The written rules of engagement

Abstract

It is one thing to accept that boards are political arenas and quite another to understand the kind of political arena, and the contexts in which it operates, that you will enter when you’re appointed to a board. Company politics may not be governed or regulated in the same way as national politics, but the role of the director is defined by and subject to a complex framework of laws, regulations and codes of practice. Managers who aspire to be directors must realize that this means there is a huge difference between being a manager and being a director. They must study and understand that difference. If company politics is informal, in the sense that it operates without written rules, corporate governance — in the form of laws, regulations and codes of practice — is its formal counterpart.

Good corporate governance has a ring of abstract formality, but it has the potential to add real business value and reduce business risk. It’s about ensuring clarity and accountability in key roles.

Paul Skinner, chairman, Rio Tinto plc