Beware token harmony.

In the wake of the recent exposures at AMP, were the directors really culpable and in partnership with their respective management teams? Or were they simply incompetent?

It feels inconceivable that there could be such a broad pattern of incompetence as implied by the media. These boards probably followed most of the accepted standards for board operations and passed all the tests to see if they were likely to do a good job. Look at the likes of the Enron Board to see how this can happen in other sectors.

So how do we avoid it for the future?

Maybe its time for some fundamental changes around how corporate boards should operate and be evaluated. We need to help them be strong, high performance work groups whose members trust and challenge one another for the genuine betterment of the organisations they represent.

Most commentators fall back on process to achieve this : more rules, procedures, composition of committees which together is supposed to produce vigilant, involved boards. The trouble is, more rules and process can frustrate participants, especially the big picture people around the table. This can be dangerous as it can easily create a situation where there is 'token harmony'. Much like a forced marriage, on the outside it looks great but on the inside not much excitement is happening.

So if following good-governance and being regulatory well behaved doesn’t produce good boards, what does?

A great board is a centre for a strong, effective conversational eco-system which encourages candor, respect and all ears open debate. This is then truly utilising the power of the talent around the table.

The process to achieve this is simple enough. Team members foster mutual respect and because they respect one another, they develop trust. Because they trust one another, they share difficult information. Because they all have the same information, they can challenge one another’s conclusions coherently. And because a spirited give-and-take becomes the norm, issues are treated with truly open debate where even if there is dispute, there is acceptance that disagreement, with the right handling, is highly constructive. Once they have that relationship, the bonds among board members are strong enough to withstand clashing viewpoints and questions.

Needless to say, this almost always leads to stronger outcomes and not just composite opinions.


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