Some Reasons to be Cheerful


While 2019 promises to be every bit as tough as 2018, Fidelio derives optimism from business upping its game. We see business and Boards recognising the vital role they have to play in generating wealth but also addressing some of the big societal and environmental issues that have been so disruptive in 2018.


The Chair – In the Spotlight

The Chair is arguably the Board-level role that has changed most in recent years. Expectations have increased enormously from shareholders and stakeholders. This is true for Chairs of unitary Boards but also for Chairs of two-tier / Supervisory Boards.

Recognising that the complexity of the Chair role has increased substantially, Fidelio kicked off 2018 with an exploration of the support that the Chair needs from the Company Secretary with one of the FTSE’s most experienced Company Secretaries, David Jackson, Company Secretary, BP plc.

The demands on the Chair have only increased during the year and in December 2018 Carlos Ghosn, one of the best-known Chairs and corporate leaders in the automotive sector, along with Greg Kelly, Director of Nissan, were arrested at Tokyo airport in November and, at time of publication, are still in custody.

Pressures on the Chair will not decline in 2019. We argue that Chairs need support and indeed to go on learning is an important milestone towards Board effectiveness and also a ground for optimism.

In the context of regulatory complexity, rising nationalism and anti-business sentiment, as well as increasingly muscular shareholder activism, Fidelio announced the inaugural Chair Masterclass, to be held on 28th March 2019. This one-day Programme will focus on (i) the governance and regulation underpinning the Chair role and (ii) how to be effective as a Chair looking at Board dynamic, shareholder and stakeholder expectations, presence and authority, as well as the practicalities of leading a highly functional and effective Board. It is attracting Chairs from the UK and internationally.

The Chair, Change & Disruption

The role of Chair is becoming less comfortable and more accountable as the pace of disruption and change picks up.

Reflecting this, Fidelio conducted in-depth research in 2018 with leading international Chairs on how they were preparing their Boards for disruption. According to Fidelio’s research, French Chairs saw disruption arising predominantly from technology, while UK Chairs who are currently navigating substantial political uncertainty attributed disruption to a number of causes:
1. Technology (45%)
2. Regulatory / Political Landscape (24%)
3. Consumer Behaviour (14%)
4. Social Norms (12%)
5. Board / Executive Dynamic (5%)

Importantly the Research also demonstrated that Chairs are becoming more sure-footed in preparing their Boards for disruption prioritising the following steps:

  • Diversity of Board composition and a rigorous approach to succession planning
  • Robust approach to overseeing and contributing to strategy formulation
  • Commitment to ongoing Board learning.

Disruption is not going away in 2019. Effective Chairs are comfortable with this and we take heart from this more agile and proactive approach to Board readiness.

The Board & Technology

Technology was very clearly identified as a major source of disruption in 2018. Across Evaluation Development and Search in 2018, Fidelio saw a clear focus on digital preparedness and its implications for Board composition.

While there is no template for structuring and preparing the Board for technological disruption, the Chair’s understanding of how to approach this primary Board challenge is clearly improving.

In this vein, we were delighted in September to be joined by Chairs across a range of sectors and geographies to kick the tyres on the opportunities and risks of technology with Bruce Sewell, former General Counsel, Apple and current Audit Chair at Vail Resorts. Key takeaways from the discussion included:

  • Boards need to strengthen technology expertise in order to inform all aspects of the Board’s decision-making and oversight. This is almost certainly not a question of either Board-level expertise or external advisors. It’s both.
  • A further mechanism is the use of the Audit or Risk Committee – to ensure tough scrutiny and well-thought through recommendations to the Board on technology issues and compliance, giving comfort to the non-technologists on the Board. Deep technology expertise at Committee level is therefore a prerequisite.
  • Some Boards are also turning to Technology Board Committees to provide a link between the Board and the Executive on a range of technology issues.
  • Others are looking to Advisory Committees that harness external technology expertise to support the Board’s thinking on technology.

While the pace of technology is unrelenting, and the majority of Chairs know that their Boards lack adequate technology expertise, Fidelio is now seeing more proactive and structured thinking about how to close the technology gap. This too gives us optimism for 2019.

As does the shift away from technology being solely a male domain. Key digital/ technology appointments for Fidelio in 2018 included women and we expect this to continue in 2019.


There has been a very substantial increase in regulation and compliance for Boards since the Financial Crisis. This is true of Financial Services Boards, as it is of public company Boards. But, in the meantime, all Boards are feeling the pressure of scrutiny and, during 2018, Fidelio worked with public company, private, non-profit and regulatory Boards. Across all these Boards, the Chair had a clear understanding that governance was not optional and had the potential to add to valuation/ increase effectiveness.

And this too informs our optimism in the year ahead. Boards internationally are increasingly recognising that governance does indeed pay.

Evaluation – From Audit to Effectiveness

Board Evaluation as a tool has attracted media attention in 2018, particularly in the context of corporate failures. There is a risk that Board Evaluation is becoming caught up with the public debate on the Audit process. According to one school of thought Board Evaluation is indeed a tick box audit process; increasingly however we are seeing Chairs look to Evaluation as a means of significantly increasing Board effectiveness.

As such there is increased recognition that Evaluation isn’t just a regulatory tool, but very much an aid to the Chair, socialising change and new ideas and enabling the Board to move to the next level and add greater value.

Fidelio has been privileged to work on Board Evaluations which extend across different geographies from the US to Asia and across Europe, as well as different types of organisations including public companies, non-profits and regulators. In each case there is recognition that Evaluation is a useful tool for the Board itself but also a means of giving comfort to shareholders and stakeholders.

Indeed Fidelio specifically addressed the question: “What do Shareholders Want from Board Evaluation?” with Dr Hans-Christoph Hirt, Head of Hermes Equity Ownership Services (EOS) at a 2018 Board Breakfast. We concluded that Board Evaluation is an important tool for Chairman both in the UK and abroad – presenting a clear opportunity to address key questions for shareholders and stakeholders:

  • Does the Board have the skills and experience to enable the company to achieve its objectives?
  • Is there a clear understanding of Board purpose?
  • How is the Board adding value?

We consider the shift in focus for Board Evaluation from compliance to adding value to be critical. It is also a ground for optimism for shareholders and stakeholders alike.

The Governance of Search

Linked to effective governance, over recent months, there has been a sharp focus on well-governed Board Search processes, which are structured in an objective, rigorous manner rather than focussing narrowly on existing, often personal, networks. Indeed, the recent Kingman Review drew attention to the FRC’s own Board appointment process suggesting it failed to meet the governance of search requirements we increasingly expect for public Boards.

The Governance of Search provides comfort to shareholders and stakeholders, including regulators, that the company is committed not only to identifying the best Candidate but also to following a process that supports independence and underpins challenge within the Board and leadership team.

In addition to independence, the Governance of Search also supports diversity. By conducting a transparent process that can been reviewed and reaches purposefully into different markets and pools of talent, Boards can reassure shareholders and stakeholders that they are committed to inclusion as well as opening up paths to the Boardroom and leadership team.

As shareholders begin to vote against Chairs of organisations that make inadequate progress, the ability to demonstrate a strategy and commitment to moving the dial at Board and Executive level is no longer optional. Fidelio is pleased to see an increasing number of Boards embrace the Governance of Search and again we take comfort for 2019.

Peer Networks

The regulators have also made an important contribution to understanding how Boards learn which we begin to see taking effect.

In the UK, the regulator, in particular in Financial Services, is recognising the importance of Board composition and of relevant experience in particular for Chairs and Committee Chairs. If a talented individual is appointed but lacks substantial experience, the regulator is encouraging them to acquire a network of peers with relevant experience, as well as a mentor.

We see this as another instance of regulatory intervention which is encouraging greater Board effectiveness and it has certainly fed through to the work that Fidelio is undertaking to support Boards and ensure that Chairs and key Committee Chairs have access to the networks they need as sounding boards and for moral support.

Recognising the value of connecting experienced Committee Chairs facing similar challenges across different sectors and jurisdictions, Fidelio has built bespoke peer networks. These have extended across Chair Roundtables and one-on-one meetings between highly experienced Committee Chairs, selected for their specific insight, sectoral expertise and geographic understanding. Fidelio looks forward to continuing this work in 2019, with a Roundtable for Remuneration Chairs in January.

Similarly, as the UK Government emphasises Board engagement with employees, in the New Year Fidelio will also be hosting a Roundtable to explore how Boards are preparing for the new Financial Reporting Council (FRC) guidelines on engagement with the workforce in the 2018 UK Corporate Governance Code which takes effect from 1 January 2019:

For engagement with the workforce, one or a combination of the following methods should be used:

  • A director appointed from the workforce;
  • A formal workforce advisory panel;
  • A designated non-executive director.”

The value of learning from peers is immense and Fidelio takes heart that there is a substantial appetite to contribute to and benefit from this type of learning among our network of leading Board Members internationally. This too gives us optimism for 2019.


And, finally, Fidelio takes comfort from the fact that thinking about Boards is becoming more radical and addressing the core issue of purpose: how Boards can serve shareholders, stakeholders and also support a broader societal agenda.

Radical, Forward Thinking – Boards Need Purpose

In a recent debate at Women Corporate Directors forum in London on the moral imperative for business, Halla Tómasdóttir, CEO of The B Team and former Presidential Candidate of Iceland, spoke eloquently about the crisis of conformity and Boards not recognising the need for change – particularly around climate change and inequality. Fidelio argued that while this has too often been the case, we are seeing important signs of change in Boardrooms and among Chairs in the UK and internationally.

In 2018 Fidelio hosted a series of seminars principally for our “A Seat at the Table” Alumnae focussed on the purpose of Boards and how individual Board Directors and Chairs add value. Jan Babiak, Non-Executive Director, Walgreens Boots Alliance, provided practical insight on the role of “The Audit Committee and Diversity“ while Margaret Casely-Hayford, Chair, Shakespeare’s Globe, and Lord Gus O’Donnell, Chair, Pro Bono Economics, both addressed “Building a Board Portfolio with Purpose” concluding:

Organisations with a clear purpose are more robust and resilient and there is much the Board can be doing to ensure purpose in the Boardroom and purpose throughout the company. This includes:

  • Enabling diversity;
  • Ensuring a demanding and intellectually honest process to arrive at strategy formulation;
  • Prompting ongoing Board learning and critical reflection – what works and how can we improve;
  • Reaching across the public / private divide to enable corporate Boards to better understand how government works and non-profit Boards and government Boards to gain better insight into the profit imperative.

And secondly it is very possible for the individual Board Director to establish a balanced and meaningful portfolio. Some key recommendations were:

  • Create a framework covering key priorities within a Board portfolio including financial social and private. And, of course, reputational;
  • Use this framework for decisions on Board applications and accepting appointments;
  • Visibility, presence and authority are critical factors for being on the radar screen for key Board opportunities.

Again, Fidelio derives optimism from the quality of thinking and commitment we are seeing to building Boards with purpose drawing on public and private experience.

Diversity – Here to Stay

And last but absolutely not least Fidelio recognises there is much frustration with progress towards diversity at Board and senior Executive level. But we also see important changes underway that bode well for diversity in 2019.

The most important of these is the recognition that diversity contributes to financial performance and in particular to the quality of decision-making and ability to think about risk.

The benefits of diversity in business, and in particular mitigating against “groupthink”, of course relate to diversity in its broadest sense, including cognitive and socio-economic diversity. Within this, gender diversity which has the broadest impact and is easiest to track cannot be overlooked. As such Fidelio was delighted to co-host in 2018 Fidelio’s third consecutive debate on the Frauenquote – comparing progress on gender diversity in UK and German Boardrooms and what can be learned and shared between these two approaches. Fidelio will be continuing to roll out Board diversity in Germany and the UK in 2019.

Promoting gender diversity has long been a priority for Fidelio and in 2018 we were delighted to be recognised, once again, by the Hampton-Alexander Review for our contribution to increasing gender diversity on Boards and leadership teams in the category ‘Beyond FTSE350’. This reflected Fidelio’s international Search track record, but also our ongoing contribution to building the pipeline through the acclaimed, flagship, “A Seat at the Table” Programme for senior female executives and directors, now in its seventh iteration. We are pleased to note that in 2018 Alumnae were being appointed to Board and Non-Executive roles but importantly also being considered for and appointed to Deputy Chair and Chair roles.

And, as 2018 drew to a close, Fidelio invited a group of senior women to join us at the Museum of London to commemorate the centenary of the first UK general election in which women were eligible to vote. Whatever the suffragettes would make of progress to date, 100 years later they would certainly be looking forward not backwards.


As 2018 draws to a close Fidelio looks back and sees much evidence that Boards are becoming more effective. This is clearly necessary. The environment is unforgiving and the challenges facing business are unrelenting.

But the increased willingness of Chairs and Boards to learn – and to learn in a number of ways – gives comfort for 2019. Specifically, we see:

  1. Chairs much more on the front foot when it comes to disruption and preparing their Boards to be more agile and responsive. In addition, we see a shift in focus to Boards adding value.
  2. Greater recognition that the governance pays. Boards across a range of organisations and geographies are recognising that good governance can also add substantial value to the business. Search and Evaluation are tools to increase Board effectiveness, enrich composition and also critically build trust of shareholders and stakeholders.
  3. And Boards are becoming much more aware of purpose – the need to generate profit for shareholders and also benefit society more broadly. This translates into building a Board portfolio with purpose and into greater emphasis on diversity and inclusion in the Boardroom and the business.

As we move into 2019, Fidelio expects the focus on Board effectiveness and Board composition to increase. We also expect the ability to learn and to look across to different sectors and geographies for best practice to become highly prized.

Fidelio is committed to maintaining this momentum in 2019 and we wish clients and friends a Happy Christmas and a peaceful, more optimistic, 2019.

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