Governance issues in the private sector

This article was previously published on the Leadership Foundation website.

Governance issues in the private sector

The Financial Times has been running a regular series on ‘Better Boards’. Considering boards in the private sector, a number of questions of interest to higher education have been explored.

A recent discussion has been about striking the right balance between cohesion and conflict (26 September 2013). Too much cohesion and a board of directors risks ‘group think’, losing the creative tension that comes from debate and disagreement in decision-making. The value of having an individual on a Board who is the ‘wild card’ - someone who brings something different to the table – was also discussed. Equally, boards where there is excessive conflict are problematic.

Ensuring non-executive directors are effective raises questions about prior training or development (3 October 2013). Generally, non-executives joining a board face the immediate challenge of educating themselves about how the business is run. The learning demands are likely to greater for those operating in an unfamiliar sector. A further observation is the need for directors to continually educate themselves, both their professional skills and about the business sector, for their knowledge to remain current.

Issues raised for governors

• Do discussions at your governing body reflect an appropriate balance between cohesion and conflict? How do you see your role in achieving this balance?
• How do you ensure you understand how the business is run, and that your own knowledge is up-to-date?