independent board and executive team effectiveness
Market
Corporate governance is ‘the system by which companies are directed and controlled. Boards of directors are responsible for the governance of their companies. The shareholders’ role in governance is to appoint the directors and the auditors and to satisfy themselves that an appropriate governance structure is in place.’
The UK Corporate Governance Code (The Code) 2018 does not set out a rigid set of rules; instead it offers flexibility through the application of Principles and through ‘comply or explain’ Provisions and supporting guidance. It is the responsibility of boards to use this flexibility wisely and of investors and their advisors to assess differing company approaches thoughtfully.
Board Effectiveness Evaluation
Moving a compliance requirement for public companies, and a best practice commitment for private companies, into a value adding intervention requires experience, confidence and discretion. A purely formulaic engagement rarely delivers much more than weighted scoring.
Our approach is to deploy both quantitative and qualitative methodologies. We work with the Chair to review the Principles and Provisions and align them to their organisation. We create an easy to navigate e-enabled questionnaire to identify themes and follow up with 1:1 discussions with all Board members to further explore their observations. Depending on need, we meet with other stakeholders such as Regulators and Institutional Investors to gain further insight.
We report to the Board our impartial findings and offer a number of themes, topics and priorities that they might like to consider as helpful to underpinning their longer-term Board performance.
Executive Team Evaluation
Is the Executive Team fit for purpose? Does it have the balance of leadership capability and capacity to deliver the plan? Has the pace of market change accelerated more quickly than the pace of the team’s development? Does the team embrace diversity of thought? Is the team actually a sum of its parts or a collection of individuals? Is there succession optionality? Does the team engender organisational confidence in its ability to lead?
Rarely can organisations answer all these questions with absolute confidence. The process of “evaluation and assessment” can instil mis-trust. If an organisation embraces CI as one of its fundamental pillars to delivering differentiated performance, it is the expectation that CI is championed and exemplified by its leaders.
Our approach is to work with the organisation to bring impartial insight to the questions raised through a combination of methodologies primarily 1:1 discussion supported by appropriate psychometric assessment to provide complementary data points. In our experience, the latter, in isolation, too often becomes a blunt instrument which leads to unintended consequences. Data needs to be understood in the context of the business, market conditions and need. Our role is not to become the expert witness, but to identify areas of strength and gaps the business needs to be aware of in order to deliver plan. The output will help prioritise either development interventions for individuals or the collective to enhance performance or explore the more interventionalist activity of replacement; the ambition is to help deliver positive outcome.
THE TEAM
Toby Lapage-Norris
Ben Williams
Paul Redwood