Skeptical of political and corporate leaders…is there a connection?

Skeptical of political and corporate leaders…is there a connection?

Is there an increasing gap in expectations between what the community expects and what our political and business leaders provide?

A recent report published by the Australian Institute of Company Directors and authored by Steven Cole, an experienced director, titled “Mind the Expectation Gap – on the role of a company director” suggested that this gap is seriously impacting upon the ability for Directors to perform their role, and is impacting on national competitiveness.
This gap is caused by confusion due to the following:
  • By legislators, “who respond to populist electorate pressure and continue to over-regulate business activity – especially in the area of director liability – with increasingly prescriptive and pernicious laws, many of which offend fundamental rule of law principles that apply to the rest of the community”.
  • By regulators, who often have their key performance indicators based on their number of successful prosecutions, rather than a reduction of cases to prosecute due to good corporate practice.
  • By the media “which, in response to the insatiable public appetite for the notorious and the titillating in order to sell media product and air time, is inclined to simplify, generalise and sensationalise occasions when corporate shortcomings do arise”.
  • By the public through its need to attribute blame for that which befalls it and which sees company directors as “the souls to damn and the bodies to be kicked when a corporate is involved”.

Cole noted: “The performance of corporations and their boards is usually assessed and judged by regulators, courts, media and the public with the benefit of hindsight; without time constraints; and with access to all the information possible that may have been

relevant to the judgment made and its probable consequences. Hindsight is truly 20/20 vision, but hindsight 20/20 vision is not available to the directors when the decisions need to be made.”

 

This publication warns that if the expectation asymmetry between the law, best corporate governance practice and society’s expectations is not addressed, primary consequences will include overly defensive corporate practices focused on compliance
and liability protection, rather than productive and prudential entrepreneurship; too much valuable boardroom time being spent on conformance rather than performance issues; and a reluctance among skilled and able business leaders to assume public directorial office due to unreasonable liability and reputation risks.

I would contend that this phenoma is a good reflection of what is occuring, and that this phenomina is as true for Directors as it is for Politicians albeit the balance of issues may vary.  That is not to say that Directors and Politicians dont make mistakes…in that sense they are as human as all of us…but as a nation, are we creating the best conditions for their success?  And are these gaps in expectations good pointers as to where the problems lay?

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