Very Short Guides to the Main Roles on the Board
Dimension of board effectiveness: People
Boards are made up of unpredictable humans who blow hot and cold, who have bad days and good ones, with pet topics and infuriating foibles.
Based on over 100 reviews of board performance, Harper Webb has created this set of Very Short Guides to the main roles on the Board. We’re not aiming to give an exhaustive description of what every individual should and should not be doing. Rather, our aim is to focus on the main opportunities and pitfalls to help you to think about your contribution and give your best.
It’s easy for boards to become complacent and set in their ways. So, here’s our challenge: read the guide which is relevant to your role and find 3 things you do well and 3 things you are going to do differently.
Check out below our first 3 Very Short Guides to…
A very short guide to…
Being a good Senior Independent Director
The thing about being a SID is that a lot of the time, you have very little to do. But when you are needed – when there’s a Chair who is struggling or a new Chair needs to be found – your job is crucial.
Your objectives
To ensure the Board is led by an effective Chair
To help the CEO-Chair to maintain a constructive working relationship
Your duties
Not much, most of the time! And that is fine – the SID is there to intervene, if needed.
Conducting the annual review of the Chair, including chairing a meeting without him/her
Checking in with major shareholders, ministerial sponsors (for government bodies), employee sponsors (for pension funds) on what they think about the Chair
Checking in periodically with the CEO and Chair on how they are working together
Planning and leading an organised process for the Chair’s succession and transition
The most useful skills and attributes to develop
Readiness to listen and balance the views of colleagues and stakeholders
Courage to give tough messages to the Chair – who is often a big personality
Confidence not to try to make the role into something it is not
Top compliments
She was brave enough to tell the Chair what we were all thinking but didn’t dare tell him
He mediated a good compromise between the Chair and CEO when they were at loggerheads – now their relationship is stronger than ever
I find it lonely being the Chair and my SID is always ready to be a sounding board
When I arrived as Chair, she helped me settle in with a quiet word here and there
He recruited an excellent new Chair in a process that took all our views into consideration
Frequent gripes
He won’t stand up to our Chair and ask her to change her behaviour
She didn’t stay in touch with our major shareholders so we didn’t expect the vote against the Chair at the AGM
He didn’t prepare for the Chair succession although we knew well in advance she was leaving
She says she reviews the Chair’s performance but we don’t know what she says to him
Just one thing….
As SID, it’s important to do the Chair’s review every 12 months if possible or 18 months at least. It’s a chance to take stock and check intentions, as well as to see how the Chair thinks things are going and offer support or advice. Just because “everyone loves the Chair”, doesn’t mean there is no need to check in. Plus, the Chair might not be as well-loved as you think... (See here for more on the Chair’s performance review.)
Variations
Some boards don’t have a SID, in which case the role described above would fall to the Deputy or Vice Chair. If you don’t have any of these positions on your board, one of the non-executives (or trustees) should lead the annual review and succession processes. It’s best if this is someone independent of shareholders or sponsors to ensure a range of views are given equal weight.
A very short guide to…
Being a good Employee Non-Executive Director (E-NED)
The Boards of many listed companies nominate a NED to be leading specifically on employee engagement. But what does “workforce engagement” mean in practice?
Your objectives
To help the Board to hear “the employee voice” so that the decisions taken take into account the impact on employees
To ensure the NEDs are able to “sniff” the organisational culture for themselves and are not just hearing about it from top executives
Your duties
Working with the executives, particularly the Company Secretary and HR Director, to develop a plan for the non-executive board members to engage directly with employees
Establishing ground rules so NEDs act appropriately and management set up visits/interactions well
Getting feedback from NEDs and executives to find ways to improve engagement
The most useful skills and attributes to develop
Organisational skills - to create an efficient plan
Determination – this is a board responsibility that often falls by the wayside
Empathy – to be able to interact with all kinds of employees
An interest in people and their views
Top compliments
The Non-Executives (NEDs) gain useful insights when they go out and about, which helps me as CEO
Our people enjoyed meeting the NEDs and found it interesting to chat to them
Our E-NED makes sure we meet a selection of people in an informal setting
It’s fascinating when our front-line sales force is invited to a board breakfast, as it helps us understand the issues they are facing and how we as a company behave with clients
Frequent gripes
Our E-NED is always insisting on visits which waste employees’ time and distract management
She looks for issues and extrapolates from them making a big fuss and distracting us – a broken tile becomes a criminal offence
The E-NED goes on lots of visits but the other NEDs rarely have the chance to meet anyone
The NEDs are always giving “helpful” suggestions but this just confuses our employees
It’s not very useful to me as a NED when the whole board goes on a visit to a site - everything smells of fresh paint
Just one thing….
Don’t assume that employees understand what the Board’s role is and why NEDs have come to chat to them. Work with management on setting up meetings well with clear communications to employees ahead of time, during and after sessions.
Variations
Not all boards have an E-NED. Listed companies can choose an alternative approach, such as an employee director or attending workforce advisory groups. (See the UK Code of Corporate Governance, Section 1, Provision 5). And most non-listed companies are not required to engage in a formal way. Regardless of the regulations, it’s worth all boards having a clear engagement plan and giving one board member the job of making sure it works well.
A very short guide to…
Being a good Executive Director
The CEO and other Executive Directors (EDs) are there to run the company. In this guide we are looking specifically at how they can get value from their Board rather than just getting decisions “through the Board”.
Your Objectives
To get the Board’s input and approval on important decisions such as the strategy, major capital investments and key appointments
To keep the Board informed on operational performance and progress on strategic goals
To ensure the organisation benefits from the Board’s collective skills, wisdom and experience
Your duties
Preparing concise, well-structured board papers in time for the NEDs to read them – even if, as is likely, the EDs are not personally writing many of them, they need to insist on quality from those who are
Providing the right information to allow sound, strategic decisions to be taken
Agreeing the agenda with the Chair and Company Secretary – making sure the right things come to the Board at the right time
Helping the NEDs to understand the business and the impact of key decisions
Answering their questions and meeting their requests (when reasonable…)
The most useful skills and attributes to develop
Communicating concisely and clearly
Readiness to be challenged and hear alternative points of view
Openness and transparency
Top compliments
Our CEO never responds defensively when challenged but she’s clear if she doesn’t agree
The CEO anticipates what we will need to know and makes sure we are able to have a good debate on matters of substance
I’ve never had a “nasty surprise” – she lets us know early if a problem is arising
He makes time between meetings to check in with the NEDs and welcomes us into the business without sending a “minder” from the senior team
Frequent gripes
She only tells us what we want to hear and tries to keep bad news from us
He is irritated and makes us feel stupid when we don’t understand points of detail
She sells us fully-cooked decisions for us to rubber stamp rather than consulting us early
The CFO doesn’t make the effort to get us good-quality information that highlights the major points and we drown in the detail
Just one thing….
When you and your executive team get frustrated and irritated by the non-executives, remember that it is their job to ask the Executive Directors tough questions. They add value by being curious and sceptical. If you want a symbiotic relationship where you get insight and support from the NEDs, you need to work as much as they do on making that happen.
Variations
On some boards, the only Executive Director is the CEO, but most also include the CFO too and others will have several EDs. Regardless of who is a director, the Board will benefit from hearing from a range of executives and senior managers who feel empowered to speak their minds. So, it is important that the CEO doesn’t hog the mic and let’s others present and respond to questions.
