Boards today are more “concerned with the appearance of good governance but not necessarily its achievement.” This bold statement is contained in Fred Hilmer’s most recent book ‘What’s Wrong With Boards: Rethinking Corporate Governance” (2022, Brio Books). Hilmer is one of Australia’s leading business strategists and academics, having extensive experience leading and consulting to major Australian companies. And this just released book tackles what he has identified as the looming failure of corporate governance.
The book contends that flawed governance is at the heart of poor company performance, and it is travelling in decline. The governance problems faced by corporate Australia are different now to those in the past and are identified as:
- The widespread poor behaviour and misconduct of senior management and boards.
- Governance failures resulting in short term increased profits at the expense of customers and employees.
- Governance issues are being identified and managed in terms of ethics and practical.
In writing this book, Hilmer noes that his “goal is to clarify the nature of the problem, identifying and applying principles that demonstrates where current practices are unhelpful, and propose solutions that we believe are worth of further proper debate and exploration.” As such, the book is divided into three parts:
- The nature of the governance challenge
- More-or-the-same won’t work
- Equipping boards to meet governance challenges.
There are a number of places where conventional thinking is challenged, including stating that there is too much emphasis on conformance and not enough on performance, whereby boards “retreat into form over substance via box-ticking processes, all based on so called best practices.” It goes on to assert that “by and large unproven best practices set out what should at best be helpful guidelines but rapidly evolve to become uniform de facto rules.”
The advice to directors is that there is no one “best move” that covers all situations and Hilmer urges boards not to adopt a “best practice” model, but rather what is the best fit.
This is a very timely and engaging book, peppered with Australian and other examples. Anyone involved with a board of any type is strongly encouraged to read this book and explore its recommendations.