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Derek Bishop

Director

Boardroom culture

Date added: 29th Aug 2014
Category: Leadership

The Institute of Directors is shining the spotlight on the role of the board of directors in both governance and performance. What does that mean for engagement?

Where does organisational culture start?  We know it develops over time in response to internal and external interactions but we also know that the effect of those interactions is guided by the CEO and the leadership team.  Now, the Institute of Directors has gone one further, in shining the spotlight on the role of the board of directors in both governance and performance.

IoD Director General, Simon Walker, has stepped up in recent months to highlight cases of poor governance or high executive pay.  Speaking to The Guardian he said “We are trying to get back to the focus on governance, on running companies better and in the interests of stakeholders broadly.”  Criticising “crony capitalism”, Simon Walker believes that diversity is an important tool for raising standards of governance.  “If you constitute your board entirely from people who think it is normal to earn a telephone number salary, you can’t be surprised when they don’t ask tough questions” he said adding that the solution is to have boards which are more diverse in terms of background, gender and age.

In calling for greater diversity, Simon Walker is not alone.  The Oxford Economics Global Diversity report says that diversity can be key to competitive advantage whilst Ford CEO Alan Mulally said “It’s the only business case we need—the only way to satisfy diverse customers is to include their perspectives inside the company.”  Diversity for diversity’s sake helps no-one.  Diversity which brings a rich mix of experiences and outlooks into the boardroom, thereby impacting the culture of the organisation, can have a significant impact on employee engagement, risk management, governance and customer satisfaction.

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