The Governor’s Year in Review (2017)

It’s that time of year where we reflect, plan and prepare in anticipation of what we will achieve in business and personally over the next 12 months.

Like many years before it, 2017 has given us a number of memorable lessons, charting the way for new practices to be further embedded in governance which is the fabric of any good organisation. Take for example the on going issues for Sports Direct, the so called purge of corruption amongst officials in Saudi, Uber, Harvey Weinstein being fired by the Board of his own company, further MP scandals and breaches of the code of conduct including Priti Patel and the furor regarding the pay of university chancellors just to name a few. What all of these issues have taught us is that, as I say at the governance forum: “governance is more than compliance.” It is not enough to just have a code or the right practices in place – action in accordance with and behaviour in alignment with these codes and practices are the tenets on which good governance is built.

 

Below, I have taken the time to remind you of some of these principles that I have shared with you during 2017 as a refresher and in a bid to help you review your own systems and processes and assess how these will be acted upon in 2018 and beyond.

 

January

Preparing for your Non-Executive Director Interview

  • Research the organisation and rehearse your answers thoroughly;
  • Respect the time of the interview panel and only prepare what you have been asked to deliver;
  • Demonstrate that you have the relevant knowledge, experience and skills;
  • Show that you understand the culture of the organisation and its board.

 

February

How and Why Boards Need to Adopt Black Box Thinking

  • Leaders and boards have to recognise that they are capable of making bad decisions;
  • Dr John Carver said: “Boards are an incompetent group of competent individuals.” His inference is that just because members of a board are competent, high performing and experienced individuals it doesn’t follow that the board as a single entity will excel;
  • Boards need to adopt a state of mind that accepts that something’s going to go wrong – but they don’t yet know what, when or how;
  • Complacency is the enemy of boards. In fact, it is the enemy of governance;
  • There has to be transparency involved in using an integrated reporting approach.

 

March

How the 6Cs can Help you Become an Effective Board Member

  • Competence: Board members need core skills in finance, the law, governance, general commercial understanding and human resources.
  • Commitment: You can be competent but if you don’t read your board papers or understand what the organisation does, how will you challenge and scrutinise the business or organisation and its activities?
  • Contribution: You can only be effective if you are adding value to the organisation, project or initiative that you are working on.
  • Comprehension: In order to contribute and lead effectively, you must understand the culture, history and the objectives of the organisation you serve and be able to communicate all those elements effectively to all stakeholders.
  • Capability: There are many ‘soft’ skills that an effective board member should have in addition to their core skills in finance, technology, HR etc. Key skills include the ability to influence and negotiate, to communicate, to analyse and to think strategically.
  • Code: The seven Nolan Principles identify a code of behaviour that is essential to being an effective board member.

 

April

The Duties of a Director

  • The seven codified duties of a director:
  • S 171 to act within their powers: The first director’s duty, under section 171, is to follow the company’s constitution and abide by the terms of the company’s memorandum and articles of association.
  • S 172 to promote the success of the company: Under section 172 directors must ‘promote the success of the company’.
  • S 173 to exercise independent judgment: There is a duty under section 173 to exercise independent judgment.
  • S 174 to exercise reasonable care, skill and diligence:  The duty of care in section 174 applies to the decision-making process of a director having regard to the factors listed in section 172.
  • S 175 to avoid conflicts of interest:  Section 175 specifies that directors must avoid situations where they could have a direct or indirect business or financial interest that conflicts, or could conflict, with the interests of the company.
  • S 176 not to accept benefits from third parties: The purpose of the section 175 ‘no conflict’ rule is to ensure that directors carry out their roles as if it was their own interest at stake.
  • S 177 to declare interest in proposed transaction or arrangement: Under section 177, when directors are on both sides of a proposed contract, for example where a person owns a business selling products to the company of which he is a director, it is a default requirement that they disclose the interest to the board, so that disinterested directors may approve the deal.

 

May

How to Apply Wisdom in the Boardroom

  • Diversity is a key component of a balanced boardroom;
  • Independence is a crucial trait of any non-executive director and helps the organisation to remain strategic and fulfill its duties to promote the long-term success of the company they govern;
  • American Journalist James Surowiecki, surmises that decisions made in groups are better than those made by individuals.

 

June

Developing Griffin Style Leadership for High-Performing Boards

  • Board effectiveness requires leadership and high standards of behaviour and depends on the inter-workings of board resources, board competency and board execution;
  • Strategic planning helps organisations to look ahead and always ensure that activity that the board is undertaking is in line with these objectives;
  • Manage – The role of the chair is crucial in managing board behaviour;
  • Measure – External board and committee observations provide the board and the organisation with an independent view of how the board is performing;
  • Monitor – The appraisal process is important when monitoring board behaviour;
  • Take the time to review the behaviour on your board, implement the necessary training and development and introduce the relevant processes to ensure you are operating effectively.

 

July

Effective Board Members Leading Organisations to New Heights of Success

  • A well-governed business in the private sector enjoys financial success and growth in a sustainable and ethical way. In the public and voluntary sectors, the governance and leadership of organisations can literally mean the difference between life and death;
  • An effective board member is someone who is informed, knowledgeable, willing and able to apply the principles of good governance and effective boardroom behaviour;
  • Effectiveness is a discipline that everyone can learn, but it requires a particular perspective;
  • An effective board member puts all their knowledge and skills into practice and remains committed to making a positive contribution to society and business. They use the boardroom as their way to make a difference.

August

Positive Change for Our Boardrooms Forever

 

September

Corporate Reforms and Board Behaviour

  • The building of trust through good governance and transparent reporting is fundamental to the success of individual businesses and to a healthy economy;
  • Tackling any type of governance challenge will require robust and rigorous compliance regimes;
  • The process of improvement, transformation and better practice can only come from a change in the range and mix of characters around the boardroom table;
  • If we want businesses to make different decisions then we have to be able to influence the ways boards think and how they behave by addressing dysfunctional board behaviour.

 

October

How to Appraise the Chair

  • The senior independent director (or vice chair) is normally responsible for appraising the chair. The three stages are:
  • Stage one consists of an in-camera session (the chair is not present);
  • To compliment the information identified in the in camera session and get feedback, a detailed survey is sent to all board members (stage two);
  • Building on the information from the in camera session and the comprehensive survey to take note of the comments which have been gleaned from discussions with the chair and each NED (stage three);
  • Once the process has been completed, the individual carrying out the appraisal will meet with the chair to provide a summary of the feedback from the three stages outlined.

 

November

Power and Influence in the Boardroom

  • Making an impact is even more important when you are representative of a minority group in the boardroom (i.e. a woman on an all male board, a tenant board member on a housing board or a young person on the board of charity where members have not been refreshed for a number of years);
  • It is the board’s collective contribution that is the key ingredient in operating as an effective board. Influence here is key;
  • Confidence – Building your knowledge and credibility in a particular area will give you confidence and allow others to be confident in you;
  • Articulation – When delivering your point, you must speak clearly and concisely;
  • Experience – Always remember to use your experience to triangulate information from different sources;
  • Relationship – Your influence will improve if you build rapport with your fellow board members;
  • Get Attention – Get others to take notice of what you are saying by using facts, case studies and definitions;
  • Integrity – Demonstrating that you have integrity will help your influence. Be authentic, be open and be transparent;
  • You are likely sitting on that board because you have the right level of competency and skill to execute your duties with dove like precision but you must not leave those skills and abilities at the door.

 

 

So there you have it. A quick summary of my 2017 blogs which will hopefully help you to plan and implement effective governance in 2018 and beyond.

 

 

Until next time…