Stoning

Blog

4 January 2019

We live in a judging culture. This can be attributed to the fact that the world has become malleable. Disasters also happened to us in the past. During a storm we would seek cover. We would wait patiently until things improved again. Not anymore. When something is not going the way it should, someone did something wrong. Settlement must follow. 

And in this respect we do not like pointing the finger at ourselves. We prefer pointing the finger at someone else. This applies on a small scale but also on a large scale. In case of an epidemic authorities and doctors failed. When a Stint ends up under a train, the design of the Stint is inferior. The business goes bankrupt. People who suffer from a disease neglected themselves. And in difficult financial times the government failed. They should have intervened earlier!

“Accountability and settlement are inextricably linked like Siamese twins. They are, however, not the same”

The world did not only seemingly become malleable, but certainly also more grimly. It is not much different when it comes to the governance of a business. An army of inspectors surrounds us. This ranges from the internal auditor to the compliance officer and from the supervisory board to the external auditor and the regulator. Their supervision is in line with a regime of systems and rules. Lawyers and accountants came up with thousands of them that must all be complied with. It is impossible to be familiar with all of them. Understanding all of them is truly a hopeless task. If you do not follow these rules then you are judged for it, not just legally but also actually, through your reputation. At present, but certainly also in the near future, everything that deviates from what should or must be is monitored and registered electronically 24/7. Everything is available on the internet. It cannot be erased. Your past has become your lifelong companion. In earlier times your past took place in the privacy of your soul. You dealt with it and moved on; or not. Now, your past has become public and will remain so forever. Every human being with his or her cellphone has become a prostitute of his or her existence. You can believe this is a good or a bad thing, it is a fact of life.

How do you handle this as a supervisory director? Of course this question has many angles: how do you give substance to your supervision and how do you account for it? What do you expect of accountability of your board? Accountability and settlement are inextricably linked like Siamese twins. They are, however, not the same. Settlement is the perverted variant of accountability. There is a whole spectrum of forms of supervision between accountability and settlement. Supervisory directors must be well aware of the element of the spectrum where their supervision on the board takes places. As a supervisory director, do you steer on openness and explanation or do you actually steer on settlement? Assessing is not the same as judging. Observing and reflecting are more functional than threatening and hitting.

This is easier said than done. The social media accelerated the tendency for settlement to a large degree. As a word accountability somehow still reminds us a bit of an accountant. This used to be a balding, boring man with glasses and a pencil. Not anymore. This accountant has disappeared. And he has been replaced by a man with a scythe. Nowadays it is no longer about the figures but about preservation of the image. The Economist of December 13, 2018 contains an article (‘Time-tested ways of holding business to account are crumbling’) in which it is discussed how the global attention of the public for businesses shifted from the financial field to the reputational field. Financials are out, reputation care is in. A very dangerous development. This is now our reality. Let he who is without sin cast the first stone.  

This blogpost is also available in Papiamentu. Download the PDF version. You can also download the English 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.