The five fatal corporate governance mistakes

By Susan Oliver

Corporate governance is rather like hospitality staff: when it’s good, you barely notice it’s there, but when it fails it can completely ruin your night.

I’ve been a director on ASX boards for twenty years, and in that time I’ve seen five serious corporate governance mistakes that tend to be repeated over and over again.

The overarching principle of good corporate governance is that of robust discussions between people with diverse skill sets. It starts with who we put on the board, as that in turn dictates how the board runs.

These are the common mistakes I see in this realm:

  1. Selecting the norm
  2. Taking a narrow or tokenistic approach to diversity
  3. Overloading boards with finance people
  4. Selecting celebrities instead of team leaders
  5. Narrowly focused remuneration committees

Great corporate governance requires the board to take smart risks

For great corporate governance, the board must be willing to take smart risks. That means thinking outside the norm in who they appoint, daring to challenge the status quo within the board, and using greater diversity of approach in thinking strategically. When we play it too safe, our corporate governance suffers.

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