Changes to governance and compliance requirements over the past decade have placed greater demands on boards. One of the consequences of those changes is that the role of the Company Secretary is evolving from an administrative/compliance function to embrace a broader leadership and strategic role, and to play a crucial part in linking the board and management.

Company Secretaries are becoming more involved in developing the board’s process, to enable the board to be more effective.

This evolution can be challenging and exciting, and requires Company Secretaries to develop an expanded skill set and a different way of thinking, influencing and communicating.

A study by Chartered Secretaries Australia in 2004 identified the top 5 responsibilities of Company Secretaries as:

• managing the board of directors
• handling continuous disclosure responsibilities
• managing board committees
• ensuring compliance with governance standards
• dealing with AGMs.

One of the key skills that highly effective Company Secretaries must possess, or develop, in order to carry out those roles, is the skill of asking the right questions.

Little training available for questioning skills in business: Incredibly, as important as it is to be able to ask questions in business, business schools do not teach the skill of knowing when to ask a question and which question to ask.

Although the legal profession is well represented among Company Secretaries, legal education generally does not include questioning skills, especially the skill of asking questions on non-technical issues, which form by far the majority of issues both in and out of legal practice.

Most ‘at risk’ business communication deals with subjective reality: The majority of written and verbal communications in business relates to facts, strategy, solutions, beliefs, opinions, assumptions, perceptions and interpretations. Many ‘facts’ are, in reality, beliefs, assumptions, opinions and interpretations wrapped in language that is designed to appear factual, but which is actually a representation of personal, subjective reality that often bears little resemblance to the truth.

Unfortunately, many decisions at all levels of management are based on that type of ‘fact’, and result in financial loss for the company, job losses for employees and loss of share value, especially when those decisions are made at executive and board levels.

Many, if not most, of those losses could be avoided, if the right questions are asked.

One-Tel and NAB are two recent Australian examples where the right questions might have made a significant difference. One-Tel disappeared; and NAB lost $360m, its principal executives and most of its board members as a result of its currency trading debacle. And, of course, HIH developed a culture (reflecting the leadership style) that strongly discouraged questioning what was done at the top, and finally imploded, impacting many thousands of families and businesses and almost bringing the residential building industry to its knees.

Questioning skills are time- and cost-effective, and high ROI: The pity of all this is that it is so easy to ask the right questions. They only take a few seconds to ask and can save a great deal of money, time and effort.

Why aren’t the right questions asked more often? Generally, questions are not asked because the opportunity and need for a question is not recognised. There are a dozen or so  patterns of language commonly used in business that demand questions. I can guarantee that those patterns, and the risks associated with not challenging them, are present at every board, executive and management meeting. The fact is that most business leaders are only vaguely aware (if at all) of those patterns, and how to challenge them. However, the most highly effective business leaders are very aware of those patterns, and know the questions that challenge or counter those patterns.

Test yourself: Consider the following example:

“At the time of writing, [global] trading operations continue to manage risk responsibly in changing market conditions. Adherence to risk discipline is good.”

On first reading, would you ask any questions? Or would you pass on to the next item on the agenda?

Look at the quote again. They are the sentences written in a report* to the NAB’s Risk Management Executive Committee in November 2003, not long before the NAB discovered that it’s trading desk had lost  $360 million – roughly 10% of the Bank’s annual profit.

There are at least 8 elements of those two sentences that, individually (and in combination), might be of interest to a Director or Executive – patterns of language that can very easily and subtly slide your mind away from the key issues that, as a caretaker of the company’s assets and brand/business, you must be vigilant in considering. Patterns that set alarm bells ringing.

Did you spot the eight?

One shot at asking a question: It is critical to be able to identify, at normal speech speed and in the midst of a lengthy conversation, the language cues that flag potential problems. If you have to pause and think about what the 8 elements are, you’ll stand little chance during a normal conversation or whilst scanning documents.

Have you spotted the 8 yet? If so, (or even if not), what now? Having identified the 8 elements, how, specifically, will you tackle the language and deal with the issues raised by those 8 items. Which of the items will you tackle? How will you do that in a few seconds, and effectively? Which will you tackle first, second or third so that the potential problem is identified and a risk strategy implemented to prevent the problems causing damage? How do you do that in a way that works best?

The value of an effective Company Secretary: Company Secretaries are ideally placed to ask the right questions and positively impact the success of the board, executive team and business. These days, they often have access to the board/chairman,  the executive team, to meeting agendas and decision-making processes in a way that was not possible a couple of decades ago.

One Company Secretary, whom I’ve known for some years, takes the view that his duties include asking the questions that will assist the board  and executive team to be properly informed, so that they can make informed decisions. He considers that to be necessary to enable the board to comply with their legal duties, and also to ensure that the business is as effective and competitive as possible.

He works both behind the scenes and in meetings to effect that outcome, quietly and unobtrusively. For instance, if he spots a possible flaw, ambiguity or omission in board papers submitted for an agenda item, he may contact the author and ask questions that enable the defect to be corrected prior to a formal meeting; or chat with the Chairman and highlight the issue if the Chairman has not spotted it.  He doesn’t play politics, is objective, even-handed and respectfully assertive. As a result, he has the respect of the company’s leaders and has been instrumental in saving the company many millions of dollars, as well as making the board and executives’ jobs easier.

There is a simple art to asking the right questions that make a real difference, every day, in every business. It is an art that has such impressive and immediate benefits that I call them Powerful Questions that Every Director, Executive and Manager Must Ask.

Published in Director Magazine (Australian Institute of Company Directors)April 2005. Copyright 2005 Spandah Pty Ltd.

Asking the right question can save millions of dollars for companies.

If there is one factor that most recent corporate failures in Australia and overseas have in common, it is the failure of Directors and Executives to ask the right questions. Invariably, that failure is a reflection of an entrenched culture (e.g. HIH) that discourages challenging, questioning, probing for facts and seeking better strategies. That culture often starts (implicitly or explicitly) at the top – at Board and Executive levels.

The cost of not asking questions After the NAB’s $360 million currency trading losses in 2003, the NAB’s Chairman, Graham Kraehe, said afterwards :

“I think probably the primary thing [I learned from the recent events] is to not necessarily accept the information that is presented to you, be far more aggressive in questioning it.”

HIH lost its entire business – leaving $5 billion in debt – because questions were not asked. NAB lost around 10% of its profits. All up, over $5 billion between just two companies.

How much value is lost in other companies by not asking some simple questions – questions that

• challenge assertions and assumptions, 
• probe the facts, 
• cut through the ‘spin’, 
• clarify hidden meaning and purpose, 
• identify the weakness in a process, proposal or strategy.

From my experience working in Australia and overseas with small, medium and large businesses I have no doubt that the answer is: a lot – and it’s all unnecessarily lost profit.

The skills of hearing and asking

None of those questions needs to be delivered aggressively. In fact, they are generally far more effective when delivered conversationally, without aggression and with a constructive purpose. The skill of asking the right questions is an essential skill for Directors and Executives and is linked to the skill of hearing/noticing what is said and what is not said.

It is the latter – what is omitted – that creates many, many problems in business. Omissions can take various forms, including assumptions (data not available or not verified), generalisations (global descriptions that fail to define what is meant), partial descriptions and specifics (which avoid an alternative).

The skill of hearing/noticing what is missing is a skill of awareness that can be learned quite easily. Unfortunately it is not taught in business school.

Language and awareness

One of the elements of learning that skill is to recognize the patterns of language and conversation that expand, contract, direct and focus your awareness and thoughts, and then to learn the questions that reverse those functions.

There are some patterns of language that are typically used to influence and persuade – language that will slide your awareness and attention towards what the speaker (or writer) wants you to think, and away from what the speaker wants to avoid. These patterns are the tools of trade of skilled influencers – the honest, the dishonest and the accidental – as well as those who avoid accountability.

If you understand those patterns, and the impact they have on your awareness and thoughts, it is far easier to spot the issues and phrase a question that elicits useful information. However, you must be able to spot the patterns at the speed of normal conversation, because you rarely get a second chance.

There’s hardly a Board or Executive meeting where those patterns are not used, knowingly or unwittingly.

The function of communication and questions

Communication has a simple function – person A generally wants to communicate an idea to person B and influence B to think or respond in a particular way and/or to take a particular action. ‘Action’ here includes ‘to do nothing’.

To achieve that, the speaker/writer must use language that activates one or other of a number of processes within our consciousness that determine how we process information and create reality inside our minds. Even if A has no intention to influence a B to do X, if B understands the language to mean ‘Do X’ then the language will have that effect.

We must choose our language with care. We must also listen to language with care and be aware of its impact on us. Take for instance, the following example:

“At the time of writing, GMD [Global Markets Division] trading operations continue to manage risk responsibly in changing market conditions. Adherence to risk discipline is good.”

If you had read that in a report from the currency trading room during a Board meeting, chances are that you would think “Good job” and go to the next item on the agenda. An expensive decision. The quote is extracted from the APRA report into the irregular currency options trading at the NAB. It was part of a report to the NAB’s Risk Management Executive Committee in November 2003.

Have a look at that quote again, and consider which questions you might ask to prevent problems arising when faced with similar language. Two things stand out that signal potential problems:

1] The language is largely global. Global language expands awareness to encompass many possibilities without being specific. Sounds great, means little. Everyone believes that they understand what is meant, but when asked they all give different meanings. Like flying over a territory and not being able to see the details. For the NAB, the problems were in the details of how things were being done. You don’t need technical expertise to tackle this type of language. If the language generates global awareness, simply direct and contract awareness by asking for specifics: “What do you mean by ‘trading operations’?” “What do you mean by ‘manage risk responsibly’?” “What risk, specifically?” “What do you mean by ‘changing market conditions’?” “To which risk disciplines are you referring?” With the verbs (process/action words) you could ask: “How are you managing the risk?” “How are market conditions changing?” Then, from all the (global) possibilities, the mind is focused on what the language means in practical terms.

2] The word ‘good’. When you are dealing with hundreds of millions of dollars of exposure, ‘good’ raises potential deficiencies in the adherence to risk disciplines. The word ‘good’ is more contracted or limited than ‘excellent’. There is a gap that is unexplained between ‘full adherence’ and partial, ‘good adherence’ – ‘good’ is a comparative word: “If adherence is ‘good’, compared to what? Prior adherence or the required standards?” “Where is it falling short of required standards if it is only ‘good’?”

Those questions alone would probably have led to a review of the NAB’s procedures, and they only take a few minutes to ask. But if that is not enough, there is more. The next phrase that deserves attention is “At the time of writing..”. That phrase contracts or limits timeframe and directs and focuses the reader in some narrow band of time at which the words were written.

You can quite simply re-direct the mind and step outside of the limiting time frame by asking the questions: “What about in the months prior to the report?” “What is the position since the report was written?”

Apart from being full of global language, the two sentences have another element that directs and focuses awareness towards managing risk and adherence to risk discipline. Sounds like the trading room has everything under control. But in directing awareness to the ‘management’ of risk in positive terms, they can cause the mind to by-pass the essential issue of what exposure the bank had. To re-direct the mind back to that issue, ask: “What is our exposure.”

These are some simple questions that can save companies many dollars and generate better results by getting to the facts and identifying processes and strategies that may require attention.

Having done that, what do you do next?

The other side of the coin is that questions are an excellent, fast and very effective way to facilitate solutions, commitment and accountability. There are around 22 questions that will turn virtually any business problem into a solution and strategy with full commitment and ownership. But that is another story for another time.

A prominent neuroscientist was asked, “What do emotions have to do with learning?” His reply. “If you want to learn a foreign language quickly, fall in love with someone who only speaks that language.”

There’s no doubt that generating and tapping positive energy is one of the great challenges for business. But what about the other side of emotions – what may be termed ‘destructive’ emotions?

A couple of years ago the news media reported a punchup in the executive suite of a large Australian organisation. Tensions were high in the organisation, and not just at the higher echelons. At around that time I was asked to facilitate a solution to a conflict at operational level in an organisation, in which the senior manager in one division had been told that he would be knifed if he attended a Christmas party. That conflict was estimated to be costing the organisation $500,000 per year in lost productivity.

Most of us have seen, or felt, the destructive effects of sustained anger and resentment in businesses, at Board and Executive levels, as well as in personal life. An article by Deb Richards in the weekend Australian Financial Review in 2005 focused on anger in the workplace, and what it costs business in hard earned money.

Paul McCarthy, at Griffith Business School in Australia, estimated an average cost of $20,000 per employee per annum. That amount is calculated on the impact on productivity, absenteeism, personnel turnover, management time and the cost of implementing various HR and grievance procedures to deal with the issues created by the anger.

I think of anger and passion as two sides to the coin of creative energy. The difference lies in how we frame and direct the energy – in other words, our choices.

Anger in the workplace is often blocked or frustrated passion. The passion drives a sense of purpose, accomplishment, freedom to fully express and be the best a person can be. Empowering corporate cultures create and direct that passion and the energy that goes with it.

Tapping into that power is one of the main keys to productivity and profits. If the passion is blocked, frustration, anger and resentment soon follow, and productivity will decline along with profits.

When working on corporate culture change projects, it is easy to observe just how prevalent negative emotions can be in many businesses, and the crucifying effect on productivity. In one particular company, the managers were sending their most difficult people to our change workshops to get ‘fixed’. They considered those people to be troublemakers. However, what we found in the workshops was a little different – that most of those ‘troublemakers’ wanted to do their best for the company, but were stifled by bureacracy and a controlling management style, and expressed years of frustration in their anger. They didn’t need to be ‘fixed’. They needed tools to enable them to unblock the pipes and to direct their energy to more productive outcomes.

Once we realised that by simply providing some simple skills the negative energy could be switched 180 degrees to a positive energy with a substantial immediate impact on the organisation, we actually began to ask for ‘troublemakers’ to be sent to the workshops. Within 6 months their managers were asking to be taught the same skills.

That was how Spandah’s flagship program the MasterProcess was born. I liken the MasterProcess to the martial art of Aikido – in which the attacker’s energy is turned around to neutralise the attack with very little effort. Except in the case of the MasterProcess, the energy is then immediately directed towards a productive outcome and the art is in asking questions that change the way people think, choose and behave.

If there is negativity in the workplace, there is usually a simultaneous opportunity to improve the business, productivity and profit. Karen Weedon, a Brisbane based organisational psychologist, has researched the issue of anger in the workplace, and found that the worker starts to withdraw his or her loyalty to the company in the early stages of anger. If the situation is not dealt with in time, the worker will leave.

Weedon points out that the worker’s relationship with the boss is important in limiting the losses that arise from anger in the workplace. If they thought that the boss was a good person, they stayed loyal, despite the anger.

However, that’s no way to live. The issues simply need to be dealt with by a process that creates solutions to the core problem. Last year one of the MasterProcess participants sent me an email after their workshop, and said that, prior to the workshop, she was intending to leave her company, as she had perceived the problems that she faced there as being insurmountable and had become angry and disillusioned. During the workshop she was able to see the light, worked out a number of opportunities and strategies for changing her situation at work, and decided to take up the challenge to create a sustainable work environment.

Instead of losing a very capable person, the company now has an advocate, and has retained her energy and expertise to deal with issues that had been undermining the morale of many of her colleagues. That resolution will be worth at least $100,000 to the company just in the local work area by retaining that person’s experience and knowledge, and avoiding the costs of finding and training a replacement. Across the company, the value of the solution (which extended beyond the local area) is worth a lot more.

As an end note, I have a friend who regularly buys into, and turns around, ailing companies. Among other criteria, he looks for companies that have a couple of executives who are at each other’s throats and are limiting the potential of the company, or where the company’s leaders have created a stifling culture (there’s often a lot of ego tied up with both elements). One of my friend’s first tasks is to offer the relevant executives the opportunity to work out their differences, or (if they can’t) to receive a golden handshake. Once the warring executives have resolved their differences or (more often) received a golden handshake, he is able to shift the company to an empowering culture and return to profits within 12 months (and a few $million increased personal wealth). Nice work if you can get it.

By Christo Norden-Powers          Copyright 2006 Spandah Pty Ltd

Incorrect assumptions are one of the major causes of problems in organisations. Even if the assumptions are challenged, the challenger rarely probes deeply enough. So, how do you challenge assumptions effectively? 

Assumptions are sometimes necessary to carrying on business. We may need to make assumptions in some circumstances where certain facts are not available and cannot be readily obtained – for instance where the company is entering innovative new territory and there are simply no clear facts available.

However, assumptions are all too often made in circumstances where a few simple questions would identify the facts, or would identify a risk that is otherwise hidden to those not directly involved in the operations. Such appears to have been the case with National Australia Bank (NAB) in 2003 when the top echelons of the bank assumed that the bank’s currency trading was being conducted within appropriate risk parameters.

From my experience working with companies around the world, I can say with certainty that it is common that critical procedures are not followed in organisations. The assumption is usually made that procedures are being followed, even to the point where obvious non-compliance is not noticed. It seems that the mind often deletes information that is inconsistent with one’s beliefs and expectations.

For example, some years ago I was investigating the assembly of a medical device on behalf of a company that distributed the device globally. One of the company’s clients had alleged that the device had nearly killed a new born child. The issue was whether a micron filter fitted into the device was defective. All the executives, managers and staff swore that the company’s quality procedures were adhered to – even the person who inserted the filter in the device – and produced all the necessary testimonies and documents (with boxes ticked) to prove it – until I asked for a specific demonstration of how the filter was inserted. It then became apparent that short cuts were being taken which damaged the filter, placing patients at risk.

The interesting thing was that the person who performed the demonstration had not consciously recognised that he had not been following proper procedures.

A lot of people had made assumptions in that company. Some Executives asked “Are we following QA procedures?”. The answer was ‘Yes”. No one asked the critical next level of questions: “How do we know” or even better “Show me.”

Most enquirers stop asking when they hear “Yes”. They are often concerned that asking the follow-on questions will suggest that they don’t trust the person who is answering. If the issue is important, you must ask for the next level of evidence. In most cases, that one extra question will identify the real position. Don’t assume that the person who states that the critical procedures are being followed actually knows that to be the case from their observation. They have more often than not been told the ‘facts’ by someone else and are merely repeating what they have heard. Bring higher accountability to the table. Ask “How do you know?” and if possible “Show me”.

For instance, if the answer to “Are we working within our risk management guidelines?” is “Yes”, then ask “Show me the risk position that we currently hold”.

If the answer to the question “Can we afford this?” is “Yes”, ask “Show me the current cash position” or “Show me the debt maturity schedule”.

Facts are what can be seen, heard, felt, smelt and tasted. Anything less is someone else’s interpretation or filtering of the actual facts.

In many cases, the right questions will identify an area for improvement to a strategy or a decision, or will expose a potentially serious and costly problem. There’s nothing to lose by asking the right questions in the right way, and everything to lose by not doing so.

 Asking the right questions saves companies millions of dollars, and they cost only a few seconds or minutes of time to ask.

When you next hear a factual statement on a critical issue that is not supported by sensory data (i.e. by what the person saw or heard or read that verifies the statement) ask the following:

• How do we/you know that to be the fact?
• What did you see/hear/read that tells you that?
• Show me the evidence.

Then, when you have the so-called ‘evidence’, ask the same questions about how the evidence was collected and compiled.

If there is a weakness in the data, those questions will soon point the way to what other data is required before you can make an informed decision or reduce risk.

By Christo Norden-Powers          Copyright 2006 Spandah Pty Ltd