Expectations for the Board, already high, are increasing. If there is a corporate failure, the first question on the public’s mind is where was the Board? Scrutiny too is growing. The UK Government’s consultation into “Restoring trust in audit and corporate governance”, for example, has significant implications for Boards including: a potential extension of Public Interest Entity definition to include a much larger group of companies; alongside increased reporting and attestation requirements and legal accountability to the FRC/ARGA on the part of all Directors. Equally shareholders are exerting greater influence. Large institutional investors are making their views clear at AGMs – for example BlackRock’s recently disclosed voting record on pay in Europe shows a clear trend in voting against the remuneration report where appropriate providing a strong signal of intent to Boards.
COMPLEXITY & JUDGMENT
At the same time all major organisations – whether quoted or privately held companies, government bodies or charities - face greater complexity. A number of strategic and operational decisions need to be considered carefully taking account of different perspectives. Consider for example the range of corporate responses to accepting government support during the pandemic with some companies and Boards ending up firmly on the wrong side of public opinion. This complexity extends to Board composition – Boards are visible and are expected to reflect diversity, but diversity does not fit neatly in a box. For example, a recent report by the FRC flagged progress in gender diversity but potentially at the expense of socio-economic inclusion.
"Against this backdrop the Chair plays a pivotal role."
The Chair clearly plays a pivotal role. Providing leadership to the Board clearly provides leadership the organisation as well.
THE CHAIR & REPUTATION
In a recent webinar Fidelio explored ‘The Chair as Chair as Chief Reputation Officer’ with three highly experienced Chairs: Ruth Cairnie, Chair of Babcock International and Senior Independent Director of Associated British Foods; Sir Ian Davis, Chair of Rolls Royce; and Sir Peter Gershon, former Chair of National Grid. An effective Chair will always have been alert to reputation and will have provided guidance to that end. As our webinar demonstrated what good Chairs have done implicitly is becoming explicit – not least because shareholders and stakeholders are demonstrating a keen interest in how the Board performs its role, including the quality of judgement and decision-making. As Fidelio’s panellists set out there is much the Chair can contribute to reputational resilience, including:
ensuring clarity of purpose
raising key questions such as reputation for what and reputation with whom
providing oversight, so that effective crisis communication planning is in place including for the Board
THE CHAIR & DIVERSITY
Equally, while headlines scream ‘Working-class men ‘pushed off’ boards to make way for women’, the Chair has an essential role to ensure that both Board and company understand what diversity means for the organisation and why this is so important for employees and key stakeholders. Diversity is not a zero-sum game. The Board is a composite which has the opportunity to be much greater than the sum of its parts. The Chair’s leadership in building a diverse, inclusive and effective Board sets precedent for the company and provides comfort for stakeholders. The role of the Chair is not to accept obstacles at face value but to ensure that the company has a narrative and framework for building diversity and that progress is being made and reported. Certainly Fidelio is supporting a number of Chairs through Evaluation, Development and Search to build high performing diverse Boards and to be articulate on the "how", the "why" and the progress.
THE LEARNING CHAIR
The importance of the Chair role becomes ever clearer and in particular its contribution to the long-term sustainable success of the company. There remains an assumption that Chairs simply acquire wisdom and relevant experience en route to the Chair role. Many do, but a good Chair will also be acutely aware there is much to learn in particular in the first major Chair role. To this end with the 10th iteration of “A Seat at the Table”, once again to be held at Hever Castle (Kent, UK), Fidelio is looking specifically at the role of the Chair. We have previously explored the Chair's expectations for the Board; in September we will look at key aspects of the Chair role, including:
Building the Board; composition and diversity
Chairing the Board; building consensus
The Chair and ESG; the Chair and climate change; shareholder and stakeholder engagement
The Chair and reputation
The Chair’s contribution to strategy and value
Once again meeting around a Boardroom table, but also benefiting from the new found digital adoption in Boardrooms globally, Fidelio will welcome experienced Chairs and Board Members at an earlier stage of their Board journey to explore honing Chair skills.
Fidelio made a significant contribution to gender diversity in the Boardroom and we look forward to having similar impact on creating a more diverse pipeline for the role of the Chair.