regulatory measures, invasive media, macro-economic pressures and the prevailing
geo-political climate, it's important to constantly re-evaluate and evolve the
role and composition of the Board. This point was picked up by our first
contributor, stating that the 2008/09 financial crisis was a major catalyst for
change. He cited financial services Boards are now more confident to cope with
the various new information channels and the increased pace of issues they
This position was countered from a retail NED who stated that
non-financial services industries did not want or indeed require the same level
of regulation. In his opinion, the key defining characteristic of any Board
should be agility - the ability to respond and deal with an ever changing
We talk a lot about diversity, in the same
sense as ethnicity on gender but it's not all about that, it's about how you
bring diversity of thought.
The Chair of a public transport body
commented how an enormous amount of power has shifted away from companies and
towards the public. The public used to have their view mediated, either by the
newspapers or other outlets, but now they communicate through Twitter and other
social media. She went on to give an example where a celebrity had a bad flight
to India and the minute the plane had touched down, he tweeted that the airline
he had flown on was terrible. He reached 5 million people before the airline
realised that there was a problem! This is a real challenge facing today's
Boards - on understanding technology disruption and how they should better
interface with various stakeholders and the business in real time.
senior City Chair made a more personal comment around how the world is changing
and Boards are not keeping up. He cited by way of example, cyber security and
social media is usually the last item on the agenda. By the time the item is
reached he's bored stiff and has lost the will to live let alone contribute in a
positive manner. He suggested if everyone on the Board is over 50, it is
unlikely to have a firm grasp on technology and its impact.
posed the question on how Boards are composed, including diversity and
inclusion. Boards continue to talk a lot about diversity, in the same sense as
ethnicity or gender, but it's not all about that, it's about how you bring
diversity of thought. For example, if you seek a NED for a retailer, the usual
option is to search for candidates with extensive retail careers. The same is
true of a lot of Boards - they are just too conservative in bringing in new
talent. Retailers are consumer led organisations therefore, bringing in a young
social media expert could be a more effective choice, as opposed to a long term
The Chair for the lunch then spoke about a study
conducted by a leading Strategy House 18 months ago. The study surveyed around
800 NEDs worldwide and found that only around a third of them fully understood
the strategy of the businesses they were representing. Further to that, only
around a fifth were completely aware of how those companies created value. This
posed the question that maybe NEDs need to be less plural and invest more time
with each company they represent.
Change is inevitable, it
has never been this fast, however, it will never be this slow again!
first to respond to this point was a former NED for one of the world's largest
drinks manufacturers and distributors. He cited that one of the major issues is
to break down the information barriers between executives and non-executives.
Unless a strong flow of relevant information is forthcoming, it is not easy for
a NED to gain a transparent and comprehensive overview of the business and its
This point was expanded upon by an NED from the sport sector.
He suggested that an element of compulsion to give more information to Boards
might be an answer. Although, in his opinion, a number of Boards are moving in
the right direction, a huge number are not.
The subject of NED training
was raised. A relatively new NED cited the huge difference between her
executive past where she was given fantastic training and induction, compared to
her NED roles where she has had to design a programme of training herself. She
felt it was the responsibility of NEDs to fully understand the business,
customers and the business model. The role of the NED is not to be an expert in
everything but as a prerequisite, to be able to deal with change at a faster
rate. Boards cannot simply add an expert every time a new challenge arises. It's
up to the Board to train its members and encourage them to keep training. Her
Board now allocates 45 minutes at the start of every meeting, just learning
about a topic specific related to the business needs.
The subject of
broadening skills encouraged conversation about inviting other staff members to
join the Board. One guest spoke enthusiastically about how, when he worked in
Germany, there were Worker Representatives on the Board and it worked extremely
well, particularly at times of challenge. His experience, however, was very
different in the UK where Worker Representatives were less willing to contribute
on the important issues during challenging times. This was seen as a UK
cultural problem where workers were often less likely to speak up. This issue
can be countered by allowing Worker Representatives to have board papers in
advance and asking them for their thoughts so that they could then raise them
during the Board meeting.
One guest from the public sector commented that
she also sat on a PE (Private Equity) Board, and they are fundamentally
different from PLC Boards. NEDs on PE Boards are expected to challenge more
proactively, question the numbers more deeply and act in a far more robust
capacity. There are perhaps lessons to be learnt from PE Boards?
member of an alternative lender, generally agreed with the above point. He
suggested that with many financial services Boards too much time is spent
looking at things from a governance perspective and far too little is allocated
to doing the important things, such as really challenging the CEO. Boards need
to step up their performance. There is a fine balance between supporting and
challenging management. Often there is too much support and not enough hard
As a final note of advice to any executive considering taking
up their first NED role - you are not taking on a job, it's a liability, under
law. It is important to recognise that you could be walking into something that
could wipe out the rest of your career and your personal wealth. So you have got
to take your NED responsibilities seriously, or you shouldn't be signing up for
You are not taking on a job, it's a liability, under
In conclusion, it became clear from the discussion that Boards need
to evolve faster to take on the present day challenges that organisations face.
Boards are not perfect but do undertake a difficult mandate under sometimes
challenging conditions. There is considerable room for further improvement as
well as evolving the NED role, to better understand the business they serve,
engage more meaningfully with management and undertake greater proactive
communication with a wider range of stakeholders in real time.