204. What is our agreed-upon definition of corporate governance? (Question #2)

This season, every episode of OMG focuses on a question that directors really need to answer. 

OMG is written, produced, narrated and scored by Matt Fullbrook.

 

TRANSCRIPT:

Question #2: What is our agreed-upon definition of corporate governance? If you’re at all familiar with my Ground-Up Governance platform, then you know I’m kinda obsessed with definitions. I’ve said before that I think the most important and insidious jargon in the world of corporate governance is the term “corporate governance.” How many times have you heard corporate leaders complain about boards crossing the line from “governance” to “operations?” A significant part of the reason this happens is because nobody agrees what “governance” even is. I attended a panel discussion earlier this year where the three panelists were talking about boards and AI. The definition police part of my brain quickly fixated on the fact that each panelist meant something different when they said the word “governance.” One was clearly referring to the rules imposed by the stock exchange and regulators. Another seemed to be using the word “governance” to talk about board composition. And the third was talking about the structure of board meetings. It was a good enough discussion, but imagine how much more clarity and coherence there might have been if the moderator had said “for the purposes of this discussion, I would like us to think of corporate governance as [fill in the blank].” Instead, everyone just kinda went along with this weird assumption that they were all on the same page. Now, in a boardroom this matters even more. I suspect all of your directors and executives can easily agree that an important part of their job is corporate governance. But I have an even stronger suspicion that they don’t have a confident consensus about what corporate governance even is. And it’s hard to do something – and do it well – if we can’t even define it! Especially if we’re all pushing and pulling in slightly different directions without realizing.