Continuous Board Learning – Imperative Not Optional
Whereas ten years ago it was broadly assumed that Board Members brought substantial experience when they joined the Board, it is now recognised that this alone is not enough.
The pace of change and, in particular, the demands of technology mean that Boards need to think carefully about ensuring their skills are very fresh. Recent research that Fidelio has conducted on how Chairmen prepare their Boards for disruption show that Chairs are expecting the unpredictable. Agility must therefore be added to the Board mix. If the organisation is to be agile in its response to change, the Board must set this tone from the top.
Leadership and learning are indispensible to one another.
President John F. Kennedy, 1963
But Chairs face a distinct challenge – Directors are often time poor and already very experienced. How do they learn? Most Boards commission formal programmes as well as dedicated Board modules on specific topics. But Board Members also need informal channels to test their thinking and seek advice from those who have confronted similar challenges. This is particularly true for the Chair, an often isolated positon, as well as for Committee Chairs.
The Isolated Chair
The Chairman frequently sits in a lonely position. Certainly in the UK, and indeed in most governance jurisdictions, the role of the Chair is becoming increasingly prominent. Fidelio has written previously about the evolving role of the Chair – with greater expectations and increasing accountability.
While many Chairmen have previously been CEOs (and many would argue this is requisite experience) the complexity and accountability of the Chair role is multidimensional and substantial. It includes both oversight and governance of the organisation, while being alert to disruption and at the same time dealing with complex and frequently conflicting stakeholder demands. The Chair also faces the inherent tension of ensuring that the organisation is fit to respond to short-term challenge, whilst thinking through sustainable long-term succession planning.
The buck stops here.
Chairman interviewed as part of Fidelio’s FTSE100 disruption research
Of all roles, it is most difficult for the Chair to confide internally. The appointment of the Senior Independent Director and the Vice Chair can be a tremendous support, but Fidelio is also enabling talented Chairmen to reach out externally to build a trusted network.
Clearly one issue here is competition and there is a great sensitivity in some sectors about Board Members from competitive companies liaising.
Fidelio has turned this to advantage. We connect Chairs with other Chairs and Board Directors on an international basis who have experience of overseeing similar sized companies facing comparable challenges across a range of sectors.
Typical attributes for Chair peer networks:
The Devil’s in the Detail – the Challenge for Committee Chairs
As the role of Chair has become increasingly prominent, so too have the Committee Chairs and the importance of the work done at Committee level. The work of the Audit and Risk Committees has been most highly scrutinised, particularly within Financial Services, but this privilege is now shared by the Chair of the Remuneration Committee! Recent revisions to the UK Corporate Governance Code from the Financial Reporting Council shone a clear spotlight on the responsibilities and accountability of the Nominations Committee.
Most Committee Chairs have good mechanisms for keeping abreast of the technical aspects of the role. For example, international professional services firms have good provision for their clients. But for all key Committee Chairs there are also areas of judgement beyond the technical which include navigating the areas of intersection with other Board Committees.
Aligning the work of the Board Committees is critical but can often pose a challenge
Plural Audit Committee Chair, FTSE and internationally, Fidelio Audit Chair Network
Recognising the value of connecting with experienced Committee Chairs facing similar complex challenges often in other sectors and jurisdictions, Fidelio has built bespoke peer networks. These extend across Chair Roundtables and one-on-one meetings between highly experienced Committee Chairs, selected for their specific insight, sectoral expertise and geographic understanding. The value of learning from those with highly relevant experience is immense; the tailored nature of the network provides a major competitive edge with regard to Board learning.
Experienced Board Members and Committee Chairs need to be sensitive to time commitment and (the perception of) over-boarding. Hence we increasingly find seasoned Board Members and those building a portfolio approaching both their learning and their networks in a very structured way.
Firstly they are keen to reach beyond technical issues to think through specific knotty issues that their Committee / Board / company is facing. Recent granular discussions within an Audit Committee Peer network included:
- Navigating technology risk
- Changing social norms including #MeToo and implications for whistleblowing
- The effect of disruption on horizon-scanning and strategy
Moreover on a personal development note this insight into Committee work across different sectors also supports the individual Board Member as she/he maps their portfolio — making for better informed decisions and also better Board Members.
Sharpening Executive Learning
The same principle applies at the Executive level, particularly for senior roles which are more isolated in their accountability and lacking internal peers for guidance, for example the Chief Financial Officer, General Counsel, Chief Internal Auditor, Corporate Affairs Directors and Investor Relations Directors.
Here too Fidelio has developed tailored peer networks to support individual learning and establish an effective sounding board. For example, for public companies we have seen recent focus on best-in-class shareholder engagement which is explicitly referred to in the FRC’s Corporate Governance Code.
Accordingly Fidelio has established peer networks for senior finance professionals and IR directors giving visibility into best practice cross-sector and cross-geography, including insight into key themes such as:
- Structuring shareholder engagement at Board and executive level
- Accessing capital globally
- Steady state IR vs major transaction
- Ongoing public company education
- Public company implications of MiFID II
As learning and working habits evolve, senior Executives too need to acquire insights in a much more relevant, connected and bespoke manner.
Board Learning and External Perspective
As Fidelio approaches our sixth iteration of the “A Seat at the Table” Programme, here too we recognise the value of networks. This highly structured Board Learning Programme interweaves the five attributes of Board leadership and draws upon the practical experience of Chairs and governance experts. But we also lay great value upon the rich diversity of experience that participants bring to the table representing different sectors and geographies at a very senior level.
Here too we are creating personalised networks – supporting talented women globally in very senior executive roles, or just embarking upon portfolio careers, to build a network across their peers and with contributors who include Chairs of leading companies and organisations. There is substantial evidence of these networks providing specific advice and relevant support which has been critical to securing Board and advisory roles.
Board Learning + Peer Networks = Shortcut to Board Effectiveness
At the heart of Board innovation, Fidelio designs and delivers peer networks for Chairmen, Committee Chairs and senior Executives. This dovetails into our support for Chairmen in building Boards fit for the future through Search, Development and Evaluation.
If you are seeking relevant external perspective on the challenges that your Board is facing and are keen to access the insight of experienced Board Members from a range of relevant industries and geographies, contact Fidelio.