Written by Franco Azzopardi, 10 June 2013
On June 5th 2013 the Financial Times reported that research cites ‘lack of board skills as cause of most company crises’. The report studies 41 corporate crises, looking at the underlying causes that led to disaster, and the resilience of the organisation in handling the aftershock. It found that a general lack of board inability to influence C-level executives were the common root of 88 percent of the failures studied. It also concluded that in 85 percent of the implosions, ‘blindness to risk’ was also the common denominator cause.
There are numerous writings about the attributes that board candidates should possess. The Financial Reporting Council of the UK lists among others, intellect, critical assessment and judgement, courage, openness, honesty and tact, the ability to listen, forge relationships and develop trust. It also suggests diversity of psychological type, background and gender to ensure that the more does not end up being composed of more of the same. Unlike math and science, these attributes are tacit. Mastering them is an art.
In the opening remarks of the Bloomberg Businessweek, May 2013 issue, there was highlighted that only 58.6 percent of American civilians had jobs in April – the lower employment-to-population ratio since the 2007 recession. Politicians and economists have been discussing high unemployment but seem to be going round in circles. Is more education a possible cure for the mismatch between job seekers and employers’ needs? It has been widely accepted that education improves social mobility. However it must be acknowledged that the working world is also getting more complicated and demanding. This complexity has ‘opened a great divide between those who have mastered its requirements and those who have not.’ Perhaps educational institutions and academia are steadily drifting out of sync with what the business world requires, providing a dangerous sense of confidence to graduands, rather than making it clear that they just provide the arsenal of weaponry, but not mastery in the art of war. It is what I coin the distinction between the technician and the tactician. Technicians have imitable and teachable skills whilst tacticians have tacit skills, strategise, act and react at the opportune timing. Both are required in an organisation.
Back to the boardroom, will more academics fill the gaps and cracks? Or should boards lean more on vision, experience, chemistry, and battle-hardened masters of the art of business and organisational behaviour and dynamics? How is the education industry aligning to the needs of the business working world? Is society losing the appetite for risk, especially after the crises? Are risk managers over-managing risk? Is risk still the base ingredient in entrepreneurship?