Magazine article New Zealand Management

The Director: Off with Their Heads! Everything about the Furore Created by the Remarks of Former Employers and Manufacturers Association Chief Executive Alasdair Thompson and His Subsequent Departure Demonstrates Substandard Corporate Governance. by Jens Mueller

Magazine article New Zealand Management

The Director: Off with Their Heads! Everything about the Furore Created by the Remarks of Former Employers and Manufacturers Association Chief Executive Alasdair Thompson and His Subsequent Departure Demonstrates Substandard Corporate Governance. by Jens Mueller

Article excerpt

Byline: Jens Mueller

Was Alasdair Thompson alone suddenly overcome by his misguided 'wisdom' during the television interviews? Did no one else in the organisation or at board level know about these Neanderthal-like views beforehand? Was the board unaware of his opinions and taken by surprise? Was it a completely unexpected event that could only be dealt with after the fact? Was there never a single indication from prior actions that suggested what convictions were held? Are we to believe that his throw-away comments were so unusual that no one else should be looked at to apportion responsibility?

The opinions stated were, it seemed, strongly-held beliefs, repeated under fire. As such they were likely often communicated in other fora and presumably, therefore, in line with what EMA member firms or their leaders were comfortable with. Otherwise, the members would have bailed in droves a long time ago.

In times of greater stakeholder transparency and accountability, I would have expected the whole EMA board to resign, acknowledging their lack of oversight, directoral competence and knowledge of how the organisation's CEO argued his views, in public or in private.

Instead, after several weeks of haggling and hiding behind the veil of employee privacy, Thompson is fired, an acting CEO appointed and the matter apparently closed. Amazing, how quickly and smoothly an organisation seems able to snap into a new regime, and self-cleanse its failings.

Everything about this case demonstrates sub-standard governance. This is especially alarming in an organisation that advises other employers on how to conduct their business. Has this board not heard the call for greater director involvement when organisations or their leaders fail to live up to performance standards presumably already set by them?

By clinging to their board roles and sacrificing the CEO, the EMA's directors signal that they were not aware of these damaging statements, were taken by surprise and thus could not be held personally responsible. Is this a credible position?

Chairs and CEOs normally discuss business frequently, inside and outside regular board meetings. Surely the board knew what opinions the CEO held. This CEO clearly wasn't one to hold back with his opinions. Therefore, how many times had staff, directors, clients and other stakeholders heard opinions curiously at odds with today's mainstream business thinking?

Board meetings, where CEOs usually participate, provide many insights into the attitudes, beliefs and competencies of a CEO. It is inconceivable that in this case board members were not aware of Thompson's beliefs which were, he said in his interview, based on research findings.

Directors are responsible for all aspects of the organisations they govern and delegate operational duties to management. Delegation requires oversight and necessary direction. This board's actions suggest that all was fine in the shop -- until the fateful few minutes of the TV interview and bright camera lights revealed the previously unknown. It's a bit like the CEO of an airline reporting with a surprised look that heavy losses were the result of "sudden" fuel price increases!

What directors should have known or more surely did know, cannot be a surprise. It is reasonable, therefore, to expect that action follows immediately on recognition of a problem. Failure to deal with issues doesn't make them go away.

Directors should take a proactive view and align the future aspirations of their business with its current activities. If there is a mismatch, directors act on it. They don't wait for reporters to broadcast their deficiencies and have the world gloat.

This is not just Thompson's problem. …

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