Reviewing a Year of Governance: Best Practice and Top Tips for Boards and NEDs

So, in this blog post I’m looking back at the subjects I’ve covered in 2016 which I hope will encourage you to reflect on your progress as well as helping you focus on steps that will help you to become a more effective governance practitioner. 

Chairing Meetings Effectively

In January I looked at the role of chairing board meetings. We have all experienced good and bad chairs and as part of The Effective Board Member (EBM) programmes that I run, participants feed back on their own experiences. They regularly say that good chairs have a thorough understanding of the organisation; they encourage participation in decision-making and can manage the dynamics of the board members. Good chairs manage time well and follow the agenda. As a result of all these positive attributes, everyone leaves the meeting with a shared understanding of identified actions and the ways to monitor performance are clear and transparent.

People are usually agreed that bad behaviour is typified by a disorganised, ‘dictator style’ chair whose meetings are unproductive and overrun their scheduled time. Meetings can become more of a social event than a place where business is conducted.

To be an effective chair it is important to maximise your leadership skills and cultivate a strong teamwork culture. You have to be dominant without dominating and authoritative without being  autocratic. You need to influence but not control.

 

Navigating your Way to a Board Appointment

 

Following on from this, I looked at ‘the good, the bad and the ugly’ of securing a board appointment.

The good news for people seeking board appointments is that things are slowly changing for the better. The closed networks that have controlled so many board appointments in the past are beginning to open. However, for now it is still the case that the ‘ugly’ of securing a board appointment is that if you don’t fit a particular profile, statistics say you won’t make it.

The ‘bad’ is that many board positions receive hundreds of applications from experienced, high calibre, competent people. To secure a position, you will have to invest time to demonstrate the qualities that you would bring to the organisation. Success is not guaranteed, but hard work – which includes thorough research and detailed preparation of your CV and application – will increase your chances of securing an appointment.

The ‘good’ is that many organisations are creating robust and professional recruitment campaigns that are increasingly objective and skills-focused. This attracts applicants from a diverse range of backgrounds. Businesses, charities and social enterprises are realising that more sophisticated recruitment procedures produce a balanced, high-performing board that gets things done.

 

The Role of a NED, Improving your CV and Preparing for an Interview

In the course of the year I produced four blogs aimed specifically at providing practical help and advice for would-be Non-Executive Directors (NEDs). These blogs looked at the role of effective NEDs; how to strengthen your CV and give a great interview for a NED appointment and finally top tips for NEDs.

The role of a NED is a challenging, demanding but ultimately rewarding role, which requires integrity and high ethical standards. Independent NEDs bring the essential element of wider experience and fresh perspective to boards.

I have an acronym to remind you of the role of a NED. Four of them were specifically identified in the Higgs Review and now feature in the UK Corporate Governance Code. I have added Ambassador and Evaluation resulting in the acronym SPARSE:

Strategic – Help contribute and develop proposals on strategy;

People – Determine appropriate levels of remuneration. Have a primary role in appointing and removing executive directors;

Ambassadorial – Maintain dialogue with stakeholders;

Risk – Ensure financial informational is accurate and financial control systems are robust and defensible;

Scrutiny – Review the performance of management;

Evaluation – Undertake formal and rigorous evaluation of own performance and that of the board and committees.

 

In addition, NED skills should include:

• Monitoring
• Questioning
• Interrogating
• Influencing
• Probing
• Listening
• Being Adaptive

The first step to securing a NED role is to do your research and decide on the type of appointment you want and the sector in which you want to work. Choose an organisation where you can bring about a positive change for the better and make a valued contribution. Make sure you can commit the time the role will require.

You then need to update your CV and produce a version that focuses on the relevant skills and experience that you possess. Include work examples that are tailored to suit the specific appointment for which you are applying. I also reminded you in these blogs of how to search for the type of appointments that you want.

 

Stepping into your First Board Appointment

I also looked at how to prepare for your new role once you have been appointed. This includes ensuring that you receive a full induction to your role and meet with executive members for each of the key organisation functions.

To prepare for your meetings you need to review the agenda and any papers circulated and prepare a ‘crib sheet’ of all key numbers and facts. Make notes of anything you don’t understand and remember that you can ask for explanations outside of board meetings.

During the meeting, ensure that your contributions and questions are clear and concise. There are no stupid questions – so if you are unsure of anything DO ask. Some board meetings are quite formal so be careful to observe board protocols such as speaking through the chair.

Conduct at the meetings is important and as a board member you should always display the Nolan Principles which are openness, objectivity, honesty, leadership, integrity, selflessness and accountability.

 

When you are on a Board…. The Core Assurance Framework

Once you are on a board, it will be a priority to ensure that failure doesn’t happen on your watch.

Board members help to set strategic direction and scrutinise management. Board members should ensure that their organisation is doing the right things, in the right way.

Assurance that all is well can be obtained by developing processes with what I call the CORE assurance framework – Compliance, Organisation, Risk and Effectiveness.

My work and research with more than 100 organisations and more than 500 EBM Programme participants around the world has helped to establish the key principles of The Governance Forum framework, which are:

1. Resources

2. Competency

3. Execution

 

Briefly, the resources element includes ensuring that every organisation has all the required, relevant, up-to-date documentation.

Competency can be described as the board’s ability to do what it says on paper! If no one on the board understands how to be strategic, or there isn’t a sufficient level of financial expertise, the board will not be competent.

The third key principle is execution – the act of carrying out what the terms of reference or governing document say you should do, in a manner that promotes the long term success of the company or organisation.

 

Diversity in UK Boardrooms

My final blog of the year came in the wake of press reporting of the Government’s planned review of corporate governance.

A focus on unlisted companies dovetails with my ‘Beyond The FTSE’ theme, which I launched in November in the Diversity in the Boardroom campaign’s latest publication. I launched this campaign two years ago to encourage, inspire and motivate organisations to consider the diversity of their boards, report on their progress and improve the talent pipeline.  While progress has been made there is still some way to go.

Boards still need to appoint more women, people from BAME backgrounds and younger people to bring together a culture of inclusion, perspective and expertise. I am a firm believer that all appointments to improve diversity should be based on competence and skill, but the talent is there; it just needs to be unearthed. Investment in training and development will make this happen.

Diverse boards are not just morally and ethically important, they make good business sense too:

• Research has linked diverse boards with better corporate performance and better decision-making.

• The best boards are created when organisations access the top talent from all backgrounds.

• Customers are paying more attention to the demographics of the people at the top of organisations and businesses.

• Diverse boards provide a broad knowledge base and therefore result in productive debate, discussion and decision-making.

• Understanding the cultural sensitivities of stakeholders leads to better engagement across all business functions and can even impact procurement and tendering opportunities.

 

So what might your next steps be for 2017?

To find out more about the Diversity in the Boardroom campaign, or to book a governance review consultation, you can contact my team on 0845 505 1875 or get involved on Twitter @TheDiverseBoard using #BeyondTheFTSE.

You can buy The Little Book of Governance and Boards Behaving Badly from the Governance Forum website – http://www.thegovernanceforum.com/books-by-karl-george/

 

Find out about future Effective Board Member programmes at http://effectiveboardmember.co.uk/

 

Until next time…