Board Culture and Global Governance
Posted on February 21st, 2008 by Julie Garland McLellan »Permalink
Over the next couple of weeks, Audit Trail is pleased to be featuring contributions from a special guest blogger, Julie Garland McLellan. Julie is Australia’s leading expert on government sector governance and a member of Approva’s Advisory Board, and we’ve asked her to share her thoughts today on how cultural factors inform the way that companies are organized – and what this can mean for global governance standards. We’ll let Julie take over from here.
Boards are social networks; they develop their own shared culture. The board culture is influenced by the cultures of the people on the board and hence by the underlying business and community cultures that these people come from.
Global governance standards are at the mercy of individual and national board cultures. Although a company may have a board with a majority of independent directors, the processes and outcomes will be very different in:
• An Asian company where face-saving requires that directors not admit to misunderstanding anything
• A patriarchal society where younger members are expected to defer to their elders
• A male-dominated culture where women are expected not to contribute to the debate but to applaud the men
• A politicized society where the board member who is a member of the ruling party holds sway over the others
• A company that has a large family shareholding and a family member on the board
Different countries are likely to have typical board cultures that can be very different from those of US and European companies. Indeed the ‘European” board culture varies dramatically between the two-tier German system, the single tier British system, the employee representative systems in some countries and the majority of family businesses and political allies in others. In Norway, where the requirement for female board members has recently been legislated, the culture is very different from board culture in Spain, where the boardroom is still predominantly a male-dominated area.
The most important aspects of a board’s culture are a desire to ‘do the right thing’ and a healthy debate about the possible future strategies and their likely risks. No amount of legislation will protect a company if the people in the boardroom are either unethical or poorly engaged in developing and implementing the best possible strategies for the organization.
Julie Garland McLellan has over 20 years experience in strategic business development in resources, utilities and energy industries. She is currently a corporate governance consultant with Blackrock ITS, a leading Australian IT services and solutions firm. Previously, she served as associate director with McLennan Magasanik Associates, and a board member of the Victorian Minerals and Energy Council, the Victorian Energy Networks Corporation (VENCorp), the Melbourne University Engineering Foundation and City West Water. Julie has an honours degree in civil engineering from City University in London, an MBA from the leading Spanish Business School (Instituto de Empresa in Madrid) and is qualified in finance and corporate governance. We’ll let Julie take over from here.
Tags: global governance, corporate boards
February 25th, 2008 at 2:00 pm
[...] Board Culture and Global Governance – Interesting take on the board culture issue [...]