United States President Harry Truman had a sign on his desk that read 'The buck stops here.' He's quoted as saying, “It's easy for the Monday morning quarterback to say what the coach should have done, after the game is over. But when the decision is up before you — the decision has to be made.”
Leadership and culture are determinants of value. The board is ultimately responsible for value creation and it's part of the board's role to 'set the tone from the top'. Like the President, the board has nobody else to pass the buck to. Leadership overarches all of the roles of the board and is one of the fundamentals of asset management, as defined in the ISO 55001 international standards for asset management.
The aim of asset management is to create value for stakeholders through the organisation's assets. While technical systems and processes may be in place, without effective leadership, value creation will be limited. Stakeholder expectations will drive many aspects of asset management decision making. Working with and through the CEO, the board has a crucial leadership role in engaging with relevant internal and external stakeholders, setting expectations and monitoring and reviewing performance.
Important questions for the board to ask with respect to its leadership role in asset management:
This is the first in a series of articles on the board's role in asset management.
Stay tuned next week for the board's strategy role.