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Lean’s contribution to corporate governance reform

corporate governance

December 2, 2016

The publication this week of the Government’s Green Paper on Corporate Governance Reform once again puts businesses and the way they are run at the top of the media agenda. As the Opposition spokesperson commented in the House of Commons in response to Secretary of State Greg Clark’s speech, much of the impetus for corporate governance reform comes from the scandal of BHS’s demise earlier this year.

One of the three core areas under consideration for reform is “whether there are measures that could increase the connection between boards of directors and other groups with an interest in corporate performance such as employees and small suppliers.” This, of course, is the watered down version of Theresa May’s original promise on the threshold of 10 Downing Street to put workers on company boards.

It will be interesting to see how the business community responds to the Corporate Governance Reform Green Paper and no doubt there will be much discussion in boardrooms and on the shop floor over the coming weeks. But from my perspective, I believe this debate highlights yet again the positive part that Lean can play in shaping good corporate governance.

One of the common characteristics of businesses with poor corporate governance is a lack of accountability and transparency. Smoke and mirrors, accounting trickery, buck passing and sometimes downright dishonesty are shamelessly deployed, whether as acts of arse-covering or to manipulate the share price. But where Lean lies at the heart of business operations, such obfuscations are nigh-on impossible.

Since Lean is based on data and the scrutiny of factual information, there are few places to hide. The structure of working in cross-functional teams rather than siloed departments encourages communication and collaboration between all layers of an organisation, largely preventing a ‘them and us’ mentality from developing.

That sense of difference and distance between bosses and workers is another fundamental problem in many businesses. Whether it’s a matter of a cavernous pay gap, a mutual misunderstanding of the other’s job role, an overwhelming sense of resentment or a total lack of communication between those at the top and the bottom of a business, this otherness can be a corporate canker. Again, by employing a Lean strategy it’s possible to avoid much of this antipathy as Lean naturally brings bosses and workers into contact.

With Lean, leaders learn from their colleagues and everyone is given a voice and the chance to make a difference. An inbuilt sense of partnership and shared ambition, as well as a belief in meritocracy rather than entitlement, improves both company performance and team morale alike.

Greg Clark concludes his foreword with an invitation to the business community: “We are determined to make Britain one of the best places in the world to work, to invest and to do business, and part of that means continuing to have a framework of corporate governance that is admired across the world. This review will help us achieve that aim and the views of businesses, investors, employees, consumers and others with an interest in successful business are warmly welcomed.”

I would urge everyone to read the Green Paper and, since we are being given the chance to raise our voice on this issue, to respond. It remains to be seen how closely those in Government will listen to the views of the proletariat but let’s hope they take their own advice.

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