There is no doubt that some of the most challenging leadership jobs are those where a change in direction for a company is required to improve the profitability of the enterprise. I have spent most of my leadership career doing just that, so I have a great deal of experience with that challenge. Trust me, there is no doubt that the stress that can be enocuntered is generaly much more that most leaders expect. There is no doubt that change agents work smarter, harder and more intensely than any other leaders.
I have had a series of such challenges, all of which have been dramatic and tested my skills. None have been more interesting or more fun than the one I have taken on recently. O2 Media (www.o2mediainc.com) is a full service Marketing, Media and TV Production company. We are really excellent at what we do, but the profitability has been less than desirable. Our efforts have been focused on changing that and I am learning so much while I am at it.
This company produces a varety of shows that run nationally on Lifetime (The Balancing Act - 7-7:30 daily) and TLC (Designing Spaces). The profit equation is short of whwre we would like it,m bt the quality of these shows is excellent.
As I continue to post, i will talk more about what we are experiencing.
It may actually be impossible for board of directors members to actually do their job effectively and consistently. It is particularly difficult during what appear to be good times. When things are tough, and the company is in crisis, board will tend to react with significant engagement. When things appear to be working well, then board have a tough time deciding justy how engaged they need to be to make certain that hey are doing their fiduciary duty. The real issue becomes one of , how aggressive should the board be in challenging management when it is functioning well. The nose in, finger out mind set may sound good; but when the nose is not really enough to understand just how well things really are; it may become important top cross the line to get far more engaged. It is then that a board will almost invariably be accused of micromanaging, and will inevitably enrage management. Unfortunately, in many companies that made strategic missteps; that is precisely what was needed, before the direction was followed. It may not be impossible, but it could be very difficult to draw the line.
The hand ringing by corporate chieftans has been constant since the day that SOX became law. It has been clear to all in corporate America that SOX was too expensive and it should never have been imposed on the system. Public company CFO’s have been complaining about the costs and gave projects of the death of public company ability to raise capital because of the extreme costs.
Clearly, these costs should never have been mandated to be incurred in one year, but the FCPC Act required the system of internal controls to be implemented. It is clear that 25 years later, companies were finally required to implement, and the CFO’s complained. Sorry, they spent al that time, not doing what the law required, and then they were mandaqed, or they would go to jail. It is amazing what sanctions can accomplish.
Well today it was reported that the costs of 404 are going down. My answer is…of course they are. Once controls become routine, they work, and they cost less. My prediction is that, some day in the future, CFOs will assert that 404 was the best thing they could have done to focus attention on cost effective controls.
What governance is is the oversight of an enterprise, normally from a level above that of management. Perhaps the most important thing to say is that governance is not management. Today, the single greatest challenge that managements have is to maintain their ability to guide and drive an organization while recognizing the critical role and intense concern of the board of directors.
I work with as many as a hundred of boards each year and the single most vexing challenge that these boards have is to know how and when to govern vs. when if ever, to manage. Boards clearly need to manage themselves and their activities as a board, they cannot find themselves in a position where they are effectively behaving as if they were managing the enterprise. yet, although this may be clear and true, “keeping the nose in and the fingers out” is a huge challenge for boards in the post-Sarbanes-Oxley era. The challenge is for boards to know when engagement turns into meddling; when inquiry turns into inquisition and when challenging turns into distrust and even rejection. The line between these is not always clear, and yet boards are constantly faced with the decision to either stay at 50,000 feet or to fly at 1,000 feet. Flying at 1,000 feet can be necessary at times, but it will never represent the state of activity of a board that is “governing” a well functioning organization.