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Board Effectiveness and the Company Secretary
John Deffenbaugh Director, Frontline
2 February 2016
Who is the most important person at
the board table?
2
Houston, we’ve had a problem here
• Level of understanding among board members about their business
• Type and level of information and intelligence available for decision making
• Effectiveness of non-executive director challenge
• Ability to hold executive directors to account for implementation of board decisions
1. Knowing the business
What is our business? Who is the customer? What does the customer consider
value? Peter Drucker
The Practice of Management, 1954
Financial Services Industry
The modern financial services industry is a casino attached to a utility: • The utility is the payments system, which enables
individuals and non-financial companies to manage their daily affairs. The utility allows them to borrow and lend for routine activities, and allocates finance in line with the fundamental value of business activities
• In the casino, traders make profits from arbitrage and short-term price movements. The users of the utility look to fundamental values. The occupants of the casino are preoccupied with the mind of the market
The activities of the casino have come to dominate the utility.
John Kay Sunday Herald 11 January 2009
We have to strive to alter our whole mentality about hospitals... Hospital building is not like pyramid building, the erection of memorials to endure to a remote posterity. We have to get the idea into our heads that a hospital is a shell, a framework, however complex, to contain certain processes, and when the processes change or are superseded, then the shell must most probably be scrapped and the framework dismantled.
Enoch Powell, Minister of Health, March 1961
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2. Information for decision making – From Data to Knowledge
Subjective and judgmental
Objective and analytical
Data
Information
Intelligence
Knowledge
Insight
Process Driven – ‘Black Box’
© Frontline
Joining the dots
Activity
Quality Cost
Strategy
Adapted from Kenichi Ohmae (1982)
3. Challenge function – Building trust in a system
Bedfellows Partners The Voiceless
Fence Sitters Allies Loose Cannons
Opponents Fellow Travellers Adversaries
High trust Quality of Relationship
with Proposer
Low trust
Low/ against
Level of Support
for Agenda
High/ for
Peter Block (1987)
You are entitled to your own opinions, but you are not entitled to your own facts.
Daniel Patrick Moynihan
Recognising the challenge of which ‘hat’ you wear
Personal – individual appointment and contribution
Interest – not a constituency
representative; functionally accountable
Corporate – team role of within
the board
Corporacy is uncomfortable!
© Frontline
4. Holding to account – Leadership challenge and support
Cosy club
High performance
Inertia/apathy
Stress
John Blakey and Ian Day (2012)
High challenge
Low challenge
High support
Low support
• Persecution • Anger • Stress overload • Lonely • Paranoia • Confronting • Fear • Threatening • Back-stabbing
• Exciting • Energetic • Risk taking • Fun • Collaborating • Purposeful • Creative • Learning • Stretching • High performance
• Indifferent • Cold • Drifting • Boredom • Uncommitted • Stress from underload • Frustration • Unclear
• Smothered • Vagueness • Frustrated • Caring • Cosy/comfortable • Non-confronting • Under-achieving • Not developed
Developing the capability of middle leaders
Staff
Exec team
CDs GMs
Direction from the top
Light a grass fire
“Middle out”
One either meets or one works. One cannot do both at the same time.
Peter Drucker
Essay “Know your time”, 1966
Adding value in the company secretary role
• Take a balanced perspective, eyes down to know the business, eyes up to understand the context
• Balance assurance with summary in board minutes, and consistency across committees, summarising to ensure quality of content
• Develop and provide guidance and training on writing board papers
• Understand the power dynamics on the board and work to build relationships through conversations
• Own the implementation of board decisions, providing a link across the organisation
• Work in service of not just the chair and chief executive, but the board as a whole
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Background
Frontline working with boards…
• Diagnostic • Peer Assessment • Well-led Review • Facilitation • Development • Coaching
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Frontline
Willow House, Strathclyde Business Park, Lanarkshire, ML4 3PB T: 01698 464140 F: 01698 464141 9 Staple Inn, Holborn, London, WC1V 7QH T: 0207 404 7005 E: enquiry@frontlinemc.com www.frontline.consultants.com
Frontline
11 Academy Street, Coatbridge, Lanarkshire, ML5 3AW T: 01236 433019 Central Court, 25 Southampton Buildings, London WC2A 1AL T: 0207 404 7005 E: consult www.frontline-consultants.com
John Deffenbaugh Director Frontline john.deffenbaugh@frontlinemc.com Mobile: 07788 746550 Twitter@DeffenbaughJohn www.frontline-consultants.com
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