It is time to take a more positive view of Boards and their ability to contribute to society as well as their own organisations. The paradigm needs to shift from risk, legislation and criticism to the positive contributions of Boards of all shapes and sizes
The Peakstone Elements of Positive Governance are Purpose, Strategy, Culture, Ethics and Values, Risks and Opportunities, ESG, Leadership, Reward and Recognition, Decision Making and Value Creation. By taking a fresh, conscious approach to these Elements Boards can lift the performance and contribution of their organisations and employees to new levels. Importantly, with proper application they can help Boards Survive, Sustain and Succeed in this challenging world.
Background
Positive Governance builds on the concept of Positive Psychology. Dr Martin Seligman as President of the American Psychological Association in 1968 proffered that “Positive psychology is the scientific study of human strengths and virtues.” This field has now grown to a well researched and utilised international endeavour. Positive psychology is now well recognised for its ability to advance organisations
At Peakstone Global our proposition is that:
“Positive Governance is the professional field of endeavour that advances the positive value of applying a Board’s strengths, virtues and values to the governance of organisations and the benefit of society.”
Positive Governance is about optimising the potential contributions of boards.
10 Key Elements of Positive Governance:
1. Purpose
Beyond Mission and Goals, the Board practising Positive Governance will establish the organisation’s clear statement of its Purpose within society. This will help to focus and engage its employees, investors, and stakeholders. The organisation accepts that its Purpose reaches beyond investor short to medium term financial goals.
2. Strategy
The Board establishes clear, measurable, meaningful and realistic strategies to optimise its Purpose. This includes setting clear financial and non-financial goals. It engages and motivates all stakeholders, including employees, investors and communities.
3. Culture
The Board consciously reviews and actively develops its own and the organisation’s culture. This is about taking positive steps in line with the concept of positive psychology to create and build the organisation’s culture. Setting the optimum Tone from the Top by words and actions is essential to advancing the organisation.
4. Ethics & Values
When well stated and reinforced by the Board, ethics and standards help create the framework for behaviours and decisions across the organisation. They should be couched in positive language as much as possible. It is more about “We shall rather than Thou shall not.” They are the bedrock of board and organisational culture.
5. Risk & Opportunities
The Board establishes a clear and understandable Risk & Opportunities Management Framework, which also recognises and encourages a positive preparedness for the organisation and its employees to create opportunities within the Framework. This will help the organisation advance rather than stultify.
6. ESG
The Board recognises, applies and reports on Environmental, Social and Governance objectives. These include international objectives such as the UN Sustainable Development Goals and reporting on global sustainability standards.
7. Leadership
The Board, Chair and CEO demonstrate leadership with positive behaviours exhibited, such as confidence, competence, compassion, and clarity. Such authentic leadership is not based on blame, ego, criticism, or falsehoods. It does use effective stories, examples, and role modelling of expectations.
8. Reward & Recognition
The Board clearly establishes a framework that positively rewards and recognises desirable behaviours and outcomes. The framework utilises financial and non-financial motivators including individual and group awards, personal attendances by Directors, media and the like. Positive psychology clearly establishes the value of focusing on strengths instead of weaknesses, as well as on positive experiences, traits, and organisations.
9. Decision Making
The positive governing Board will seek to create an optimistic decision-making process utilising relevant, realistic and timely information, as well as diversity of thoughts and experiences around the table and from executives or elsewhere. It will also seek to avoid unconscious bias at the group or individual level whilst creating, as much as is reasonable, positive emotions coupled with realistic risk adversity. There will be a conscious understanding of the variances and values of different perceptions and communications styles or expectations. Respect is a key behaviour even in the face of diversity of thoughts.
10. Value Creation
Commercial Boards have traditionally judged the success of their organisations on financial value creation, be it revenue or capital-based criteria. Increasingly Boards are now assessing success on a wider range of criteria that may be summed up in the concepts of broad based ESG or ‘Social Value Contributions’. Positive Governance will see Boards and their organisations adding value to society as well as their long-term shareholders and stakeholders in this way. Ultimately the activities and the profits of organisations are for a greater Purpose in society.
