The Governance Education Boom-Opportunism or a Genuine Shift towards Greater Corporate Responsibility? Poor Decisionmaking at Board Level Is Driving the Growth in Corporate Governance Education Programmes at Tertiary Institutes throughout the Country. the Director Talked to Universities and Business Schools for a Comprehensive Review of Governance Education

New Zealand Management, November 2004 | Go to article overview

The Governance Education Boom-Opportunism or a Genuine Shift towards Greater Corporate Responsibility? Poor Decisionmaking at Board Level Is Driving the Growth in Corporate Governance Education Programmes at Tertiary Institutes throughout the Country. the Director Talked to Universities and Business Schools for a Comprehensive Review of Governance Education


While some are 'climbing on the bandwagon' of the governance education boom, there is plenty of substance in the new offerings. Massey University's new Centre for Corporate and Institutional Governance (CCIG) in particular is a real commitment to advancing governance practice in New Zealand.

According to the centre's director Professor Martin Devlin, dysfunctional boards resulting in ongoing corporate and organisation failures--many of which are not made public--are evidence of the need for governance education. And little attention is paid to governance--as distinct from management skills, in traditional executive education.

MASSEY TAKING A LEADERSHIP ROLE

Massey is responding to this need with the establishment of the CCIG. Devlin says the aim is to be a central focal point for studies, research and training in governance and to provide a New Zealand model of governance.

"There is no other organisation, other than the Institute of Directors (IOD), where this is the sole focus of people's attention. The IOD is a professional body but research is not their area of expertise." The IOD is however working with Massey on the enterprise through a Memorandum of Understanding.

Devlin says that 'inclusivity' is a prime principle of the centre and joint research between institutions will be encouraged. All New Zealand universities were officially invited to participate in the centre. "There was interest from Otago and we have researchers from Victoria [University of Wellington] involved."

Massey is targeting a 'national market' with its governance programme and will have an 'Outreach' extramural option.

Devlin says there is demand for corporate governance education from all three sectors: business; the public sector (including hospitals and all state funded institutions); and the voluntary sector.

And the greatest need is where there are representational boards (members appointed by representation of shareholders) and where no board experience is required by new members. "Hospital boards are a good example--they're a mix of elected and appointed members.

"Political and representational boards are a recipe for dysfunction," says Devlin. "There's a need to get effective boards."

The key learning objective of the centre is to increase effective governance in all three sectors.

Another driver of the developments in corporate governance education is the whole area of compliance. "Compliance is an issue for boards internationally with some industries becoming regulated to extremes." Devlin cites the electricity industry where reforms have imposed "hundreds of thousands of dollars" in compliance costs annually. "Legislative and industry restructuring have meant more time and focus on compliance and less on strategic and entrepreneurial."

He says that with the tendency of legislators to promote more complex compliance legislation, the CCIG will take on a lobbying role, advancing the case for less legislation.

Demand for better perfomance from boards has also come from shareholders. Shareholder advocate and chairman of the New Zealand Shareholders' Association, Bruce Sheppard, is on the CCIG advisory board.

Devlin says the centre is still working on its research programme which will include the evolution of governance needs in SMEs and Maori governance. Other possible research areas are: the role of governance; strategic outputs; director selection; board structure and processes; quality of governance; corporate failures; shareholder relationships; board performance; director wisdom; quality of information in governance; measuring good governance; role of the chair; and the New Zealand model.

The centre will satisfy demand from directors seeking some formalisation of their skills and experience. Devlin notes that the New Zealand stock exchange (NZX) has flagged the need for certification of directors (of public companies) as has the Crown Company Monitoring Advisory Unit (CCMAU).

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