3xR

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22 October 2018

In the nineteenth and twentieth century millions of children were raised under the regime of the three Ps: peace, purity and periodicity. Only after the Second World War were the strict methods of upbringing in the West, which had thus far applied, broken.

This could mostly be attributed to the merits of Dr. Benjamin Spock. Henceforth, it was allowed to cuddle a baby (occasionally). According to some this more indulgent approach (cuddling a baby) resulted in the generation of the wild nineteen sixties with flower power, sentiments against the Vietnam War and free love. Whether that is correct or not, something can be said about these three Ps. In this respect, do not just think of the family, but also of corporate governance.

“The soft side alone is not enough. It must also be clear that non-compliance with compliance requirements implies that you are kicked out”

Peace, purity and periodicity are absent in many businesses in the Dutch Caribbean. There is a lack of compliance. There is often question of an indulgent approach, both in respect of the staff and mutually between bodies (board, supervisory board, stockholder). Direction and clarity are often missing. Often, the priorities of the board are not clear. In many instances these priorities are therefore felt and experienced insufficiently within the organization. This will not get you a step further. PPP may in that case be useful, together with a variant of these three Ps: positivity, presentation and priority.

Positivity. Recently, Ron Gomes Casseres has argued for more positivity on the part of the government and the business community in this newspaper.  You can destroy each other but you can also hearten each other and strengthen positive forces and ideas. We truly need that. This is a cultural issue par excellence. The responsibility for this is not merely borne by the board. This responsibility is also borne by the supervisory board. It is again one of those examples of a subject that is never on the agenda but should be, at least four times a year.

Presentation. If you do not present and communicate plans and priorities then nothing happens. Sharing and communicating is a key duty of the board. The supervisory board should also supervise this. I am regularly asked the question by supervisory directors how they need to ‘supervise’. What does it actually mean? It is very simple. You need to place the relevant subject on the agenda. And you then ask the board how they think they are going to handle the subject. If that approach appears to be reasonable then you ask the board for the timeline. Finally, you verify if this timeline was actually followed successfully. That is supervision.

Priority, finally, is the essential tailpiece of the three Ps. Focus on one or more key objectives is indispensable. An example is the need for better compliance. This need is not only felt at financial institutions but also at public utilities, transportation businesses, in the law practice and in the accountancy practice. Within these businesses compliance is usually experienced as a burden. It is felt as an additional duty imposed from outside. It is experienced as a duty that prejudices the work rather than that it contributes to improvement. The accomplishment of better compliance is doomed to fail, unless the board is loud and clear about compliance being a priority. Moreover, the board must communicate clearly and unambiguously about this and last but not least place this in a positive context. This can be done by explaining that good compliance leads to more security, better quality of the customer base and more extensive knowledge about these customers in order that they can be served better and will be more satisfied. The soft side alone is not enough. It must also be clear that non-compliance with compliance requirements implies that you are kicked out. And clarity about that in turn leads to peace, purity and periodicity again.

 

This blogpost is also available in Papiamentu. Download the PDF version.

Do you have a question about corporate governance? Please email it to governance@ekvandoorne.com and perhaps your question will be discussed in the next blogpost.