Presentation on theme: "Www.bvalco.com Evaluating the effectiveness of boards James Bagge and Alison Gill October 2012."— Presentation transcript:
www.bvalco.com Evaluating the effectiveness of boards James Bagge and Alison Gill October 2012
Introduction “The UK Corporate Governance Code has evolved since it was first introduced in 1992. It has always placed great importance on clarity of roles and responsibilities, and on accountability and transparency. It has become increasingly clear in the intervening period that, while these are necessary for good governance, they are not sufficient on their own. Boards need to think deeply about the way in which they carry out their role and the behaviours that they display, not just about the structures and processes that they put in place”. Baroness Sarah Hogg Chairman Financial Reporting Council
From the Walker Review (2009) “Improvement in corporate governance will require behavioural change”. “Needed behavioural changes are unlikely to be fostered by regulation fiat”. “Principal deficiencies in BOFI boards are much more to do with patterns of behaviour than to organisation”. “Governance practices are organic, dynamic and behavioural rather than akin to black letter regulation”.
www.bvalco.com About Bvalco Bvalco is an independent company, formed in 2010. We specialise in bespoke, independent and objective reviews of boards. Our strength lies in our credentials of working with boards, our team and our approach. Our reviews deliver improvements in shareholder confidence, board performance and boardroom dynamics.
www.bvalco.com Issues of evaluation Self versus External Evaluation Observing the Board in Action Benchmarking
FRC UK Corporate Governance Code (2010) Main conclusions “There is a recognition that the quality of corporate governance ultimately depends on behaviour, not process….there is a limit to the extent to which any regulatory framework can deliver good governance.” “The FRC has therefore sought to change the tone of the Code to signal the importance of board behaviour.” “There is concern that the code is too often viewed as a compliance exercise rather than the means of promoting appropriate behaviour by boards and good communication between boards and shareholders.”
www.bvalco.com Board Reviews
www.bvalco.com The role of the board The Boards Role To oversee the running of the company (not to run it)
What is meant by board behaviour and boardroom dynamics? Dynamics (competition, passivity, anger, rivalry, hubris, optimism, delusion) Felt & not readily observed Not readily discussed or discussable Accessed through observation, discernment and description Present in all groups Insight & thought drives behavioural change
www.bvalco.com What we find Consultant/Regulator hangover…. Parallel tracks & ambiguity about the concept of ‘team’ Not recognising the opportunity and time for change Insufficient focus on strategic issues & process Succession
www.bvalco.com Some of the challenges Lack of time Trust, confidentiality and sensitivity Power and ego Reluctance to work on the group interaction Poor emotional intelligence
www.bvalco.com In summary Boards are dynamic groups Their behaviour and culture are not static and need to be actively worked on Reviews ensure that group dynamics such as ‘groupthink’ passivity ineffective communication are exposed and replaced by positive behaviours. To be effective reviews must be future focussed and enabling.
www.bvalco.com Working through board effectiveness dilemmas Consultation syndicates
www.bvalco.com Reflect on the dynamics of your board? What can they tell you about the effectiveness of your board?
www.bvalco.com Consultation 10 minutes – describe your board situation (group listens) 15 minutes – group asks questions 15 minutes – whole group discussion (coachee listens) 10 minutes – coachee describes what they have heard 15 mintues in plenary – whole group
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