Wise Boards Know Which King They Are Protecting

Every organisation protects a king. The trouble begins when the system protects the wrong one, faithfully and every day, with the full cooperation of capable people. I call this protecting the wrong king, and I think it explains more governance failure than any list of bad actors.

In a paper with Kate Norbury and David Rooney, we put the underlying point in a single sentence. “Destructive leadership results from systemic as well as individual foolishness.” The phrase that carries the weight is “as well as”. It keeps the individual in view, so nobody is excused. It also refuses the comfortable story in which a few people are removed and the organisation is declared well again.

The Royal Commission showed foolishness at the scale of a system

The example we used was the Hayne Royal Commission into banking and financial services. Most Australian directors know its findings, and they repay slow reading. As we wrote, the report showed that “employees were routinely rewarded for carrying out unethical activities that went un-investigated and unpunished.” Then came the detail that made the country wince. Financial “organizations continued to charge fees, including ‘advice’ fees, to dead clients even after notification of death.”

Look closely at the word routinely. Routine is the language of systems. One adviser behaving badly is an individual failure. A practice that repeats until it becomes normal needs a system around it, with incentives that reward it, processes that repeat it and oversight that fails to see it. Each of those is designed by someone, and each is overseen by a board.

A fair objection is that Hayne concerned misconduct, some of it potentially criminal, and that misconduct belongs to regulators, remuneration committees and the courts. Talk of wisdom can sound soft beside that. I accept the first half. Law and regulation carry the consequences. Wisdom concerns the earlier moment, while the system is still being designed and the people inside it are still deciding what to notice. The paper is also careful about the pressures leaders face, from “external shocks, policy changes, rapid changes in technology and markets” to the loss of key people. Pressure explains a great deal. It excuses very little.

A chess coach offers boards a sharper rule

The paper pairs the inquiry with a film. Life of a King follows Eugene Brown, who learned chess during seventeen years in prison and went on to coach young people in Washington DC. Working as a school janitor, he is asked to supervise a detention class. He takes a black wooden king from his pocket and tells the students, “This is a king. This is your life. One mistake and it can be taken away.” In the sessions that follow he explains how every piece moves, and he keeps returning to one point. Every piece is on the board to protect the king.

The rule is simple enough for a teenager in detention and demanding enough for a board. Organisations are arranged the same way. Incentives, reporting lines, risk appetite statements and meeting agendas are pieces on the board, and each of them protects something. The question for directors is whether the king those pieces protect is the one written into the values statement.

We drew three rules from the film, “always protect the king, think before you act, and keep your eye on the endgame”, and observed that they “were understandable rules and they created the core of a framework that transformed young people’s lives.” Boards need rules of the same size, short enough to remember in the room and serious enough to change what happens there.

Wisdom is a practice that boards can build

Many of us hear the word wisdom and think of temperament, something a person has or lacks, usually arriving with grey hair. The research is less comfortable. As we noted, “wisdom research shows weak correlation between wisdom and age or wisdom and direct experience.” What matters “is how one reflects on and reframes one’s own and others’ experiences”. A board with long experience still has to do the reflecting.

We described wisdom as “the fit of a solution to a context”, with reflection as the “foundational activity” that produces that fit. The Compass Coaching Model in the paper sets out seven steps for developing it, from commitment and orientation to the greater good through mindfulness, perspective expansion, action, sensitivity to outcomes and strategies to stay on track. Its final step asks each leader to work out “what their version of ‘always protect the King’ is.”

The Right King Test gives directors four moves

For boards, I have compressed this into four moves. I call it the Right King Test. It draws on the film’s three rules and on the Compass Coaching Model, and it can be run in a board meeting, a committee or a quiet hour with the board pack.

The first move does the diagnostic work. Values statements describe the king an organisation intends to protect. Incentives and exceptions reveal the one it actually protects, and the gap between them is where destructive leadership grows. The third move supplies the moral test, and the paper states it without qualification. “Nothing is wise if it is not ethical and aimed at the greater good.”

The right move has to be made under pressure

Knowing the right move is the easier half. The paper argues that wisdom has to become embodied, and it describes an embodied practice as one you “will have a strong tendency to do, even under the pressure of uncertainty.” Then comes the line I would put in front of every board. “Thus, under the pressure of competing in chess, or leading in chaos, you not only think the right thoughts, but you have what it takes to actually make the right moves.”

The right thought is often somewhere in the boardroom. The test comes in the minute when it meets a confident presentation, a deadline and a table that wants to move on. That minute is where the fourth move lives, and it is why the moves have to be practised in ordinary meetings before they are needed in extraordinary ones.

I will be candid about the limits. A reflective practice will not redesign a remuneration framework, and coaching is no substitute for regulation. My wager is modest. A board that runs the Right King Test once a quarter, and records what it finds, will see its own king sooner and will have rehearsed the move before the pressure arrives.

Start with the first move. Take your most recent board pack and read it as a stranger would, looking only at what it rewards, measures and forgives. Which king is it protecting?

Reference

King, E., Norbury, K., & Rooney, D. (2022). Coaching for leadership wisdom. Organizational Dynamics, 51(2), Article 100815. https://doi.org/10.1016/j.orgdyn.2020.100815

Film discussed: Life of a King (Goldberger, 2013).