Wendy Wedge reckons corporate boards are even more thin-skinned than political players and they’ve also performed badly.
Business folk have even thinner skins than their political counterparts and media business pages are even more prone to being the creation of spinners and flacks than even the political pages.
In the end of the year Director, publication of the Australian Institute of Company Directors, AICD President Elizabeth Alexander wrote: “There needs to be some tempering of the continual grilling of company directors as seen in the media over the past six months. The portrayal of Boards as ‘boys’clubs’ having little concern for shareholders and the wider community needs to be balanced”.
Considering how little scrutiny the business pages actually give and that the criticism has been largely directed towards companies which have failed this comment has to set new benchmarks for having a thinskin.
For a start boards do tend to be old boys clubs. There are a few girls around but it’s normally a case of round up the usual suspects when it comes to them with the same dozen or so names re-appearing time and time again (a la Elizabeth Alexander).
While in politics we have, in recent years, seen the odd dynastic succession (Downer, Crean, Beazley etc etc) and the all-pervasive influence of the legal profession the average parliament probably reflects a wider cross-section of the community than the average board.
In the 1930s a few leftist intellectuals made the point by analysing how the same names came up again and again in the board rooms of the key companies. Modern small world mathematical theory (with which most business journalists are very familiar of course) uses company boards as test cases of its concepts about small, interrelated groups.
The simplest example of small world theory is the Kevin Bacon graph which looks at connections between actors who appear in Hollywood films.
When the same system is used for Fortune 1000 US boards you get similar results with (as James Case pointed out in a recent issue of the Society for Industrial and Applied Mathematics newsletter) Bill Clinton’s mate Vernon Jordan becoming the Kevin Bacon (or Rod Steiger) of the board room graph.
Basically all the research shows what we all know: the same very few people keep ending up on boards.
That wouldn’t matter if board performance was reasonable.
But as well as the spate of failures everyone has stories of old boys whose only contribution to their boards is turning up.
In Australia we constantly say that we have to achieve best practice and most importantly we have to pay world competitive salaries and fees to company managers and directors.
In fact our CEO salaries lag behind only the UK and the US despite our corporate performances lagging well behind most other companies in most other countries.
One of the key members of the club, Stan Wallis, even admits that the relative performance is not that hot but then suggests it could be due to too much emphasis on corporate governance.
Meanwhile, the same people keep getting appointed and, except for crikey and a few others, the business media keep functioning as publicity outlets rather than analysts.
Wendy probably wouldn’t mind, except for the fact that in between putting in poor performances and exhibiting thin skins, Australia’s business elites are always busy telling the rest of us how the country should be run.
We’re doing a pretty good job of stuffing it up already. But just imagine how bad we’d be if we actually did what the corporate leaders wanted us to?