To start this article, let’s have a look at what is required for the creation of a High-Performance Organisation and then put the role of directors and the board in that context.
- Organisations need to be brilliant at what they do in the short-term informed by the long-term.
- Organisations need to be agile, innovative, ethical and highly client centric.
- Organisations need to provide cost effective and efficient products and services.
All these things are made successful through the people, so staff engagement levels are directly correlated to all these success factors.
Staff engagement is also directly correlated to the style and type of leadership as well as the transparency and fairness within the organisation. Surprisingly only 8% of staff are engaged in the UK according to the Gallup Consortium engagement survey. With that statistic, it means the UK will be struggling to be competitive in the highly challenging and competitive world unfolding ahead of us. So how do we change this? We know according to Gallup’s statistics, that managers account for 70% of the variance regarding engagement. Directors oversee the organisation, so they should ensure that organisational practices are sustainable and enabling.
Directors have a legally enforceable duty to act as per the provisions of the companies act. These rules are not there just for nuisance value, but rather to ensure that any organisation is long-term sustainable without negatively impacting any of the stakeholders. It is a common mistake for any manager when stepping to a higher-level role, to try control people under their influence rather than empowering, coaching, supporting and guiding them. This same tyranny is often seen amongst directors, who could remain excessively operational to the detriment of strategic thinking and building an organisation where all stakeholders are aligned with the direction and bigger picture. The companies act tries to guard against this, by helping directors’ step into the correct role and in so doing creates a platform for success and sustainability.
It’s time for all directors to understand their roles and learn the skills to be competent as directors as this role has one of the biggest impacts on any organisation. They must model the correct culture and ensure that organisational managers are managing in a way that enables the workforce and models a culture that enables high quality strategy execution. Ideally directors need to learn to step out of siloed operational thinking and learn to understand the bigger picture, the workings of the organisational system and unfolding trends, opportunities and threat in the competitive landscape.
According to section 172 of the companies act (2006), a director has the duty to promote the success of the company:
A director of a company must act in the way he considers, in good faith …
- the likely consequences of any decision in the long term,
- the interests of the company’s employees,
- the need to foster the company’s business relationships with suppliers, customers and others,
- the impact of the company’s operations on the community and the environment,
- the desirability of the company maintaining a reputation for high standards of business conduct, and
- the need to act fairly as between members of the company.
The full 7 duties of a director are available here: http://www.legislation.gov.uk/ukpga/2006/46/section/171/2011-04-22
About the author: Paul de Beer consults to organisations to help them perform better through leadership, strategy and alignment at all levels. His organisation Evolve Leadership Consulting Limited also provides leadership development, teaming and executive coaching.