Purpose, values & high performance – Cricket Australia review findings

Corporate governance in Australia is a growing piece of the business landscape, with more emphasis being placed on how business leaders and boards need to think and behave – particularly from the lending and investment communities.

The emerging importance of corporate governance and leadership

The recent findings of the Cricket Australia (CA) review into the ball tampering fiasco serve as a timely reminder around the emerging importance and prominence of corporate governance and leadership at senior levels of all organisations in Australia. They say sport is a business and this report serves to highlight this more than ever.

Interestingly, there are some significant parallels that can be drawn between some of the CA review findings and the proposed fourth edition of the Principles and Recommendations put out by the ASX Corporate Governance Council earlier this year.  A couple of the more obvious include:

• Board and management are expected to instil a culture across the entity of acting lawfully, ethically and in a socially responsible manner i.e. be “good corporate citizens”.
• Board is expected to define the entity’s “core values”, which must include providing positive outcomes for a variety of stakeholders, including employees, customers, local communities and shareholders.

It’s hard to imagine anyone who thinks that CA has covered themselves in glory in relation to instilling a culture that drives lawful, ethical and socially responsible behaviour – either at a board or management level.  None from one….

Boards are responsible for core values and accountable to stakeholders

Further to this, the report states that the broad consensus among stakeholders is that CA “does not consistently ‘live’ its values and principles”.  This implies CA is perceived to say one thing and do another, and the most common description of CA is one of being ‘arrogant’ and ‘controlling’.

In terms of core values, the ASX Corporate Governance guidelines discuss the notion that the board is ultimately responsible for defining the core values of the entity and that these core values should provide a positive outcome for all stakeholders. It would seem CA has failed to delineate and embed these values sufficiently such that they are lived and drive the correct behaviours from both the CA employees and players.  On the face of it, none from two…..

As a result, the report essentially calls for the heads of the game at CA to fall on their swords and be held accountable, just as they held the players to account in the wake of the cheating. The report further outlines that principled leadership and the acceptance of responsibility are essential in the wake of the scandal.  The establishment of a strong set of core values that are lived by both the organisation and the players are a key plank to delivering tangible results. However, as Jim Collins the leading author of “Good to Great” points out:

“It is not just the content of a company’s values that correlates with performance, but the strength of conviction with which it holds those values, whatever they might be.”

In this regard, you do have to question the timing and wisdom of the recent AGM and Chairman re-election held by CA – particularly given the previous involvement at CA leading into the scandal.  Had this been an ASX listed entity, a shareholder revolt (possibly led by activist shareholders) would not have been out of the question forcing a further discussion around the issue. This is something that is playing out right now with public pressure culminating in the resignation of the CA Chairman providing further fallout from this saga.

Boards can learn from the Cricket Australia review

The CA situation can be a good learning experience for boards if the outcomes are taken seriously.  If you are in a senior leadership position, or on the board of an emerging growth business and would like to understand more about “purpose and values” and how they can be established and embedded into organisations and used to help drive high performance, get in touch with us here at Checkside.