The Dictionary of the Royal Academy of the Spanish Language defines the word myth in one of its meanings as “person or thing to which attributes or excellences that it does not have.” And this word came to mind about the idea that is currently going to be the affiliates of the AFPs who decide the people who will represent the pension funds as Directors in the Directories of those societies in which they are shareholders.
Some have criticized the idea by arguing that for the establishment of good governance in these societies the key would be in the process of selecting good governance. Without demeaning how important it is for the good quality of corporate governments to have highly competent people in their Directorates, this is a necessary but clearly not sufficient condition. This opens the door for us to knock down a couple of myths.
Myth # 1: Having “stars” in a Directory, ensures its proper functioning.
In our country seems to be very installed the idea that it is enough to have “stars” in the Directory of a company for it to work well. This belief ignores, among other things, its nature as a collective body, the joint responsibility of each one of its members, representing all shareholders, who are subject to reserve duties and whose decisions must be inspired by the Seeking the best interest of the company. In a recent study published by French scientists in the journal Psychological Science, they explain why football, basketball and other team sports with a high number of stars in their stencils tend to fail. The research indicates that the mediocre results that can throw these sets is due to that the great players tend to coordinate their actions badly in equipment. That is, they prefer the protagonism of their own actions and that individualism is a disaster for the rest.
This in any case means to say that all stars are egocentric and less that they do not work inside a team, but what is important is performance as a collective. And that depends on how effectively they can coordinate themselves, how much they devote themselves to their role, the guidance and direction of those who lead them and a set of other factors, including, of course, regular evaluation or scrutiny.
Myth # 2: If it is certified it is good and if it is fiscalized better.
In Chile the value of the certifications is very oversized, as well as belonging to the category of entities supervised by some state agency. Recent events involving corporate crime prevention models puts the importance of substance above forms on the table. Its value is given not by the certificate but by a set of circumstances that make it possible to describe it as a real, integral and suitable model and not a paper manual that few or almost nobody knows and less apply.
The same must be said of the alleged benefits attributed to the audited entities and in addition to the audit. It is even often assumed, very mistakenly, that the single inscription in a register causes that the registered ones are under the magnifying glass of the inspector. That is not like that.
It is true that the audited entities have been legally bound by certain restrictions on their activities and that being exposed to administrative and criminal sanctions is a good deterrent to misconduct. However, it should not be forgotten that the inspector’s resources are limited so they will always be assigned according to some priority. What is certain is that the audit implies that there is more information available from those audited so that those who do business with them can make their decisions with adequate information. Therefore, let us not forget that decisions are always made by us, not by the supervisory body.
Juan Pablo Bórquez Y.
Partner Director BY Advisors