Now that the dust has settled from the corporate governance crises of the past few years, both government and business have had some time to try to identify the underlying problems that often lead to corporate governance problems and put measures in place to address them
by Craig Donaldson
Now that the dust has settled from the corporate governance crises of the past few years, both government and business have had some time to try to identify the underlying issues that often lead to corporate governance problems and put measures in place to address them.
While these initiatives are well-meaning, they fail to gain any traction – both at the management and broader workforce levels – in a good number of organisations who probably see them as nothing more than ‘tick the box’ exercises.
Many organisations are either unable or unwilling to embrace corporate governance in a meaningful way. Corporate governance requirements can often be satisfied when it comes to the letter of the law, but the spirit of the law is another matter altogether.
Much has been said and written about cultural change of late. After the corporate governance disasters of companies such as HIH and Enron, it was found that there’s usually a strong correlation between those organisations who fail to embrace the spirit of corporate governance and those with deep-seated organisational culture problems.
Mention cultural change to the leaders of such organisations and it’s likely that you’ll be met with blank stares, folded arms or rolling eyes. While such leaders might scoff at the idea, their resistance to change is probably the biggest chink in an organisation’s corporate governance armour. It’s widely accepted that CEO and executive behaviour, attitudes and values determine organisational culture, and as a result, what a broader workforce sees as acceptable and unacceptable behaviour.
HR can plaster as many mission and values statements up on the walls as it likes, but without executive support for such initiatives and real culture change, HR will be banging its head up against a brick wall. Despite its best efforts, HR will only get the opportunity to make headway in this area with a change of CEO, chairman or both.
As I’ve said before, you can lead the executive horse to water, but you can’t make it drink. And if the executive horse refuses to drink, then an organisation is more prone to corporate governance issues throughout its entirety. And unfortunately, there’s little HR can do about it.
