Are business leaders disconnected from the real world?

Why is it, when businesses are so dependent on the real world, some behave as if they were entirely disconnected? But should we worry? Businesses that confuse, exploit and let their customers down are unlikely to survive for long in competitive markets. The trouble is, this poor behaviour leads to business regulations that other businesses resent as ‘red-tape’.

At the other end of the spectrum, there are businesses that are highly connected with customers and the world around them, and this has become synonymous with their brand. These businesses look in all directions, not only towards ethics and Corporate Social Responsibility. They are ‘present’ in the sense that they have an open and collaborative relationship with whoever and whatever they touch. Of course, not everything works all the time and businesses have a choice to be present or not to be, guided by the people within them.

Choosing to be present means listening, engaging, thinking and acting in harmony. This is particularly important when it comes to ‘governance’. Boards of directors, comprising executives and non-executives, have the helm and they effect decision-making throughout the organisation. They have a difficult job – they need to deliver in the short-term, whilst also preserving the longer term sustainability of the business. To do this, they need to see the bigger picture.

“Companies shouldn’t find themselves helping a homeless charity one minute and then devising tax avoidance schemes the next.”

Companies that invest in future generations through apprenticeships, or who have retained staff on shorter hours through recessions are clearly thinking in the long run. These companies are also allowing themselves to be authentic. The people that work within them shouldn’t come into conflict with their personal values. They shouldn’t find themselves helping a homeless charity one minute and then devising tax avoidance schemes the next. If the public can see this inconsistency clearly from the outside, why can’t the directors and shareholders?

Non-executives are crucial in helping the board see beyond immediate priorities. As a minimum they should recognise when product offerings are skewed, or when practices are unethical. They should help identify the long run effects, so that quick fix actions are transformed into sustainable ones.

For more companies to be ‘present’, connected with their environments and deserving of public trust, as a nation we need to focus on better governance. Governance should not be seen just as compliance, but the way to position your business within the larger ecosystem and for the long term. If we do this, society’s expectations can be met with fewer regulations, at lower cost, and our businesses will be seen not just as the engine of growth, but the heart of it.

Martin Hawley is the founder of Boardcircle. His vision is for companies to help each other by sharing some of their directors’ time as non-executives. He sees the non-exec role as one that is done by a diverse group of talented people, benefiting business and society alike.

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