Why boards get misled by good intentions, not dishonesty
Summary
In this comment piece for CEO Monthly, James argues that when a board is misled, good intentions are more often the cause than dishonesty. Optimism, loyalty to a project and personal investment in a strategy can all skew what a report says or leaves out. Its writer is often accountable for the numbers in it, and nobody has to lie for that to mislead.
A problem raised by an employee can soften at each layer of management, until it reaches the board as a situation under control. Reports may also count what is easy to measure, such as how many staff attended training, rather than whether performance improved. To make an accurate picture more likely, a board can ask for evidence of benefits as well as progress. It can also hear from staff and customers as well as leaders.
Three key points
- When a board is misled, good intentions such as optimism and loyalty are more often the cause than dishonesty.
- A problem can soften at each layer of management until the board hears it as a situation under control.
- Of every report, a board can ask what evidence contradicts it and whether it measures outcomes as well as activities.
Read the full article
The summary above draws on a longer article. CEO Monthly publishes it in full, including four questions a board can ask of every report it receives.
Insights
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Explore your own question further
In a particular organisation, the detail can change how these points apply. James is happy to hear from anyone weighing them up for their own board, audit function or deal. This page summarises an article published elsewhere, and is not advice on any particular situation.