An extract from my speech to the Financial Centres Summit 2019
Good governance is a key ingredient to the long-term success of any business, and it is built on foundations of trust, accountability and transparency. There are many elements to successful corporate governance. In my own experience, the culture within a board is one of the most important, and yet it is the most difficult to define or to prescribe in regulation. I have been a part of the dynamics of many boards both in the private and public sector, nationally and internationally, as a participant and a director. To me, there are four key features that define an appropriate board culture.
Firstly, the role of the Chair and how she or he ensures that the board does its job well in setting and monitoring the implementation of a company’s strategy. Most Chairs are selected because of their previous experience and their credibility to investors and stakeholders. It is entirely possible that the Chair will need training and a good Chair will identify their own skill gaps early on. They can also play a crucial part in making sure the board is balanced in terms of mix of skill, experience and viewpoint. The crucial difference that leads to a stand-out Chair is the ability to encourage diverse views in the room, to offer feedback to individual board members on how to make their interventions more impactful and perhaps to offer training for this. The diversity aspect of the board is, of course, important but this only becomes powerful when the Chair accomplishes inclusion, encouraging each director to bring the real version of themselves into the room. Inclusion breeds diversity. When we set out, intentionally, to include those who have different views, backgrounds dispositions, etc even where they might look like us, then we remove the major obstacle to embracing diversity in its broadest form.
This is easier said than done as groupthink is related to culture generally because “the way we do things around here” becomes an accepted wisdom. Boards are made up of people and people have a natural tendency to want to belong to a group. The objective is to achieve a board where a director feels they belong but also feels they can be a challenger both of management and fellow directors especially where consensus is emerging too quickly and without proper debate. To really ensure the avoidance of groupthink, a director may need to take the devil’s advocate position. Clearly, the Chair also plays an important role in encouraging and engaging in robust and respectful debate.
Groupthink can also be driven by two other strong, human emotions - admiration and fear. Directors may hold in very high regard a Chief Executive, a Chair, an Advisor or a fellow director because of their superior learning or experience. This can blind them in their duty to robustly discuss issues on which this person is an expert.
The third learning from my experience is to have your voice heard and listen to other voices. It is the role of the Chair to make inclusion happen but what if the Chair does not do that? How can you have your voice heard? This can include specific planning, for example arranging a bi-lateral meeting with the Chair to make a point, seeking honest feedback from other directors, or undertaking formal training.
Listening carefully to fellow directors and to management can involve asking for clarification or checking on something when the Chair summarises a discussion. Some of the most persuasive interventions at board meetings build on points made by others or recognise the opposing positions of others, showing a thoughtful and listening approach, and an openness to alter you position.
To make the most impact, each director should work towards bringing their authentic self to their role, embracing their own particular diversity.
For those who wish to continue their development and aspire to be a board director or a better board director, there are many executive education programmes including the IoB’s leadership programmes which lead to the professional designations Certified Bank Director (CBD) and Certified Investment Fund Director (CIFD). You can read more about those here
High standards are central to our purpose. I believe the quality of our education programmes and our graduates can only contribute to delivering enhanced governance in the financial services sector.
Mary O'Dea, Chief Executive