high performance board 17 august 2011 craig hunter fcis
TRANSCRIPT
HIGH PERFORMANCE BOARD
17 August 2011
Craig Hunter FCIS
Craig Hunter FCIS - my career
• Chartered Secretary in Public Practice – 30 years experience, with award winning business
• FTSE and global companies, charities, private groups, sporting organisations, sole traders
• British Swimming independent director
• European Swimming technical committee member
• International swimming referee
• British Swimming team manager 1989-2006
• Olympic Games 2000, 2004, 2008
• Commonwealth Games 1998, 2002, 2006, 2010
• UK Sport Mission Control panel member
Programme
• Governance structure & board composition
• Directors’ duties and responsibilities
• Effective performance• Purpose of the board
• Independent directors
• Competencies
• Behaviour
• Governance oversight
• Board evaluation
Typical corporate structureShareholders
Annual General MeetingAnnual General Meeting
ExecExec Non-execNon-exec
Audit Executive Remuneration Nomination
Clients
Board of Directors
Typical sport structure?Council
Annual MeetingAnnual Meeting
Board of Directors
Audit Executive Remuneration Nomination
Membership
HC RepsHC Reps IndependentsIndependentsExecExec
Legal status
• Incorporated body• Company limited by shares of guarantee
• Articles of association
• Companies Act 2006
• Charity• Trust deed
• Charities Act 2006
• Unincorporated body• Rules
Round table discussion
• Briefly outline your board composition and structure as well as the challenges you face
The perfect model - 1
• Independent chair• Internal or external appointment?
• Dynamic CEO• Supported by executive management team
• finance, legal, marketing, performance/participation
• Appropriate non-executive/independent directors• Skills based –v- regional/Home Country representatives
• Appointed –v- elected
The perfect model - 2• Board composition and size
• Diversity
• Candidates able and willing to challenge convention
• Balance of executive and independent/non-executive
• Broad range of experience
• Appointment• Process, rolling –v- fixed term, terms
• Duties
• Delegations of authority
• Terms of reference
• Effective performance
• Board evaluation
• Succession planning
Directors’ duties and responsibilities
• Companies Act 2006• Duty to
• act within powers
• promote the success of the company
• exercise independent judgement
• exercise reasonable skill, care and diligence
• avoid conflicts of interest
• not accept benefits from third parties
• declare interest in proposed transaction
• declare interests in existing transactions
Dept. Business Innovation & Skills
Simple high-level guidance for directors:
• Act in the company’s best interests, taking everything you think relevant into account
• Obey the company’s constitution and decisions taken under it
• Be honest, and remember that the company’s property belongs to it and not to you or its shareholders
• Be diligent, careful and well informed about the company’s affairs. If you have any special skills or experience, use them
• Make sure the company keeps records of its decisions
• Remember that you remain responsible for the work you give to others
• Avoid situations where your interests conflict with those of the company. When in doubt disclose potential conflicts quickly
• Seek external advice where necessary, particularly if the company is in financial difficulty
Effective performance
• Effective directors
• Effective decision-making
• Effective board performance
• Board evaluation
Round table discussion
•Describe your role within your organisation/sport
•What attributes/skills do you have?
•What constrains you/your board/your organisation?
The purpose of the board
• Key decision-making body responsible for leadership, integrity, performance, and risk profile of company
• Board should determine the purpose of its meetings
• Reassert the distinction between governance, strategy and operational matters
• Emphasise the importance of the board proactively crafting policies, processes and systems to ensure the delivery of its strategic objectives
• Ethical sensitivity?
• Consider how the board, collectively and in terms of individual contributions, might improve the overall effectiveness of their responsibilities in areas such as decision-making, strategy development and financial analysis
Skill levels in the boardroom
• Importance of induction
• Development and training • Need for on-going support and development
• Access to operations and staff
• External advice
• Benchmarking directors’ performance – evaluation
Competencies
• A breadth of experience
• Team player who leaves their ego at the door
• Independent adviser, able to challenge as well as support
• Committed and prepared
• Articulate communicator and good listener
• Sharp mind and good judgement
• Visionary, creative, and passionate
• Build strong relationships and act as ambassadors
• Self-confident without being dogmatic
• Enhance their contribution through feedback
Source: Whitehead Mann
Weaknesses
• Being a passenger or nodding dog
• Critical but not supportive – not adding value
• Still acting as a Chief Executive or frustrated Executive/Director
• Sloppy thinking or not up to the job
• Self centred
• Demanding too much detail and overloading
• Unprepared
• More on “broadcast” than “receive”
• Lacking courage to disagree
• Divisive and dogmaticSource: Whitehead Mann
The independent director
YES, I challenge our
executives YES, I keep up to date with current
developments
YES, I attend board
meetings
YES, I am independent
YES, I understand
the business
The Boardroom Framework
Purpose
People
Process
Drives
Promotes
Facilitates
OutstandingPerformance
StrongManagement
Quality WorkingPractices
RolesObjectives
Responsibilities
BoardComposition/
Structure
BoardMeetings
BusinessKnowledge
OngoingDevelopment
RelationshipManagement
Skills and Skillsdevelopment
Policies andProcedures
Communication/Reporting
Guidelines, Regulations, and Commercial/Sporting Requirements
Boardroom behaviour
ICSA report concluded:
“Best practice boardroom behaviour may be characterised by• A clear understanding of the role of the board …
• Independent thinking
• Challenge which is constructive, confident, principled and proportionate
• Rigorous debate … and
• Supportive decision-making environment”
Appropriate boardroom behaviours
• Develop a culture of constructive and robust challenge in the boardroom
• Avoidance of “groupthink” culture
• Interrelationships within the boardroom
• Group dynamics, as well as the contribution of (key) individuals
• Interaction with employees
• Social context (dinners, away-days, events)
• Ground rules for meetings
Board agenda and meetings
• Standard agenda items and annual plan
• Allocate sufficient time
• Presentations by key executives
• Role of board papers
• Robust discussion & challenge
• Behaviour
• Corporate message - unanimity
• Accountability
• Use and role of committees
• Focus on strategy, financial management, governance, performance/participation, risk
Governance oversight
There are three levels
• Institutional – are the corporate governance policies and architecture fit for purpose?
• Organisational – has management installed adequate processes and systems?
• Behavioural – are directors exhibiting the appropriate behaviour?
• Sport & Recreation Alliance• Voluntary Code of Good Governance for the Sport and
Recreation Sector
Board evaluation - 1
The Walker Review:
“The board should undertake a formal and rigorous evaluation of its performance, and that of committees of the board, with external facilitation of the process every second or third year…”
Board evaluation - 2
• Who is involved?• Chairman
• Directors (executive & independent)
• Staff
• Independent observer?
• Process: robust assessment of strategic plan and outcomes
• Frequency and facilitation
• Potential conflicts of interest
• Nature and importance of board evaluation
• How outputs of the process can be meaningfully disclosed without compromising confidentiality
• Notification to stakeholders
Resources• www.icsa.org.uk
• Corporate, voluntary & community sector
• Committee terms of reference
• Audit, Executive, Nomination, Remuneration, Risk
• Guidance
• Joining the right board: due diligence for prospective directors
• Induction of new directors
• Directors’ duties
• Job/role descriptions
• Financial Reporting Council• The UK Corporate Governance Code (June 2010)
• Guidance on Board Effectiveness (March 2011)
www.versec.co.ukM: 07771 814929T : 01727 855512F : 01727 855501
E : [email protected] in England at 39 Alma Road St Albans AL1 3AT
Company Number: 3999397VAT Number:706 0811 65
www.versec.co.ukM: 07771 814929T : 01727 855512F : 01727 855501
E : [email protected] in England at 39 Alma Road St Albans AL1 3AT
Company Number: 3999397VAT Number:706 0811 65
Sport Management Consultancy