winning book Boards and co-author of Five Generations at Work: How We Win Together, for Good.

This article has been sponsored by SAP Concur industry-leading technology that automates travel, expense and invoice spend processes. The fee will be donated to ESSA-Education Sub Saharan Africa , a charity which is using evidence to transform educational outcomes through systemic change and to make educational systems more resilient.

A Maximising Mindset

Thu, 13 Jun 2024 07:25:18 GMT

Reflecting on things while traveling can be stimulating and so it proved in the beautiful hills near Maseru, Lesotho recently. The reason for my visit was to contribute to an Institute of Directors Lesotho event on governance, for which big thanks to their Chair, Selebalo Ntepe.

The theme of my tiny contribution was “Value Maximising Boards”. Why?

Because even though there is a lot to think about in terms of risk in the world right now, it is important that we also remember that there is a lot more to being on a board or being a leader than minimising risk. Whether we are in business, the social or public sectors, minimising risk will help us stay in the game. Yet it is rarely enough to win it or, should we wish to, to achieve our full potential either individually or collectively.

Unless we are incredibly lucky it’s usually necessary to be well governed to achieve sustained success. Good governance contributes to creating value and impact in so many ways in addition to reducing risk. For example, in making more robust decisions with increasing efficiency and through building stronger reputations. Yet it is not sufficient.

We need a clear vision and purpose which mobilises and guides teams in the right direction. Ensuring that we have the right strategy and the right resources as well as right governance to achieve our vision and fulfill our purpose. That’s why, in a recent report conducted by SAP Concur , it was found that 60% of senior leaders said their main task today was preparing their business for the unexpected. As a board or a leader we need to make sure we’re adding value and providing more than just effective oversight to maximise a businesses potential.

Although very familiar with South Africa, which surrounds it, I knew very little about land locked Lesotho before my trip. Hence, I felt the need to research its history, culture and state of governance. In doing so I learnt a lot about the person whom Lesotho’s corporate governance code is named after. I was expecting them to be a prominent and well-connected business leader, a Lesotho Cadbury or Higgs. Wrong!

The code is named after a 17th Century Basotho chief, herbalist and philosopher, Chief Mohlomi. He travelled around Southern Africa teaching and practicing a leadership philosophy based upon peace and prosperity with the aim of developing transformative leaders. He was also a social entrepreneur ploughing back what he earnt into the communities he visited.

Far-sighted Mohlomi believed in intergenerational thinking, something which we today, with much threatened futures, are rediscovering. This for him was not just about doing no harm but about positively building for the future and making the world a better place for those from all generations, now and to follow.

Unlike many of the local warmongering chiefs of his time, he saw the huge benefits of identity and independence in unifying and galvanising people behind a positive vision which has real meaning for them not just the leaders. Yet he also saw the realities of interdependence, recognised the value of a stable context within and around a community, as well as the benefits that flow from thinking of others affected by our actions.

Mohlomi, certainly seems to have been one of life’s inspirational maximisers. Maximising value and impact, not just for today but for the future and not just for himself or his tribe but for others now as well as those to come.

As a board, or a leader more generally, how can we turn these centuries old inspirational maximising principles into practice in our much-changed world.

Here’s six simple thoughts to prompt thought and discussion:

First of all, it’s helpful to understand that a minimising mindset can easily become a reductive mindset, even if arrived at through traveling along a path of good intentions. It may then provide insufficient protection against the things we fear as well as reduce our ambition and weaken our talent magnet. Whereas maximising potential can strengthen resilience through providing greater individual and collective strength, resources, relationships, empathy and access.

At the same time we need to recognise reality, that we can’t run completely free and that a degree of minimising is necessary. For example in use of resources and in helping us to focus. So, when composing our boards and leadership teams and in thinking about diversity we need a healthy balance of risk appetites. Those who can inspire us to think big and those who can ensure that we maintain financial and operational control, as well as that rare earth material, those who can do both.

We need sharp focus, high motivation and strong alignment. We need clarity about what we mean by value or impact- whether Financial & Commercial, Social, Personal or Intergenerational, whether short- or long- term, We also need to be clear about who that value or impact is being created for and how we are going to measure it and distribute it.

Having an integrated stakeholder strategy helps; in framing our choices and guiding our investment, in maximising the use of our capital, our knowledge, and human and natural resources. The word integrated being critical. Knowing what all of our key stakeholders want and need from us and as importantly what we want and need from them. Then having the metrics in place to know to what extent we are all getting what we want and need will enable us to maximise whatever resources we have.

As does having intergenerational mindset. It helps in so many ways, from reinforcing long term sustainable decision-making to the creativity and fresh insights and challenges that Nextgen boards bring. In a new book which Rebecca Robins and I have co-authored Five Generations at Work: How We Win Together, For Good (click to find out more and pre-order) we take a fresh, evidence based and solutions focused approach to the topic. Bypassing the current divisive negative and stereotype-fueled discourse, we have drawn upon six years of research and case studies from leading businesses and other types of organisation, to produce a definitive playbook for empowering intergenerational collaboration, innovation and productivity at work.

Moving away from over transactional mindsets when it comes to recruiting, developing and maximizing the value of our people also helps. Current unsustainable churn rates, talent scarcities, low engagement and the consequences of precarious employment are not good for business or any other type of organisation. I believe they have also been harmful the wellbeing of our societies.

Finally, whilst acknowledging that “Do no harm ” has been helpful in many ways, it is staggeringly unambitious whether in the context of our planet, our organisations, those we interact with, our communities or future generations. There is enormous opportunity through creating wealth, health and making our planet an even more wonderful place to live.

All of the above are dependent upon one other thought. That it is hard to have a value or impact maximising board or leadership team without people with maximising mindsets. That’s why it’s something we should always look for when recruiting and help to develop in those we work with.

Patrick Dunne OBE

Experienced Chair and author of the award-winning book Boards .

This article has been sponsored by SAP Concur industry-leading technology that automates travel, expense and invoice spend processes. The fee will be donated to EY Foundation an independent charity which supporting young people from low-income backgrounds to maximise their potential through getting paid work experience, employability skills training and career guidance.

Too Many Chiefs? The C-Suite Conundrum

Thu, 14 Mar 2024 08:32:13 GMT

The proliferation of the "C" prefix to job titles has coincided with seismic changes in the way we lead, work and communicate as well as with generational shifts and changes in the power balance between functional leaders.

Looking at organisation charts and job sites it seems that there are now over 20 commonly used “C-Suite” titles ranging from the classic trio of Chief Executive, Chief Financial and Chief Operations Officers, to the up-and-coming CDO (Chief Data Officer) and new age sounding Chief Experience Officer. Amusingly when I mentioned that I was writing this article a C-Suite friend told me about a comment her CEO had made to her one day “I’m really worried we seem to have a Chief of everything but Wednesdays!”

Taken literally the "C-Suite", means the place where the “Chiefs” hang out. Historically this was a luxury "Suite” of offices typically at the top of a tall building. This reinforced status, rewarded achievement, shielded the most senior leadership of the organisation from the rest of the organisation and enabled them to spend more time together working on the big strategic issues or to keep a closer eye on their competition for the top job.

I've always found the term "Chief" a strange choice. As a boy I was puzzled by the fact that they were always portrayed as the bad guys who got shot while the supposed good guys, who were ironically called cowboys, literally rode rough shod over the feelings and rights of others. The term also feels somewhat at odds with modern leadership and the "C" can easily be used in a less flattering way e.g. “Clown Suite”.

The use of the word "Chief" can also be an issue for many indigenous peoples, especially Native Americans. DEI Expert Lee Bitsóí's article Why "Chief" should be eliminated from Diversity titles summarises this well.

In the C-Suite three-word system of nomenclature for job titles the first word is Chief, the second describes the function and the third is "Officer" again another somewhat outdated term other than in the military. Millennials who are assuming more and more leadership positions from GenXers will also influence how things are described as well as how they are done.

So, despite its enormous popularity and use of the two elements of the term C-Suite both feel a little at odds with our times. Does it matter if today’s meaning is clear and relevant? This will be an absolutely it does for some who also may doubt whether the meaning is clear.

Yet, for others the proliferation has played its part in creating helpful conditions for “Distributed Leadership” to flourish , where leadership responsibilities are shared rather than vested in one or a very small number of people. Fans of distributed leadership will point to three principles required to make it work:

– Autonomy and the empowering freedom and agility it provides

– Capacity , specifically the boost to leadership capacity through more empowered leaders and the;

– Accountability that comes with clearer responsibility and autonomy.

They are also likely to say that it simply reflects the practical reality of many organisations and the ways of getting things done in a more complex and interconnected world an that it is a model and style of leadership that is more in tune with the younger generations coming through.

For those who don’t hold those views, or where perhaps those principles haven’t been applied or applied poorly, distributed leadership can be confusing, frustrating and expensive. Confusing in trying to decide who to go to for a decision. Frustrating at the time it takes to get decisions made, given the range of inputs and formal or informal veto rights of too many chiefs and expensive because of the aggregate costs of the chiefs and the associated costs.

But what’s happening to the “C” roles themselves? In talking to a range of “C”s , the answer appears to be quite a lot and much of what is changing is common to many of the “C” roles across a diverse range of sectors.

For example, one of the pioneer C-suite roles, the CFO, feels to have shape shifted significantly with a knock-on effect on the skills required to be successful in the role. This is captured very well in two recent CFO Insight reports from SAP Concur titled CFO Insights - Top Priorities for 2024 and Key Skills Finance Leaders need for the Future .

The priorities illustrate the shift in role for CFOs with digital transformation and data now at the core. For interest, the other priorities related to “Balancing short- and long-term priorities”: “Stability versus growth” “Keeping up with the accelerated pace of change and investing in cutting-edge technology” “Embracing, driving, and managing digital transformation”, “Providing more value to customers and creating more value for their company.” And, lest we think the CFO is getting distracted from the core of their role “Focussing on the basics”

However, a recent Paper from the ACCA and BDO Chief Value Officer - The important evolution of the CFO put forward the view that “Chief financial officers are increasingly adopting a value centric approach in their work and this represents an evolution towards a chief value officer role away from a traditionally financially focused remit.” I can see a lot of boards having a religious difficulty with that notion and thinking that the financially focussed remit underpins a progressive approach to value rather than is something to move away from. Just above the base of integrity in the Maslow like hierarchy of needs of CFOs that I described in Boards .

With regard to skills and characteristics, many of those required for CFOs will be required for others with “C” titles including one that Thomas Lavin the Chief Controlling Officer at SAP describes engagingly as “Finding the sweet spot of combining artificial and human intelligence to generate meaningful insight”.

Thomas’s quote feels just as relevant for Chief Human Resource Officers, who may need to become even more human and resourceful to balance the growing need for them to be highly digitally savvy and AI literate with the pressures of recruiting and retaining talent and achieving high engagement. One such human skill as I argued in a previous Article Managing Conflict - The Underacknowledged Superpower is the ability to manage conflict which is rising in importance.

There has also been shift in power between roles reflecting the changing context. Examples of this include the power that Chief Technology Officers (CTOs) and Chief Data Officers (CDOs) weald. Well, that is if they are good. Most organisational transformations are critically dependent for sustained success upon having the right technology and data strategies. Smart CEOS and boards know this. Which helps in taking the right care in appointing people who can blend strategic capability with technical prowess or in many cases people who understand the business and know what great technical people look like and can lead and get the best out of them.

When I sat down to write this article I thought long and hard about the “So What?” I didn’t just want to put out a load of issues, fun though that might be. The “So what?” became to challenge whether we have we got what we need with our current organically developed leadership models and the configurations they have led to and whether they are right for what we see coming ahead. The answer is inevitably organisation specific. I am really keen to encourage thought and debate and to learn from others. So please do comment and add your wisdom to what I think is a critical topic for Boards:

“How we set up and configure our executive leadership for success”

Patrick Dunne OBE

Experienced Chair and author of the award-winning book Boards .

This article has been sponsored by SAP Concur industry-leading technology that automates travel, expense and invoice spend processes. The fee will be donated to Leap Confronting Conflict a charity which gives young people and the adults in their lives the skills to effectively navigate conflict.

Arrogance - The Judgement Slayer

Mon, 13 Nov 2023 08:40:15 GMT

There’s more to arrogance than a humility bypass. It is important not to confuse a minor bout of over-confidence or healthy self confidence and assurance with a long-term and deep-rooted corrosive condition. A condition which ties a dead weight to the person suffering it and impacts those they come into contact with.

Defining arrogance and differentiating it from other forms of irritating behaviour probably has as much to do with how others on the receiving end of it feel, as it does to the collection of actions or behaviours that an “Arrogant” person or group may exhibit. Arrogance has an air of grating unpleasantness about it.

Dictionary definitions capture this well. The Cambridge Dictionary in particular, with:

“Unpleasantly proud and behaving as if you are more important than, or know more than, other people.”

Collins American English takes it up a notch defining it as:

“An offensive display of superiority or self-importance; overbearing pride”

When combined with its frequent travelling companions, ignorance and hypocrisy , arrogance can be especially dangerous. Sadly, both history and present are littered with catastrophic examples of arrogance leading to disaster. Many failed careers, organisations, incompetent governments and devastating conflicts have arrogance as a contributor to their tragedy.

Why? Because from small teams to nations, arrogance is a slayer of good judgement and is cancerous to building healthy cultures.

Exceptional brilliance or a genuinely wonderful contribution might lead us to pump people up or inadvertently water the seeds of arrogance then stimulate the growth of this behavioural weed through tolerance or reinforcement of poor behaviour.

Unrecognised or unchecked these behaviours become harder and harder to sort out. Judgement is impaired, performance suffers, and legends morph into losers in the eventual, inevitable and unseemly resolution of a resulting crisis.

The world has quite a high tolerance to acceptable underperformance of individuals, teams and organisations. So, even if arrogance may not result in a major crisis, arrogance can seriously hold back performance. Those with low levels of self-awareness who lose contact with reality and weak leaders may not even be aware of just how much better things could be. Those with high humility but not enough confidence may be prepared to tolerate or stand by.

Yet the harmful can also be comical. From the stock character, the arrogant but incompetent leader in Roman comedies to those ridiculed in contemporary political satire, the sport of poking fun at the arrogant has brought considerable enjoyment through the ages.

Drivers of arrogance can have as much to do with “Under” as well as “Over” confidence. Slighting or humiliating another person might be motivated by a need to camouflage or distract from our own inadequacies and to inflate perceived capabilities.

The late great Nelson Mandela, known in later life for his humility, acknowledged this in “Conversations With Myself” , a compilation of personal papers and recordings.

"As a young man, I combined all the weaknesses, errors and indiscretions of a country boy, whose range of vision and experience was influenced mainly by events in the area in which I grew up and the colleges to which I was sent. I relied on arrogance to hide my weaknesses.”

Something I have observed in a number of Chairs and CEOs over the years is the calm confidence and humility they have with a successful executive career behind them. It may not be universal, but I always appreciate it when I see it.

So, what does the behavioural science say, why is it so corrosive to judgement, what are the signs of damaging arrogance and how might we help ourselves and others avoid falling into the abyss of arrogance?

What does the behavioural science say?

This is a surprisingly under-researched area. However, arrogance is frequently included as an element of research into related behavioural conditions such as narcissism or autocracy.

For those interested in delving deeper, Foundations of Arrogance - A broad survey and framework for research , published in the Review of General Psychology in 2019, does what it says on the tin. It also bangs the drum for more research into the subject and demonstrates humility with 17 names on the paper.

It describes three categories of arrogance and six components contributing to them, namely:

Individual - Distorted information and limitations in abilities - Over-estimation of one’s information and abilities - Resistance to new information about ones limits.
Comparative - Failure to consider the perspectives of others - Belief or assumption of superiority and;
Antagonistic - Denigration of others.

A helpful framework for the diagnosis of arrogance and for figuring out how to deal with it.

Why is arrogance so corrosive to judgement?

It’s hard to make the best judgement when you deny yourself the best information for lack of listening to others or losing their respect and them giving up on telling you things because you don’t listen.

Harder still when you have distorted information, limitations, overestimate your abilities and resist new information about those limitations. Combine this with a false sense of security, a failure to consider the perspectives of others and a belief or assumption of superiority that uses up mind space and energy in denigrating others and the hit to performance is obvious.

All 6 of the components of arrogance described above play a part. Arrogance can also be contagious. Especially to those who are impressionable or feel they need to join in with the behaviour of those with greatest influence around them. The dangers of Groupthink are legendary and made worse when fuelled by arrogance. An additional risk is that when someone feels that normal rules don’t apply to them and others in the group are compliant or reinforcing of that view, unethical behaviour may swiftly follow.

What are the signs of damaging arrogance?

Lack of self-awareness is usually a giveaway. As are displays of Aysmmetric Sensitivity where people demand huge sensitivity towards their feelings but show so little sensitivity to others.

A lack of respect or interest in the perspectives of other people, talking over, or constantly interrupting them is another big clue. Add to this regular demonstrations of “Mirroring” bias, only listening to those of similar profile, and a lack of respect for others time, a high level of status consciousness and “Ruling Class” syndrome and the diagnosis becomes quite clear.

Yet there’s more. The habit of going in hard and preying on those who are weaker in the group or less confident, is another clear signal. An overly strong attachment to rhetoric over logic or new evidence, another. Potentially leading the person into a more sinister place. The dreadful pit of misogyny and racism.

One often overlooked practical item is also how they view their expense account. I remember well in my executive career being frustrated by the odd colleague who would moan about the costs of support functions at the same time as spending far more proportionately on their trips than anyone else in the business. Happily, as evidenced in The Value that's in your data report from SAP Concur, these days “Spend Governance” systems such as SAP Concur’s are a lot more sophisticated and bringing levels of transparency that help to call this out.

So, it should be easy to spot the signs.

How might we help ourselves and others avoid falling into the abyss of arrogance?

Behavioural change is rarely microwaveable. It’s usually more of a process than a moment and often starts with increasing our own or someone else’s self-awareness. Reflecting on interactions, active listening to others and seeking feedback, even though it may be uncomfortable, increases self-awareness.

It is also important to think about how self-aware we are and whether we have any arrogance issues ourselves before we go try and help someone else. Bit like a parent on a flight, harder to help your child or elderly relative with their oxygen mask if you are choking yourself.

Knowing that you or someone else has an issue is only the start. Doing something about it can be more challenging. I remember once having a colleague who told me that he knew “He was an arrogant *** but that people should be more than happy to tolerate that for (his) incisive contributions.“ . He sadly never appreciated how much more effective he might have been or took responsibility for how much misery he caused.

If we become aware we have a problem or have helped someone else to, then the next logical stage is checking our diagnosis and calibrating it with more than one person. We also need to avoid falling falling into the trap of thinking that just because someone doesn’t agree with us a few times and seems unprepared to change their view that they are arrogant. The issue may be us.

Aggregating feedback for someone without them feeling like a ganging-up has taken place requires thought. Even with thought there is always the risk of provoking defensiveness rather than reflection.

Always useful to remember when giving or receiving feedback or providing constructive challenge to choose your words carefully. There’s a spectrum of directness from blunt classics at one end such as “You’ve got incredible talent and potential. If only you could stop making people cry you might stand some chance of fulfilling it.” to skillful probing that produces self-discovery. Then at the other end of the spectrum, words so subtle that the person thinks you’re congratulating their modesty.

An organisation’s culture as well as that prevailing locally will helpfully or unhelpfully provide a tonal context for such conversations. There are big cultural norm differences in the way that feedback is expected and many a traveller, including myself, has erred in this regard.

Another route is to make them aware of the collateral damage that they are causing for their team, business unit or the organisation. Churn can be a useful evidence point here. Understanding the consequences and costs of persistent arrogance is helpful and people are often prepared to change or at least moderate their behavior to keep on the road to the prize even if it means gripping the wheel intensely from time to time.

Noticing and reinforcing changed behaviour helps. Then having had a productive feedback conversation and generated the right atmosphere suggesting coaching and mentoring might be a good next step. Finding someone the person respects to provide it is important. Often valuable to provide choice so that they own the selection.

Sometimes reactions can surprise and it might result in the need to deploy some conflict management skills to make progress. It’s not uncommon for arrogance to be combined with poor conflict management skills, compounding the problem. My last LinkedIn article Managing Conflict Well - An underacknowledged Superpower contains a lot more on this.

Finally, I always remind myself that coping with someone who is arrogant is not the same as helping them to change and that learning the skills to help people to change invariably results in helping ourselves as well as our boards and colleagues.

Patrick Dunne

Experienced Chair and author of the award-winning book Boards .

This article has been sponsored by SAP Concur – industry-leading technology that automates travel, expense and invoice spend processes. The fee will be donated to Royal Voluntary Service who mobilise volunteers in every corner of Britain to support people in need.

Managing conflict well – The Underacknowledged Superpower

Fri, 15 Sep 2023 11:21:48 GMT

Poorly managed conflict can all too easily turn into destructive behaviour, ruining lives and livelihoods in the process. There’s a toxic torrent of evidence for this in the appalling images of violence on our screens, the divisive behaviour of many of our politicians and the media, as well as the dark side of social media.

Yet, as the Gershwins’ famous song goes, “It ain’t necessarily so!”.

Managed well, conflicting ideas, objectives and personalities are powerful stimulants for creativity, innovation and organisational transformation, as well as performance. They are also strong vaccines against the dangers of “Group Think”.

For most of us the conflict in our lives isn’t about armed conflict, physical violence or sinister trolling. It’s far less noxious. It’s about people or situations causing us frustration, anger or anxiety and undermining performance and happiness. However, it can still come at a heavy price. According to Susan Clews, the ACAS CEO, in 2021

"A failure by employers to deal with conflict early can be costly to businesses and our study estimates that these costs add up to nearly £30 billion a year (in the UK). Poor conflict management can also cause staff stress, anxiety or depression and impact workplace productivity.”

I have always believed that the ability to manage difference and conflict is a defining characteristic for successful leaders and organisations. The increased pressures, uncertainty and volatility of the last few years, as well as the welcome progress in increasing the diversity of boards and leadership teams have simply reinforced this belief. It’s an underacknowledged capability and I’d love to think that this article might help a little to change that.

Many struggle to find the right place on the “Harmony Spectrum” and to bring out the best in others and themselves but over the years I have been fortunate enough to work with many who can.

So, what is it about them that makes them effective and what is it that they do to navigate and to use conflict positively?

Firstly, they assume that conflict is natural and expect it to happen. They know that there are things that you can plumb in to the organisation to increase the chances of it being healthy rather than growing into corrosive and undermining “Long Conflict” . For example, they discuss how we might resolve predictable conflicts before they happen and put the mechanisms in place to deal with them.

They work hard to understand the specific sources and nature of the conflict. The “Big Five” being:

· Context.

· Conflicting or misaligned objectives.

· Lack of clarity on roles or role conflict.

· Asymmetry of information and poor communication;

· The fundamentals of human behaviour

Recognising that there’s typically no single source but a combination making each situation distinct.

Underperformance, existential or reputational threats, societal tensions and other factors influencing the context have the power to bond or bust relationships. The pressures they create can also lead to conflicting or misaligned objectives as well as misunderstanding, weakening confidence and trust. Those strong on conflict are usually on the front foot communicating the impact of significant contextual factors and how the organisation is going to deal with them. We saw numerous brilliant examples of this through the pandemic.

There can still be misaligned objectives even a benign or positive context can’t solve, either through poor management or because that’s just life. It’s perfectly natural for different stakeholders to want different things. Zero sum games happen and are a part of life’s rich pattern.

Smart leaders know that having integrated stakeholder strategies reduces the risk of legitimate misalignment causing unhealthy conflict. We are seeing many good and bad examples of this in the way governments and organisations are dealing with the climate challenge. For those in the UK dare I mention ULEZ!

Being on a board or a leadership team without clarity or unity of purpose can be uncomfortable. If our roles collide and or we work in a “Rabble” state with everyone pointing in different directions it’s just plain miserable. Unless, of course, you thrive on chaos and don’t care about the cost to others or the organisation.

Autocratic cultures may have the superficial appearance of alignment. However, in reality, they’re often fragile. Factions and cliques below focus on pleasing the autocrat, avoiding their ire, positioning for enhanced status, or to be the next in line.

The place a board or a leadership team ideally want to be is all pointing in the same direction but with enough creative tension and diversity of thought to avoid “Groupthink” and to make sure it’s the right direction.

Smart leaders also know that getting the right connecting managers and support function leaders reduces the potential for conflict between roles. Good examples of this are in compliance, finance, talent management, systems and operations. This is as much about the right attitude as it is about the plumbing. On the plumbing there are many more systems and best practice processes to reduce potential friction these days.

I came across a good example from my friends at SAP Concur the other day at a micro level to do with a conflict rich area, expense fraud and compliance and how to plumb it away. As an aside their research showed that only 35% of employees claim that they would never exaggerate mileage claims. There is also a bigger more general point here in that not having true and accurate data for the board and leadership can cause mistrust and lead to conflict.

Those who are good at managing conflict tend to be magnetic aligners, attracting others to recognise competing objectives and aligning them behind the route through the conflict, keeping their eyes on the prize.

There’s a whole section on conflict between boards and management teams in my Boards book . Some boards operate in a parallel universe with the management presenting the bare minimum in the maximum possible time, leaving just a little bit of time for them to tolerate a few questions and enable them to get back to doing what they were going to do anyway. The non-execs or trustees here are too distant and not as involved as they should be. All pretty pointless and risky with periods of “Silent Seething” punctuated by bouts of noisy discontent when the inner conflict breaks through the surface.

At the other end of the spectrum boards and leadership teams are falling over themselves trying to do each-others’ jobs and there’s conflict over roles and usually personalities leading to turf wars.

Yet there are those who find the right balance with real clarity over their own roles and those of others and who are able to stimulate a productive intersection with other groups and individuals.

Asymmetry of information and poor communications are another source of conflict. Misinterpreting reality, projecting views on to people which they don’t hold and uniting through contempt for other people or groups is a well-known tactic of dictators. There is more on this in my previous article on Silos .

Skillful managers of conflict focus on finding out the facts, artfully dispelling myths, understanding real motives and removing bias and misunderstanding.

Self-awareness is critical both on an individual or collective basis. Dierdorff and Rubin's research published in the Harvard Business Review showed that groups composed of highly self-aware people outperformed those made up with people with low levels of self-awareness by a factor of two at making decisions, coordinating and managing conflict.

Sadly, research from Ethan Zell and Zlatan Kirzan, with data from over 375,000 people in large organisations with feedback and review processes, showed that self-awareness is not something that comes naturally. Indeed, their work showed a correlation of only 0.29 between people’s own self-assessment and objective evidence and the views of others. It’s therefore something that we need to work on.

As an indicator of the level of explicit or implicit conflict between boards and exec teams the 2022 Survey by PWC and The Conference Board of 601 C-Suite executives in major US corporations was really interesting. Of those surveyed:

Only:

• 29% rate board’s overall performance as excellent or good

• 20% think their boards are diverse enough

• 33% say their boards ask probing questions

• 21% think their boards spend enough time fulfilling their responsibilities

Worse:

• 60% don’t trust their boards to effectively assess their own performance

• 64% of execs don’t trust their boards enough to remove underperformers

• 75% think two or more board members should be replaced

Somewhat ironic in that in the US the CEOs have much greater influence on the choice of their boards. So, they picked these people, haven’t done anything to change it and are now complaining about them. Also, I wonder how many of the board members in these companies think that it’s the others around the table who are the problem not them. I wouldn’t be surprised either if many of the board members had mirror views of their executives.

As an aside, the ability to deal with underperformers is also something those who manage conflict well use to reduce the chances of “Long conflict” .

Reflection and feedback are two tools we can use to help us increase our self-awareness. Our schedules can drive out time for reflection if we let them. For me a good walk really helps with this. Most often alone but frequently with someone else. Sometimes reflecting on a situation together can be more powerful.

Another is to build a culture of Constructive Challenge and to be aware of the level of pressure and its impact on us individually and collectively. Resilience also matters in that the more resilient we are the better we are able to absorb constructive challenge and to be more responsive rather than reactive in managing conflict.

The masters of conflict management know when and how to raise or lower the pressure and have the right balance. If they spot someone, especially the CEO or CFO, coming under increasing unhealthy pressure they will override their natural impulses to pile on the pressure and instead find a way to relieve it. Understanding what causes us pressure and our own tolerances to pressure is again an important aspect of self-awareness.

Over the last few years there has also been much written about the many biases that we are susceptible to. It’s a long list. From the obvious ones such as anchoring, confirmation and mirroring bias to the more complex ones such as selection bias and post rationalisation bias.

Bias matters because it influences the way we view things as well as how we feel about them and that can lead us into unnecessary and unproductive conflict.

Another thing to be aware of is what our own and others instinctive preferences are when it comes to dealing with conflict. This is really important if you want to be able to anticipate and prepare well for a situation which is likely to involve conflict.

The most widely accepted test on this is the Thomas Kilmann test. It consists of 30 forced rank questions and ascertains whether you are most likely to Compete, Collaborate, Compromise, Avoid or Accommodate in a conflict situation

I have found that CEOs when tested tend to be high in “Compete” and “Avoid” . They’ll die in a ditch over things they care about and disengage when they don’t. Sophisticated CEOs may throw a veil of collaboration over an issue along the lines of “Morning everyone I’m really keen to know what you think about X” but if it looks like the group are coming up with the “Wrong answer” on goes the Compete or Avoid switch depending on the issue.

Really good board members and especially Chairs tend to be more even across the five approaches and have the ability to pick and choose which is most appropriate given the issue, the dynamics of the group and the atmosphere in the room. They recognise that all have their uses.

When preparing for a potential conflict situation it is as important to try and listen to what others are thinking as well as what they are saying and to be really observant of body language and conscious of your own body and what that is telling you about how you are feeling. Understanding body language and the power of non-verbal communication also helps in choosing and using the right approaches.

Leap Confronting Conflict , the charity I chaired for many years and am now a proud Patron of, has a wonderful little mnemonic called FIDO for helping young people manage conflict more effectively. I think it is just as helpful for board members and leadership teams.

FIDO stands for Facts, Interpretation, Decision and Outcome and is designed to make us respond thoughtfully and achieve a better outcome rather than simply reacting and possibly making the wrong choice.

By starting with figuring out what the facts are and what you can interpret from them and other inputs you can slow yourself up enough to avoid a hasty reaction. This can also help you to work out what outcome you want and what might be realistic. Then finally, motivated by having your eyes on the prize, making the right choices to achieve it. These choices are typically what you say, who you say it to and how and when you say it.

In summary, in my experience the “Big 3” things that help you to manage conflict well are:

· Self- Awareness and awareness of those in the conflict or potential conflict.

· The Power of the FIDO (Facts, Interpretation, Decision, Outcome) approach

· Developing the knowledge, skills and character for high performance in conflict situations.

I hope that you found this article helpful, please do contribute by commenting and reposting and in the meantime I wish you every success in developing your conflict management superpower.

Have we got in a Silo over Silos?

Fri, 30 Jun 2023 16:18:23 GMT

Once a quarter the Financial Times Board Network gathers together a group of senior leaders from a broad range of sectors, roles and sizes of business to take a deep dive into a theme of interest to the group. I really enjoy facilitating these sessions and always learn a lot from doing so.

June’s theme was “Silos” and drawing upon the combined wisdom and experience of those attending we addressed the following questions:

How do we define silos?
Why is the Silo meme not so positive?
Is the current context reinforcing Silo behaviour in organisations?
What are the potential costs and benefits of Silos;
Have we got in a Silo over Silos and;
What practical tips are there for dealing with Silos?

How do we Define Silos?

Ironically, the word Silo, derived from the Greek σιρός (Siros – A corn Pit) was originally used to describe a highly positive and collaborative concept. Silos were a shared resource of deep storage bins designed to provide protection from the outside world and to reduce risk through dividing up a harvest of grain.

They were collaborative in the sense that Silos were community based as well as community funded. Apart from the benefits of increased protection for valuable and vulnerable crops they also brought other benefits through cheaper storage for individual farmers as well as the ability to sell or to use over a longer period. A concept that has survived for over 4,000 years.

A Google search on Silos today reveals just under 300 million references. A trawl through the first thousand reveals a lot more written about organisational than agricultural silos. There’s also a far from positive meme with many tales of the frustrations felt by working in Silo’d organisations and lots of advice on how to bust them.

Classic descriptions of organisational Silos refer to them in a trope like way as a mindset or a culture of a team which is somewhat isolated from the rest of the organisation, resists external ideas, is prone to groupthink and is deeply loyal and territorial.

Traditionally the Silo tag has been ascribed to a place, function or division or operating unit, it might even be a board and an exec team being less joined up than they should be. Silos can also be generational groups or strategic partnerships and suppliers.

At the same time, there is a general appreciation of the power of tightly focused and tight knit groups that have clarity of purpose and a high degree of autonomy. Especially when you want to get something done or to innovate.

Why is the Silo meme not so positive?

The short logical answer would be that it is generally felt that despite the logic of the power of focus that power is undermined by some of the more negative basic instincts of our human behaviour. It’s also possible that a deeply entrenched narrative is hard to shift and in our internet age whenever people do their research in order to write about silos they cut and paste from the mass that’s already there. So, could it be that we are in a classic groupthink Silo over Silos!

Is the current context reinforcing Silo behaviour in organisations?

Increased volatility and uncertainty generally increases anxiety. Reduced social interaction with colleagues outside our team combined with a combination of working from home and technological development may also be reinforcing factors. So, it’s quite possible that the current context may be boosting Silos rather than busting them.

Unlikely partnerships that spell success (2022) , a paper from SAP Concur , identified a number of dream collaborations between what some might consider traditionally Silo’d functions. Yet they also highlighted that “ 71% of HR leaders are more concerned about employee collaboration than they were before the pandemic”.

What are the potential costs and benefits of Silos?

The costs were summarised as:

The negative aspects of territorial behaviour.
Unhelpful Memes and caricatures developing about groups and individuals.
Silo groups being harder to join with heightened risk of organ rejection.
Increased risk arising from a lack of objectivity & diversity of thought.
Silo groups can easily become echo chambers with higher levels of Group think and lower levels of diversity. They may well be highly inclusive for those in the group but hostile for those who interact with them.
The strong “Anchors” that Silo groups depend upon inevitably lead to greater risk of Anchoring bias in decision making. “HR are useless, Finance are the say no department” etc .
There is frequently an unwillingness to share information outside the group resulting in it taking longer for others to get things done when Silo’d groups are involved.
Unity and loyalty to the group are valued more highly than performance.
Historically, creating reinforcing Silo thinking has been a useful tool for despots to divide and rule and can feed despotic tendencies in leaders.

There was a shorter list of benefits but some of them were highly positive including:

Providing a sense of Identity, Security, Unity, Safety, and Predictability for those in it.
The positives of territorial behaviour and a “Stronger Together”, more supportive culture.
Increased energy and conviction arising from higher levels of competitiveness.
Easier to reach a common goal and alignment behind it.
Easier and faster to mobilise especially for more task-based activities.
Increased focus.

According to Unlikely partnerships that spell success (2022) organisations are 5 times more likely to be high performing if they promote collaborative work. Encouragingly, they also highlighted that “82% of CFOs in the survey said that they collaborate more with their CIO peers than 3 years ago” and that there was “43% higher workforce productivity in companies where the CFO and HR are strong collaborators”.

The bottom line feeling from the group at the FT session was that there’s a spectrum from a “ Healthy Focus” to a “Destructive Bunker” mentality and that it is far too simplistic to think of Silos as wholly negative. It’s down to the leadership to create the right culture, communications plumbing and incentives to achieve the relevant balance for the organisation.

So have we got in a Silo over Silos?

As a group we agreed that we have and we challenged whether “Silo Busting” was a healthy mindset. We thought that it would be better to have a “Maximin” approach to silos. Maximising the positive aspects and driving out the bad.

What practical tips are there for dealing with Silos?

Here are a few of the things that I and the FT group found to have worked well?

Being clear as a board and executive leadership team about what culture you want and why that will lead to stronger performance and stakeholder engagement.
Having the self-awareness, processes and metrics to understand what culture you have got. The more evidence driven the better.
Review KPIS to ensure that they are encouraging positive collaboration between highly focused groups and not reinforcing the negative aspects of Silos.
Acknowledging and rewarding positive behaviour as well as acknowledging and sanctioning negative behaviour.
Seeing investing in connecting activities for highly focused tight knit teams as a critical investment and doing so with a “Return On Investment” mindset rather than a “Budget” one. This will also help focus on the things that make a difference and help drive out superfluous, superficial and unproductive activity.
Two decision aids which help where you have Silo chiefs making a collective decision. The aim being to encourage Silo leads to set an example by being more transparent, resolving differences more quickly and being more supportive of each other:

Instead of simply saying “Yes” to a decision, or what has become common in virtual meetings a “Thumbs Up”, use the “Fist of Five” approach. Use a closed fit to indicate “No Way”. An index finger (and absolutely not your second one), to signal that you see major issues. Two fingers (palm side!) to say you see some minor issues but they need to be resolved now. Three fingers to show that you see some minor issues but they can be resolved later. Four fingers to indicate that you are fine with the decision and Five to show you are very enthusiastic and will champion it.
Use “Decision Dens” , effectively a version of the classic “Dragons Den” but more supportive. Here you assemble a small group of leaders from different functions and places at short notice to make a decision which matters a lot to one of the group.

My simple aim in writing this article was to stimulate thought and comment on the many perspectives and ways to manage Silos for maximum impact and minimum damage. Please share and add your thoughts to the conversation.

Patrick Dunne OBE

Experienced Chair and author of the award-winning book Boards .

This article has been sponsored by SAP Concur – industry-leading technology that automates travel, expense and invoice spend processes. The fee will be donated to Leap Confronting Conflict which provides young people with the skills to effectively navigate the conflict in their lives.

Resilience - The Prize, The Price and Organisational Pilates

Fri, 28 Apr 2023 15:29:01 GMT

It’s almost a decade since the death of South Africa’s extraordinary President Nelson Mandela. Amongst his many qualities was his remarkable resilience. Abundant evidence of this is provided in his book “The Long Walk to Freedom” as well as numerous accounts from others.

It’s over 100 years since Harriet Tubman, the legendary war nurse, spy and underground railroad conductor died. A former slave, Harriet was not only remarkable for rescuing slaves through the underground railroad. Like Nelson Mandela, she also had the ability to forgive her former oppressors and to prioritise reconciliation even if it meant paying a deep personal price.

Fortunately, few of us will ever have to pay the price or face the extraordinary physical and mental challenges that they or other legends of resilience have experienced. Neither though will we be able to achieve the sense of fulfilment that they must have felt in gaining the prize of universal suffrage for a nation or liberating so many slaves.

Relating to and applying things from extraordinary people or situations to our own situation can be tough, especially when we are uncertain or our self-confidence has had a blow. Yet, when it comes to resilience, I think that we can learn a lot from these legends of resilience to help us deal with what feels like an increasingly threatening and uncertain world.

What do we mean by resilience?

“The capacity and capability to withstand or recover from difficulties.” Is my preferred description.

Capacity and capability feel equally important. The experience of the last few years has probably strengthened capabilities. Yet in many cases it has also eroded capacity. Fatigue and anxiety can reduce our capacity not just to deal with challenge but also to perform even routine activities.

Nietzsche’s much used quote “ If it doesn’t kill you, it will make you stronger ” , sadly may not always hold true. There are many “Walking dead” organisations and people in them who are damaged for life who have experienced “ Difficulties ” . However, I still found it uplifting while writing this to listen to Bruce Springsteen singing Jerry Butler’s “Only the strong survive” . I believe passionately that experiences where resilience is tested are great opportunities to reflect, to learn and to improve.

Views seem to vary as to whether self-inflicted difficulties are tougher to deal with than those coming from outside. Reputation preservation can be a powerful motive when the situation is self-inflicted though credibility and objectivity might be impaired and the appeal for help less strong.

The line between resilience and endurance is easy to blur. Endurance is an element of resilience, but resilience requires more than the ability just to put up with something.

What’s the point of being resilient?

If we are going to have to endure pain or put ourselves at risk and not simply walk away from a situation then the potential upside has to be worth it. There has to be a point.

For many leaders in the last few years who have faced existential threats from the pandemic, the energy or cost of living crisis, survival has been the galvanising goal. For others it’s about the “ Eyes on the prize ” and as I am writing this on the day of the London Marathon, a marathon runner’s “ No pain no gain ” mindset.

The final words from Mandela’s closing statement at the Rivonia trial which convicted him to life imprisonment in 1964 were:

“During my lifetime I have dedicated myself to this struggle of the African people. I have fought against white domination, and I have fought against black domination. I have cherished the ideal of a democratic and free society in which all persons live together in harmony and with equal opportunities. It is an ideal which I hope to live for and to achieve. But if needs be, it is an ideal for which I am prepared to die.”

He endured 27 years in prison for this ideal before being released in 1990 and then enabling universal suffrage in South Africa in 1994. One of his most famous quotes was that “I never lose, I only win or I learn” . Life imprisonment might not seem like winning to you or I, but for Nelson Mandela the grim alternative in 1964 was a death sentence. So to him it felt like winning.

There is no doubt he learnt an enormous amount in prison that was useful, not least a whole host of strategies to strengthen his resilience including physical exercise, diet and a motivating and never-ending desire for learning. He also knew that he did lose many things in addition to his freedom in gaining the prize of a vote for his people. Not least from a family perspective,.

The bottom line is that resilience in the face of extreme difficulties can make us stronger but it usually comes at a price. So, you have to judge whether the prize is worth the price. Good judgement is a hallmark of those that prove to be resilient.

Managing the Effectiveness and Pressure curve:

Capacity to withstand and perform under pressure is another hallmark of the resilient. The chart below from my Boards book has been of great help to me in challenging situations over many years. Put simply the message is “No pressure – no effectiveness” , we’re asleep. “ Too much pressure – no effectiveness” , we’re headless chickens. “Right amount of pressure we perform strongly”, we stand the best chance of success.

Character, Craft and Culture- The key to Constructive Challenge

Sun, 22 Jan 2023 16:29:00 GMT

Many years ago we were visiting South African township schools to select some more for Warwick in Africa to support. The entrance sign to one of them proudly proclaimed an 80% matriculation pass rate. This’ll be quick, we thought, doesn’t seem like they need us. Yet, our antennae were up. The results seemed far too good to be true.

After an enthusiastic greeting from the Principal, we congratulated him on his uplifting results. Then after building enough rapport and bonding over Pythagoras, we asked him how the pass rate was calculated. His demeanour changed and with a look of withering disdain, he asked what we meant.

Taking our second step on the escalator of constructive challenge we gently enquired whether it was a percentage of children in the year group, of those entering the school, or of those taking the exam.

“ Those taking the exam ” he replied, politely omitting to express the “ You ****ing idiot ” glare on his face. “ Thanks, guessed it must be. And what proportion of the year group take the exam? ” . “ It varies year to year. ” “ Thanks and what was it last year? ” “ 25%, well up from the 20% when I took over.” “Congrats that’s a big achievement and is the matric pass mark still 30% in the district ”. “ Yes ” was the response. With that we moved the conversation on to his favourite topic, teacher training and development.

All the information we needed came from five simple friendly questions. 80% of the year group got less than 30%. A lot of good came from this awkward moment. They really could do with our support, the Principal and his team accepted it enthusiastically and over the subsequent years they achieved considerably better results.

This tiny example of the power of scrutiny and constructive challenge leading to better decisions and better outcomes is just as relevant in the Boardroom as it is in a township school and is about a lot more than data savviness.

I love my triangles and when it comes to this topic, two in particular: “ Culture, Character and Craft ” and the ever-handy board effectiveness triangle “Purpose, People and Process” . I would point out that these are equilaterals not right angles!

It’s tempting to prove the Purpose of scrutiny and constructive challenge with the negative. Simply by using a few of the countless examples throughout history and today, where the absence of it has led leaders and their organisations to destroy lives, livelihoods and value through catastrophic decision making.

Yet sadly that seldom does the trick, especially with the overoptimistic or the asymmetrically sensitive who make a decent proportion of those who need it the most. It’s as much about maximising upside as provoking the thought, insight and creativity to make better choices. Increasing the likelihood of successful implementation through deeper consideration of risks and upside.

So, there’s far more value to be had than simply stopping a howler. Greater buy-in and empowerment and avoiding the inevitable silent or noisy seething later is achievable because people feel they have been able to have their say. All of which reinforces a positive board Culture. Yet all of this is academic unless there is accountability and action and something good comes of it.

So how come, if it is so beneficial, that it’s so often lacking?

Usually because one or a combination these five things is not strong enough: People, Character, Craft, Culture and Process.

Creating a Culture where scrutiny and constructive challenge is not just accepted but is encouraged and expected and seen as highly positive is vital. Good Chairs focus on ensuring that the Board has the right People. Right meaning that they have a Character and Craft to be effective. They set expectations, lead by example and ensure that that there is a healthy amount of trust, respect, candour, reflection and feedback to keep levels of individual and group self-awareness high. In this way it’s more than a psychologically safe space, it’s a space where challenge is valued.

When it comes to character confidence, courage, humility, resilience, calm and excellent interpersonal skills, especially with respect to managing conflict, are the prerequisites. The “ irritatingly right ” and the “ sycophantically wrong ” pose real danger. The former through not having influence and the latter for having too much.

The best board members have finely tuned antennae and pick up signals quickly and accurately. They know that if a CEO is “bull*******” it’s usually all over the CFO’s face and they don’t just know the organisation well but also the context in which it operates. They have the ability to listen to what people think as well as what they say. With heightened senses and the confidence to express their views, they are able to compensate for confirmatory bias softballs from colleagues with deftly worded enquiry and points that go to the heart of things.

They are good at spotting scrutiny avoidance tactics and spotting the chaff that’s thrown out to distract. They know when a topic is introduced as a no brainer its usually far from it. When the clock is being run down as all the time is used upon presentation so there’s no time for questions and so on.

Being a board member is a serious business and you need to put the work in and have a command of the facts. Not just to be on it and in the zone but also to be taken seriously when it matters. In Getting In The Zone I drew on some of the things that top performers in other spheres do to ensure peak performance when it matters. Critically they aren’t just focussed on their own performance but that of the team as a whole.

An aspect of the craft of constructive challenge that is frequently overlooked is the ability to get into the conversation and in the right way. In a culture dominated by extroverts and when Board meetings are a bit of interrupt fest this can be challenging for introverts.

Good Chairs will put extra effort in to ensure that their more introverted colleagues are supported. Conversations pre-board meetings to ask what they think, what points they’d like to raise will not just help them to feel more able to make their points but also for the Chair to solicit their view on the day.

I have found that probably the most powerful word to use first to get into a conversation which is going full steam ahead in the wrong direction is “I”. This is because our first objective is to get into the conversation and this usually prompts a pause. It is also the case that generally the words which naturally follow tend to be helpful “I’m not sure I understand that could you go through it again” “I wonder what the effect on XX would be ” “I feel it’s really important we understand all of the consequences here” and so on. Obviously “I think you’re mad, bad or sad” would be less helpful!

Good scrutiny and constructive challenge shouldn’t be a solo sport. Mobilising others makes the job a lot easier. Body language can be a powerful tool here. A look across the room, an outstretched hand inviting someone who is well respected to comment can be highly effective. As can simply saying “I’d be really interested to know what Mary thinks about … ”

The escalator approach of moving from a gentle enquiry to a deeper probe to increasing levels of challenge is well known and generally effective. Worth remembering though that there’s no point using an escalator approach if you get off and have a wander about on the first floor, get distracted and then run out of time to get to the thing you really came for on the third floor!

In creating the right culture and conditions the Chair will need to encourage inclusive language, nudge things in the right way if they feel like they are becoming personal and encourage as well as support board members to challenge outside their domain expertise.

They also need to manage the pressure helping to raise and lower it to achieve maximum effectiveness spending the right amount of time in the zones of comfortable and uncomfortable debate.

Sub-Committees can be used powerfully to enhance scrutiny as well as to maximise efficiency. Increasingly Horizon or Nextgen boards are being used also as sense checkers as much as idea generators.

Socrates said that:

“The first step to knowledge is recognition of one’s ignorance”

And for me the first step to effective constructive challenge is to listen to this and to put the work in to prepare.

Patrick Dunne

Experienced Chair and author of the award-winning book “Boards”.

This article has been sponsored by SAP Concur – industry-leading technology that automates travel, expense and invoice spend processes. The fee will be donated to Leap Confronting Conflict a charity that designs and delivers highly impactful programmes to help young people and the adults in their lives to successfully navigate conflict.

Churn, Churn, Learn!

Thu, 06 Oct 2022 15:28:59 GMT

The world is in flux. As are many organisations when it comes to staff churn with rates of over 25% becoming more commonplace. These higher churn rates may also stimulate further churn as workloads rise to cover gaps and staff hear tales of happier times elsewhere from former colleagues still in their honeymoon periods.

The costs of churn go well beyond the immediate replacement costs, impacting productivity, customer satisfaction, momentum and ultimately performance. Yet learning from churning is also great opportunity and can be a catalyst for change.

Let’s be clear what we mean by churn? – The rate of staff turnover. It is typically calculated as the number of people who leave in a period divided by the average number of employees throughout that period.

Some might feel churn is an operational matter. Therefore, not something the board should be concerned with. I take a different view. If the purpose of the organisation is clear then the Board’s role is to ensure that it has the right strategy, resources and governance to fulfil that purpose. Higher or lower than optimum churn impacts a key resource for any organisation – its people.

High churn may also indicate that there is an issue with the culture and is likely to impact culture itself. So, it should be something of interest to the board in terms of oversight and support. They should know what the churn is and what’s driving it, as well as consider the impact and the consequences of churn in the decisions that they take.

The drivers of churn are both varied as well as specific to each organisation. It’s important for a board not to be a victim of “Average Thinking” . The overall average may be at an acceptable level, but a board also needs to know the variability, the trends and where the hotspots are. As well as what the executive are doing in managing it.

The following cocktail of statements convey a sense of some of the common drivers at the moment:

“The only way to get on here is to get out”, “I didn’t want to leave the company, but I was desperate to leave my boss”, “Both the job and the prospects to develop were massively oversold”, “It was far too transactional for me. They weren’t one bit interested in my potential.” “I loved the job but hated the culture”, “Their processes made it impossible for me to meet my objectives.” “The pandemic made me think a lot about work life balance and how crazy my life was before”. “I really liked it but just couldn’t afford to work there anymore.” “There was a loyalty discount rather than premium” “There are loads of better jobs out there, I really kick myself for not looking before. “They keep banging on about how lucky we are to have a job with purpose but the most important purpose for me is to be able to pay my bills. “

Poor leadership and culture, low pay and conditions and lack of development are perennial drivers.

The Chartered Management Institute believes that there are still too many “ Accidental Managers”. Those who have not had the benefit of quality management development. Moreover, although unsurprising in the current context, too many organisations have a “budget” rather than “return on investment” mindset when it comes to their people and don’t take account of the value created and costs saved in investing in such activity.

When it comes to the issue of pay and conditions, it’s important to remember that this will tend to apply across the organisation. Not just at the lower pay levels, who face proportionately the largest falls in their income due to cost escalation. As a number of professional service firms have learnt to their cost, sharply increasing the pay of more junior staff and destroying differentials can create higher churn in the high producer categories of staff.

SAP Concur’s forthcoming Employee Experience Research Report provides some fascinating additional insights into what’s going on.

The first insights aren’t so surprising with 70% of the 1500 HR and Finance decision makers and 2,500 other employees whose views were sought being concerned about the impact of cost of living increases. I thought it might be even higher than that. Aren’t the other 30% listening to the news?

Unsurprisingly for 65% of the sample, a pay rise was the most popular way to boost their job satisfaction. Yet this also indicates that it is not solely about the salary.

Many in the sample, some 45%, were concerned about another trend - employers encouraging them to work from home to save office utility bills. At the same time 47% of employees surveyed said that they will spend more time at the office if their employer didn’t adjust their expense policy to meet rising costs at home. There may be some nudging going on here to encourage staff back into the office.

The research also highlighted another issue – late reimbursements for expenses. Some 58% of the employees surveyed worried about delayed reimbursements impacting them. 46% also say that the process of reclaiming is so difficult and/or time consuming that they don’t bother to expense smaller amounts. 49% of them also worry that their managers might think badly of them if their claims are too high.

So, what can we learn from what’s happening? How can we adapt to healthier levels of talent refreshment and how can we avoid the downsides of churn?

The starting point is to recognise the importance of knowing what’s happening within the organisation and in the markets for your talent. It is also important to finely tune your “Churn Antennae” , to know where the major risks lie, to have robust “Flight Risk” analysis and to get behind the real reasons why people are leaving.

Engagement and pay surveys, Glassdoor and other social media analytics can provide some clues but highly effective leaders who know their staff well, understand what really motivates them and can interpret signals that are likely to be the most effective radar. Exit interviews can be as variable in accuracy as engagement surveys. Yet, done well they can provide a rich source intelligence.

With possibly 5 generations, defined by their behaviors as much as their ages, working in many organisations, it’s important that any retention strategies are flexible enough to be effective to these different groups. The growth of Horizon or Nextgen boards is one way some organisations are better connecting across the generations and convincing younger generations that they have a voice and can influence direction and culture.

An element of “Grow your own” in the people strategy, recruiting as much for potential as to fit the current need, combined with progressive induction and development processes will also help.

It would seem that some organisations have got a little confused as to where they are and where they want to be on what I call the " transactional to familial" spectrum. Sometimes transmitting nice warm familial pitches when recruiting but operating in a jarring transactional way once people have signed up. On other occasions they get disappointed when they discover that staff appear to have no loyalty to them when their recruitment communications and processes lack humanity and convey an obviously transactional culture and a precarious nature of employment. This is back to the Board and culture and being clear what sort of organisation you want to be and ensuring that’s what you are in practice.

Snatching at people is as risky for employers as snatching at jobs is for employees. Many recruitment processes seem soulless and designed to recruit for minimum cost rather than to hire the best people. The work ESSA-Education Sub Saharan Africa has been doing with artificial intelligence business Quilt.AI to understand What African students think of the transition from study to work and the world of employment has been really illuminating to employers who can be shocked how well intentioned signals can be received so differently.

A degree of churn is inevitable and healthy but on top of all the other volatility that we face it can create tipping points. It is however, unlike many of the other variables, one that we can influence if we choose to learn from churn rather than just churn and churn.

Patrick Dunne

Experienced Chair and author of the award-winning book “Boards”.

This article has been sponsored by SAP Concur – industry-leading technology that automates travel, expense and invoice spend processes. The fee will be donated to ESSA- Education Sub Saharan Africa a charity focussed on transforming educational outcomes through turning evidence into action.

From a Maps to Satnav world – The way boards take decisions is changing

Wed, 28 Sep 2022 11:29:13 GMT

When talking about the impact of the pandemic on boards in an article to accompany the launch of the second edition of Boards a few weeks ago, I noted that:

“There has been the acceleration from what I call a “Maps world to a “Satnav” world when it comes to decision making.

The “Maps” world consisted of incredibly detailed and lengthy strategic plans and annual budgets. The “Satnav” world, which is more common in early stage and venture backed organisations, consists of strategic frameworks and parameters and dynamic budgeting. i.e. Making decisions, at the best time, with the very latest information.”

The trend for larger organisations to adopt these methods has been given a boost by increased uncertainty and the availability of data analytics tools. However, it hasn’t all been plain sailing. As many board members and finance teams have found, such adjustments hard in practice.”

The analogy resonated with a lot of people. So, a three-minute video was produced in my car to say a little more about what I meant. Governance Publishing then held a small Linkedin event on the topic to gain other views on the topic.

Here’s a snapshot of what I and others think is going on when it comes to the Drivers , the Dream and the R eality of the changes that are underway and how “ Smart” boards seem to be adapting:

Before we start, I should say that in using this analogy I placed more emphasis on the mindset shift rather than the enabling technologies, for they are only a part of the story. So, please don’t assume I am suggesting a judgement or thinking by-pass or a handover to the robots just yet. This is about how we might better inform our judgements and how and when we make them.

The Drivers:

Big Data and live data:

A range of technologies from processing power to mobile devices and storage combined with societal change driven by online purchasing, social media, the easier than anticipated acceptance of the subscription models, almost instant news and other factors have combined to produce vast quantities of information.

Big data analytics, the rise of Algorithms, Artificial Intelligence, Infographics and communications technology:

As importantly, big data analytical capabilities have grown significantly. Developments in their use in Particle Physics, the use of algorithms, artificial intelligence and infographic tools combined with the ability to produce and distribute data and communications ever faster and clearer have changed the game for many, as well as created substantial businesses providing these tools and advice in the process.

Shrinkage of the time taken to gather and distribute information :

The technological and societal changes referred to above are enabling this and being reinforced by an almost herd like “Need for speed” which carries dangers as well as thrills. Daniel Kahneman’s brilliant “Thinking Fast and slow” is worth reading again!

Increase in significant external events and resultant uncertainty:

Numerous profound geopolitical, natural and societal events have led to increased uncertainty as well as reduced reliance and confidence in established institutions and ways of doing things. Then there’s the growth of an “Influencer” susceptible society where social media influencers can shift markets both ways with a post.

Shifting Risk and resilience mindsets:

These significant events have had a profound impact on the way boards think about risk and resilience. The financial crisis almost 15 years ago caused a seismic shift in approaches to risk and resilience in the financial sector. The pandemic has had a deeper and wider effect and climate change is likely to have an even greater one.

Regulators across many sectors have become more demanding of boards in terms of assurance and reassurance that they have robust enough resources, systems, processes and culture in place to withstand major shocks. The Risk Coalition is doing some very interesting work in this space

The upside in getting it right in an increasingly winner takes it all world where margins between success and failure are fine.

A few words capture this Zoom and Test and Trace.

Fear of the downside in getting it wrong

This has both a positive and a negative effect. Really good downside analysis and understanding the consequences of different choices is powerful. Yet prevarication and paranoia are unhappy partners when making decisions.

Boards of organisations who haven’t kept pace will reflect on their choices and how they made them and think about what to change. Or more likely their successors will.

As an aside it’s odd that we don’t do as much “black box thinking” on boards as we should given the importance of some decisions. For more on this Matthew Syed’s brilliant “Black Box thinking is well worth a read.

Growing popularity of “early, mid, late” approaches to the big decisions:

This is where a decision-making process for a major decision, where there is the time, is split into three stages:

“Early”: Where the board considers and discusses what are the issues that need to be taken into consideration in the decision, confirms who needs to be involved and when, as well as what the process will be from here including when a final decision will be made.

“Mid” A longer discussion with supporting papers which confirms the issues and considers the choices and consequences as well as the outline of implementation plans then provides input on preferences .

“Late”: Essentially a finalisation meeting where the formal decision is made. This time the emphasis is on the board being satisfied that not only is it the right choice but that it endorses the implementation strategy, resourcing plan and risk mitigation strategy to achieve it.

Heightened awareness of interdependencies, logistics and decision consequences leading to more system thinking in decision making.

One of the striking things to come out of the pandemic was a greater appreciation of interdependencies whether they be with suppliers or team members who were previously undervalued for their contributions and criticality. In the UK, BREXIT has also led to a heightened awareness of these things and highlighted a lack of system thinking across society. Not everyone seems to have got this yet, but many have, and it is leading to more thought on not just the choice, but how it might be implemented and its consequences.

Increased focus and transparency around purpose, values, diversity and inclusion and relationships with stakeholders

Understanding the implications of decisions for stakeholders and how they may respond or react has rightly had an increasing role to play in decisions. Lack of attention and care in this can quickly unravel what initially looked like a sound decision. The stakeholder strategy and the metrics in place to help the board understand stakeholders and what they think and feel about the organisation are central to finding the right balance especially when there are competing stakeholder interests.

Do all of these drivers and others I haven’t listed add up to a tectonic shift or are they simply producing superficial changes to how we describe what we were already doing?

It feels much more like the former to me.

The Dream:

In a nutshell, better decisions. Why? Because we are able to make them at the best time with more and better information. The payoff is that we will capture more of the potential upside when it comes to making choices and also that we will be more resilient and better able to adapt when things go wrong or circumstances change.

The Reality:

Is that we are not quite in dreamland yet. The art as well as the science is developing and just as with the early days of the use of satnav in cars and boats adaptation takes time, pragmatism, discussion and good judgement to strike the right balance.

I don’t have the data to know, but would reckon that many organisations and boards have been “Satnav” thinking for decades. Yet they were, or are, probably only a small proportion of all boards. The nature of the organisation, its stage of development, type of ownership and resources available to it will all have a big influence. Those at an earlier stage or who are in faster moving markets with shorter term paybacks on investment cycles are probably more likely to be further down this route.

In general, I don’t think we talk enough about how boards make decisions and when we do, we tend not to system think. Instead, we might focus on one particular aspect for example bias or diversity and inclusion, or perhaps a new strategic modelling tool or a technique another board has found helpful.

This is as much about behaviours as about data. Alignment within the board on this topic can also be a challenge. Some might have almost a religious difficulty with aspects of these changes and fear the loss of the comfort blanket of the more traditional plan and budget that has been with them all of their exec and Board lives. Good chairs will know that it is as important to listen to what people think as what say and be cautious with superficial proclaimers who hide behind catch phrases like “We are following the science or the data” when the data supports what they want to do and only challenge the assumptions or the competence of who produced it when it doesn’t.

Which brings me on to another reality.

The place for a board to collectively be is Data Savvy in the middle at the peak. Data savvy boards understand how to interpret data or evidence that’s presented to them. They know the difference between correlation and causation and think a lot about what might be missing, the so- called “Dark Data” referred to in David Hand’s excellent book on the topic.

Really good CEOs also ensure that data isn’t dumped, its analysed and interpreted and it’s clear what is fact and what is interpretation. Years ago I started to write little Fs and little Is on decision papers to help me get a sense of the balance. It’s really useful.

As you will see below, when it comes to what smart boards are focussing on, capabilities are high on the list. Having a board that knows what evidence will be most helpful in making a decision and has the ability to understand it, to challenge it as well as underlying assumptions and then add their experience, insight and instinct to it must help.

Another reality is that the need for speed carries dangers as well as thrills. It was fascinating to see during the pandemic how some moved swiftly but surely while others panicked and rushed only to regret later.

A final reality is that as with the early days of satnav in cars and boats when we try a different approach it sometimes takes a while to get the hang of it. I am sure that this will be the case and that this is a game with is ever changing.

So, how are smart boards adapting?

If I had to boil it down to just three things then I would sum them up as “Capabilities”, “Communication” and “Culture”.

Smart boards have humility and recognise that they need to adapt their composition as they go in order to have the range of skills, experiences and characters they need for the next phase of development. According to search firms board churn is high right now. The more commonly stated reasons given are the need for more digital capability and increased diversity. I haven’t heard yet of the for more “Satnav” thinkers.

As ever, when it comes to making the big decisions it isn’t just about the capabilities on the board. Many a good strategic decision has been made to look a stinker by poor implementation. If we are going to move to a different way of decision making we need a CEO and executive team that also get it. We need to be realistic about the adaptation required by the Board and the Executive, especially in the finance, marketing and operations functions.

We also need to accept that we are likely to have to invest not just in capabilities but in systems and processes to support the shift. A step-by-step approach is likely to work best, grand project approach least.

Smart boards are also changing their agendas and focussing their time more on the big decisions. They are having more discussion about what these decisions are, when they should take them, what input and evidence they need as well as how the decision is going to be made. The rise of the “Early” “Mid” “Late” approach referred to above is also helping.

Central to this is having the right approach to communications and ensuring that this is not a one-way exercise. This is definitely something for the Venn diagram intersection of Board and Executive. Having the right conversations and carefully considering the consequences of the changes you want to make will support buy in and usually help us to avoid mistakes.

In making this shift if we are talking about cultural change, it is not just at the board level but throughout the organisation. The good news is that one benefit of some of the drivers referred to above is that there are now more tools available now for understanding what culture we have and how it is changing.

By way of example in Boards I quote the MIT Sloan Glassdoor survey in August 2020 which included data from 1.5 million employees in 500 substantial organisations. It showed that at that point these employees were rating their organisations significantly higher on their values and culture than at the start of the pandemic and that their agility through that first phase of the pandemic was one of the key reasons.

In conclusion here’s a post from my good friend Ali Gill from BVALCO on the topic which sums things up rather nicely.

“Love this analogy Patrick. I remember the first time I used a Sat Nav to navigate my way around several traffic jams, the richness information and the ability consider options changed my behaviour and got me to my destination more efficiently. Effective decision making in boards requires three key behaviours - seeking information, concept formation and conceptual agility. Boards that use these behaviours really well will be the winners. The combination of human brain power and rich data and analytics is profoundly important.” New Paragraph

Dynamic Budgeting - A Cultural Shift

Tue, 12 Jul 2022 08:42:53 GMT

In a recent article From a Maps to a Satnav world - the way boards are taking decisions is changing , I explored the shift that boards are making, when it comes to decision making and planning, from a more traditional “Maps” approach to a more agile “Satnav” world. The “Maps” world consisted of incredibly detailed and lengthy strategic plans and annual budgets, whereas the “Satnav” world, consists of strategic frameworks and parameters and dynamic budgeting.

Driven by the religion of the annual budget and detailed strategic plans, the “M ap s world” has been the prevailing mindset for a long time. However, with an increasingly uncertain, volatile and more complex environment, the need for increased agility and optionality in decision making and planning has come to the fore.

As a result, for organisations large and small across a wide range of ownership types and stages of development, a “ Satnav” world is now more clearly emerging. Here Boards and Executive teams, are taking decisions closer to “ Junctions” or decision points with better and fresher information and are doing so as much to maximise upside as to increase resilience and manage risk .

In this “Satnav” world at the point we set out we still know where we want to get to have our preferred and favourite routes. Yet we are also prepared and indeed expect to course correct or even to end up in a different destination if fresh intelligence along the way suggests a higher upside or less risky alternative.

The application of more Dynamic Budgeting and planning , supported by the introduction of mobile and integrated invoice and expense systems are just two of enablers in this shift. The latter may often be viewed as simply a way to enhance operational effectiveness through better “Spend Governance” and to bring direct commercial benefit through reducing legendary friction points for customers, suppliers and staff. Together with budget management capabilities, the automation of these processes can also support the provision of real-time visibility on the key data around strategic variables as well as enhance predictive analytics.

It could be tempting to think that all of this is simply about a series of process improvements and refinements to a well-established way of doing things. That would be to seriously underestimate the shift that has been taking place. Especially in regard to what this means for the culture of organisations and their boards and the interaction between boards and executives.

Living the dream of better decisions, increased agility and having fewer frustrating moments enroute are the prizes but winning them is not without its challenges. Winning these prizes depends upon the supporting reality of the right systems, processes and governance. All of which in turn depend upon a shift in culture and mindset. Cultures with an open mindedness to change, a problem-solving mindset and where the board and the executive have a strong enough relationship are likely to find it easier. As are those with data savvy leaders who already combine well evidence-based decision making in an entrepreneurial way.

Many who have got into Dynamic Budgeting have done so incrementally. Perhaps starting with a lock step approach to spending. That is, we’ll only commit to that investment if other things are in place at the time, for example we have cash of X, gearing of Y or the capabilities in place etc. Revising budgets and forecasts every quarter or even month and taking a less rigid, decision tree rather than calendar based, approach to investment and resource allocation is the way many survived the pandemic. Unsurprisingly many smaller and high-growth businesses or those in more volatile markets were early adopters of this approach.

Some have used Dynamic budgeting to seize market opportunities to try and balance upside and risk. Then others have used it to help drive organisational transformation as well as to completely re-engineer business models and relationships with key stakeholders including customers, suppliers and staff.

It’s hard to find any robust quantitative analysis of the benefits. In part I guess because it is being applied in a variety of ways. The uncertainty and volatility of the early COVID years forced many to adapt and enter this brave new world and to learn as they go. With a little more time, there is likely to be more research on how this has gone, which elements have been the most successful and which are becoming more common practice.

Adopting Dynamic budgeting affects culture. The big cultural wins are the success that comes with making better decisions and greater agility but getting there can result in some turbulence. Improved flexibility, freedom and opportunity combined with the entrepreneurial feel of being able to go faster not just slower when conditions suit can also provide an energising boost. As MIT Sloan Glassdoor, Mckinsey and others have shown through COVID, employees tend to value agility highly.

On top of this, many finance departments have changed what they measure as well. Data from Concur® Detect by Oversight , a solution which simplifies and streamlines auditing by automatically reviewing expense and receipt data to identify fraud, mistakes and policy violations, shows that employee spending patterns have changed dramatically in recent times. This means if businesses are still measuring their employee spend programmes in the same way they have always done, they may not be getting the answers they need. This means it is time to refresh the KPIs that finance measures to ensure they address modern issues.

For some execs and non-execs, the shift from the tight guardrails and predictability of the maps world can make them queasy and uneasy. Leaders and managers within the business may also feel less autonomy. High command and control cultures in what have been more stable markets can find this tricky, especially if they are public companies.

Another interesting cultural challenge is for those moving between boards or executive teams. Most of us have lived our lives in the maps world and the simplicity of judging on whether they are on budget or plan and the fact that most organisations have operated in a familiar way when it comes to budgeting and planning is comforting and provides, albeit sometimes illusory, the feeling of greater control.

Getting in the Zone – For a Board meeting – R-E-S-P-E-C-T!

Thu, 31 Mar 2022 08:52:20 GMT

Star performers taking to the stage, top athletes settling into their starting blocks know that being “Performance Ready” is essential but not enough. In that moment they know that they absolutely have to be “In the Zone” to deliver their best.

High performing board members get this too and are smart enough to recognise that the act of trying to get in the zone is likely to lead to a better performance. Especially in what is for them a collaborative endeavour. Moreover, they R-E-S-P-E-C-T their colleagues, organisations and themselves far too much to wing it.

So what is this “Zone” that we speak of and how can we get there?

When asked to define the “Zone” I usually say that “ It’s the state of mind that’s going to deliver the best performance” and if I only had a three words to describe it in a Board context I’d pick “Energised, Focused and Calm”

Our many different characters and individual preferences combined with the varying contexts in which we operate, mean that there is obviously no one best zone or state of mind to which we all go in every situation.

High self-awareness and a few general principles can help us to develop the habits and routines that enable us to get to “ Our Zone”, the one that’s likely to be best for us for a specific occasion.

It’s going to be tougher to get in the zone if you’re not performance ready. So, the following readiness principles might help before we start trying to zone in:

Clarity and conviction of purpose on the outcomes we’d like to see as well as our role in achieving them. Beats trying to figure it out when the meeting is underway.
Knowing what we need to know. Ensuring that our judgements are well informed helps to maximise influence. Knowing the facts well beforehand allows more time to absorb new information as the meeting progresses.
Thinking through where best to apply our energy, knowledge and character for maximum impact. Using our time, knowledge, credibility, interpersonal skills and conviction in the wisest way is much easier if you’ve thought ahead and;
Having our head and body in the right place before we start . To be in as good a mental and physical condition as we can, motivated, with good energy levels, a clear head and under the right amount of pressure.

Getting in the zone is then that final preparation we do immediately before joining colleagues and the meeting gets underway.

Different types of meetings might also require different zones. Boosted by our experiences during the pandemic, good and bad, of using the various apps available more and gaining greater confidence and experience of virtual communication tools, many boards have moved away from traditional standard and unchanging formats for their board meetings.

Whatever the nature or format, whatever the board role I find the following seven things can help to get me into the zone:

Arriving early and finding a quiet space to think for 15 mins before meeting up with others. I have all sorts of routines for creating this space.

Deliberately clear my head of as many other things, turn my phone to silent and keep it in my pocket so that for this next 15 mins all of my thoughts are on this meeting.
Then I always remind myself of some brilliant words from Socrates and Maya Angelou (see below).
After which I get out my one/two page agenda sheet onto to which I will have already written what I think should be the objectives for the meeting and the top 3 points for each big decision item.
Then I go around the room of characters in my head and remind myself of how I think each board member would think and feel about the big decisions and how they are likely to contribute.
All of which might prompt a quick look at some of the board papers to add a word or symbol beside some points which will trigger recall of the point later.
Finally, and this might sound odd, but it has deep personal significance to me, I then sing in my head “I got sunshine on a cloudy day, when it’s cold outside I got the month of May” which reminds me to be positive no matter how challenging the issue or the conversation.

The words of Socrates and Maya Angelou referred to above are as follows:

Socrates: “ It is easier to win an argument than to make the right decision”

A reminder that nothing should be taken at face value, even when brilliantly presented. Rigorous analysis can so easily reveal that apparent “No Brainers” are in reality “brainless”. O r, more positively an even better choice might emerge from more discussion. Socrates words also help in turning that very useful device the “ “bull**** radar” on.

Maya Angelou’s wise words:

“People will forget what you said, people will forget what you did, but people will never forget how you made them feel.”

Always help to heighten the senses. They are a powerful reminder that everything we say or do, including our body language, can affect how people hear, interpret and accept what we say. Being on a board is not a solo endeavour. We must all perform individually but an important part of that performance is bringing the best out in everyone else. So, as feelings impact performance it matters how we make others in the meeting feel.

So, what was behind the choice of the image of Aretha Franklin composing herself before a big concert, apart from the fact that she just looks so calm as well as focussed? It was first suggested to me by ESSA’s wonderful CEO Lucy Heady when I mentioned that was writing something on this topic. Lucy, like Aretha is always worth listening to.

More research revealed that despite Aretha’s legendary status and the fact that even if she simply showed up people would be thrilled, she never took her audience for granted and deeply respected them. “After all” , she once said in an interview, “People didn’t pay for a poor show”.

Finally, on top of whatever she did to get herself in the zone, including saying a little prayer an putting on her make up, she said that “The audience can put you there, we do this thing together”. This mindset and attitude helped her stay well in the zone to the end of her performance.

How Data Savvy is your Board?

Mon, 29 Nov 2021 10:00:12 GMT

In a recent LinkedIn Article, From a Maps to a SatNav world -The way Boards are taking decisions is changing , I shared the chart below and made a few comments on the characteristics of “Data Savvy” boards.

New ParagraphThe chart and accompanying comments seemed to strike a chord and in many of the follow up chats and comments resulting from it I have been asked to say a bit more on the topic. So, here goes.

First, we’ll look at what we might mean by “Data Savvy” , then why it matters and what it means for Chairs, Nominations Committees, Board Reviewers and those running Board Development Programmes before ending with a few book tips for those who want more.

What do we mean by “Data Savvy”?

Somewhat ironically, measuring data savviness hasn’t become a precise science yet. According to the dictionary “Savvy” means “shrewdness and practical knowledge; the ability to make good judgements.”

The implicit assumption in the chart above is that boards that are either devoid of the use of data or evidence in decision making or those that are overwhelmed by their data are far from being “Data Savvy” and are likely to make poor judgements.

Whereas boards that can understand:

· What data is needed to make the best decision it can make with the best available information it can gather.

· What the data that is presented to them means

· How to put that data into context and proportion.

· How to distinguish between facts and interpretations;

· As well as understand the data’s real relevance to decision.

Are probably reasonably data savvy.

If they can then also combine this with:

· Being able to interrogate the data, assess its reliability and relevance to the decision being taken as well as recognise the “Noise” in the data.

· Understanding the differences between causation and correlation as well as margins for error and significance.

· Having the degree of self-awareness to recognise their own inherent biases.

· Being able to effectively communicate the analysis of the data that underpins their decisions and;

· Can provide a balanced level; of oversight and support to help the executive in determining the right data strategy and then ensure that it is being achieved.

Then they are likely to be a truly “Data Savvy” board.

Why does it matter?

We live in a world where more data is available than ever before and where the analytical and presentational tools to understand and communicate that data are ever more sophisticated. Having a board that understands what data and evidence will be most helpful in making a decision and who then have the ability to understand it as well as challenge it and any underlying assumptions made in its presentation and can then add their own experience, insight and instinct to form a judgement must help.

Fundamentally, assuming that the purpose of the organisation is clear and that the board’s role is essentially to ensure that there is the right strategy, the right resources and the right governance, then the ability to be “Data Savvy” in all of these areas is critical to performance.

The development of new analytical tools for better understanding of organisational culture, stakeholders and other key success factors also means that boards not only have more data and evidence to drive decisions at their disposal but that they need to be able to understand them.

Boards and Executive teams than can respond to signals in the key data that are most relevant for their business are also, other things being equal, likely be more agile and to adapt and seize opportunities more quickly and intelligently than their Data Devoid or Drunk colleagues who will tend to rely more on luck than judgement.

It also matters from a risk management perspective. All too often we hear the cry “Why didn’t the board spot the signals”. In the worst cases, the failure reports tend to point to Boards being at either end of the “Devoid to Drunk” spectrum.

For some boards, one of the reasons that they get data drunk is that the executive get tempted to dump all of the data on them in an effort to shift responsibility to the board and cover themselves. The statement “Well the info was in the board pack” may be accurate but if it is buried and lost in a sea of numbers or charts and not given the prominence it deserves then that's disingenuous.

It’s a real challenge for management to know where to draw the line in terms of which data to give to the board and how to present it. Too much and the risk of getting a little tipsy is high. Too little and they may be accused of hiding things from the board.

One area that I suspect is increasingly coming up on board agendas is “Data strategy” . This is not simply about GDPR, Data Protection, Cyber Crime or the Risk Management aspects of data but more about value creation through thinking about the use of data to drive better decisions and in the commercial value of the data itself.

Although I have no data to support this, it seems logical that being “Data Savvy” should also mean that we are more likely to understand the business. We will still have to use our judgement and take note of our collective instincts and experience and remember that the data is an important input but one not to be followed blindly. Yet failing to make the best use of the data is like flying in fog without knowing where the ground, hills or other planes might be.

Finally, on why it matters, if like me you feel that three defining characteristics of good board members are judgement, interpersonal skills and antennae then I think the ability to be “Data Savvy” boosts two of these significantly. Your judgements are likely to be better informed, your antennae sharper and asking really good clarifying questions enhances respect and increases your influence. So you need the interpersonal skills to go with your "Data Savvy" so that you can increase the impact of your questions.

What does it mean for Chairs, Nominations Committees, Board reviewers and those providing Board Development programmes?

It means that in considering the composition of the board and any new appointments that Chairs, Boards and Nominations Committees in particular, may need to heighten their awareness of how “Data Savvy” the existing board is and what that might mean for future appointments.

Board reviewers may also consider adding the “Data Savvy” category to their list of criteria when reviewing composition and skills gaps.

It may also mean that, just as in other areas, there is value in some knowledge or skills development for the board on the topic. I think there might be a gap in the market here for suitably qualified people who get what boards do to provide boosters for boards.

Those organising inductions may also want to include a specific session on the organisation's data strategy and key data.

In addition, those already offering board development programmes might consider adding “Data Savvy” modules to their programmes.

A few book tips:

If you are looking for a straightforward introduction to the topic then I would enthusiastically recommend Professor David Spiegelhalter’s “The Art of Statistics” . This is a very accessible book written by one of the best communicators on stats around. Not only is it informative and thought provoking but it is also enjoyable.

Another fun read is the late great Hans Rosling’s “Factfulness” . I was privileged to see Hans in one of his last public appearances and that twinkle in his eye driven by his mission to “fight devastating ignorance with a fact-based world view” comes over superbly in the book. It is a short book crammed full of wonderful examples of how our instincts can lead us to either not seek, understand or ignore the facts.

On the subject of ignoring the facts, or more precisely overlooking them, Professor David Hand’s “Dark Data” is another good read. This is a very thought-provoking book about the gap between the data that we have at our disposal but don’t use and why we don’t use it. In my own Boards book I emphasise the need for Boards to think about the data they need to be able to make the best decision in advance of taking the decision. This book illustrates many powerful reasons as to why this is a good idea.

Matthew Syed’s brilliant “Black Box Thinking” picks up an important aspect of dark data. The main theme of the book is best described as how come so few sectors and organisations adopt the principle of Black Box thinking used so successfully in the aviation sector to drive down failure rates. The principles of recording, transparency, learning from error and rapidly communicating causes of failure to bring about system change are so evidently valuable. Yet as humans we are instinctively embarrassed by failure, rooted to hierarchy and have a high need to avoid short term discomfort.

Probably the most famous book on the subject of decision making these days is “Thinking Fast and Slow” by Daniel Kahneman. It’s almost compulsory reading for board members and executive leaders and explores how we take decisions as well as the many biases we are susceptible to and other decision traps. The first section is a bit heavy going but it well worth persisting with. It’s a book that I have found myself reading many times and going back to.

Daniel’s latest book which he wrote in collaboration with Olivier Sibony and Cass R Sunstein looks at another aspect of being “Data Savvy” . It’s called “Noise” and essentially looks at how our judgement can be impaired by the noise that is going on when we make decisions, including noise in the data.

Finally, if you aren’t a booky person you might like to listen to Tim Harford’s excellent “More or Less” show on BBC Radio 4 which is a very good show which tries to make sense of the numbers which are in the news.