This survey has its origins in a book that we (Anil Kariwala, Robert Purse & Graham Smedley) are currently writing. Rather than simply relying upon anecdotal evidence and personal experience, we decided to undertake some survey-based research and hence the survey, which was open for responses during the first half of June 2015. The survey was intended to provide us with an understanding of people’s general perceptions of Corporate Governance and how it is applied in their organisation. The survey questions were quite deliberately ‘broad-brush’ in nature and we will shortly be launching a more forensic, but still short, survey.
We are indebted to all the 314 respondents who contributed to the survey. But none more so than the 250 directors and senior managers who participated, and we hope that the results are of interest to both the respondents and a wider readership; we have certainly found them interesting and thought provoking.
We had responses (that we know of with certainty) from:
Australia, India, Norway, Spain, South Africa, and;United Kingdom.
The total number of respondents (n) was 314 and for simplicity’s sake we have rounded response numbers (for each question) up, or down, to the nearest 10. Comments and observations on the survey are always welcome and can be sent to firstname.lastname@example.org.
Question 1 – Has your work experience been mostly public sector, mostly private sector, or a broad mix of public and private?
Although the majority (63.3%) of respondents had gained more than 60% of their work experience in the privatesector, a significant number (110 respondents, 36.7%) had either gained their work experience mostly in the public sector, or a broad mix of private and public sectors.
The responses were as follows:
Question 2 – Are you a Director, Senior Manager, Middle Manager, Junior Manager, or someone without direct line management responsibility?
The fact that more than 80% of respondents were either directors, or senior managers, implies a healthy interest (in that group) in matters pertaining to corporate governance. Corporate governance has often been perceived as a matter for directors and senior managers; we were therefore gratified to see that 50 respondents fell into the categories of: Middle manager, junior manager and people with no direct line management responsibility.
The responses were as follows:
Question 3 – How large is your organisation?
130 of the responses were from people in SME’s (<50 to 500 people) and 140 from larger (>1,000 people) organisations. Although by no means definitive, the results suggest that corporate governance is a ‘live’ issue for a wide range of organisations and is by no means limited to ‘listed’ companies.
Question 4 – Where, in your organisation, does responsibility for corporate governance lie?
Questions 4, 5 and 6 may go to the heart of the issue since they are concerned with responsibility and accountability for corporate governance. Very often responsibility and accountability are conjoined, but we are of the view that they are quite different. In the context of corporate governance, responsibility can (we suggest) be delegated, whereas accountability cannot. The survey results do not confirm that premise, but that may be a consequence of loosely worded questions, something that will be addressed in the next survey.
An overwhelming 70% of respondents said that in their organisation responsibility for corporate governance lay with the Board/Executive. Perhaps significantly, 23.3% of respondents (70) said that responsibility for corporate governance lay with more than one of the defined categories. No respondent identified shareholders as having responsibility for corporate governance, which is slightly surprising since they vote on the appointment of both auditors and directors. In the same vein, no respondent identified employees (in their organisation) as having responsibility for corporate governance.
Question 5 – Where do you think that responsibility for Corporate (Good) Governance should lie?
The responses here were broadly consistent with Question 4. A substantial majority (200) felt that responsibility should rest with the Board, the Executive, or the Chair. Ten respondents said that responsibility should rest with shareholders and the same number said that it should lie with employees. The number of respondents who said that responsibility for corporate governance lay with more than one of the defined categories rose slightly to 80 (26.7%).
It is perhaps noteworthy that no respondent allocated responsibility to the Regulators. In the recent banking/financial crisis, the Bank of England was the regulator for the banking industry and, as such was responsible for the regulatory framework within which the banks operated.
Question 6 – Where do you think that ultimate accountability for Corporate (Good) Governance should lie?
240 respondents (80%) believed that ultimate accountability for corporate governance should rest with the Board/Executive and/or the Chair. This is broadly consistent with our proposition that accountability cannot be delegated (politicians, especially Ministers, please note). To avoid any confusion, in this survey we have taken Board of Directors and Executive to be broadly analogous. This is because many organisations (public and private) do not have a formal board structure and in some cases operational accountability may be quite separate from policy. In police forces the UK and many other countries, operational accountability is quite separate (rightly so) from policy.
Question 7 – Do you think that the current (often sector-specific) proliferation of Codes of Corporate Governance is helpful, unhelpful, or not sure?
Less than 25% of respondents felt that the current proliferation was helpful. More than 35% felt that it was unhelpful, whilst 40% were not sure. Whilst the results cannot be considered definitive, the case may be emerging for a single, overarching, code of corporate governance. We will try to get more clarity on this issue in the next survey.
Question 8 – Do you see Corporate Governance as being primarily a financial issue, or an organisational (cultural/ethical/people) issue?
The overwhelming majority of respondents (96.7%) felt that corporate governance was primarily an organisational issue, not a financial one. This contrasts rather sharply with the responses to Question 9; ultimately it seems that our respondents hold to the view that corporate governance is not primarily a financial issue. Assuming that this is correct, it rather begs the question of why so many organisations ignore ‘human capital’ and ‘people risk’ when considering corporate governance and risk management?
Question 9 – In your organisation, to the best of your knowledge, is risk management mostly concerned with: financial risk, people risk, or not sure?
More than two-thirds of our respondents (66.7%) felt that, in their organisation, risk management was mostly about financial risk. There appears to be a very significant disconnect between the responses to Question 8 and Question 9.
Question 10 – Do you believe that having a statement of values and behaviours that applied to everyone in your organisation (including Directors, Executives and Suppliers) would help promote good governance?
80% of our respondents felt that having such a statement would be beneficial for good governance. The key naturally is the universal application of such a statement. The inclusion of ‘suppliers’ in the question was quite deliberate on our part as we consider an organisation’s supply chain a key element of good governance
Question 11 – Does your organisation have fully-embedded values and behaviours, where everyone ‘Walks the Walk’ rather than just ‘Talks the Talk’?
Although 200 (69%) of respondents responded positively to this question, it is worth noting that nearly one-third 31%) said ‘no’; what is unclear from this survey is whether the organisations concerned did not have a statement of values and behaviours, or if they had one but the values and behaviours espoused in it were not ‘fully-embedded’.
Question 12 – Do you believe that your organisation has high standards of Corporate (Good) Governance?
Although 60% of respondents said ‘yes’, it is noteworthy that 40% responded either ‘no’, or ‘not sure’. Whilst we have no direct evidence to support the proposition, we are of the view that high standards of good governance should be self-evident with little room for uncertainty.