HIGH PERFORMANCE BOARD
Craig Hunter FCIS
17 August 2011
Craig Hunter FCIS - my career
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Chartered Secretary in Public Practice – 30 years
experience, with award winning business
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FTSE and global companies, charities, private groups,
sporting organisations, sole traders
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British Swimming independent director
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European Swimming technical committee member
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International swimming referee
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British Swimming team manager 1989-2006
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Olympic Games 2000, 2004, 2008
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Commonwealth Games 1998, 2002, 2006, 2010
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UK Sport Mission Control panel member
Programme
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Governance structure & board composition
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Directors’ duties and responsibilities
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Effective performance
•
Purpose of the board
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Independent directors
•
Competencies
•
Behaviour
•
Governance oversight
•
Board evaluation
Typical corporate structure
Shareholders
Annual General Meeting
Board of Directors
Exec
Audit
Executive
Non-exec
Remuneration
Clients
Nomination
Typical sport structure?
Council
Annual Meeting
Board of Directors
Exec
Audit
HC Reps
Executive
Independents
Remuneration
Membership
Nomination
Legal status
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Incorporated body
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Company limited by shares of guarantee
• Articles of association
• Companies Act 2006
•
Charity
• Trust deed
• Charities Act 2006
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Unincorporated body
• Rules
Round table discussion
• Briefly outline your board composition
and structure as well as the
challenges you face
The perfect model - 1
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Independent chair
•
•
Internal or external appointment?
Dynamic CEO
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Supported by executive management team
• finance, legal, marketing, performance/participation
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Appropriate non-executive/independent directors
•
•
Skills based –v- regional/Home Country representatives
Appointed –v- elected
The perfect model - 2
•
•
Board composition and size
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Diversity
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Candidates able and willing to challenge convention
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Balance of executive and independent/non-executive
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Broad range of experience
Appointment
•
Process, rolling –v- fixed term, terms
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Duties
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Delegations of authority
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Terms of reference
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Effective performance
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Board evaluation
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Succession planning
Directors’ duties and
responsibilities
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Companies Act 2006
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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
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Obey the company’s constitution and decisions taken under it
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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
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Remember that you remain responsible for the work you give to others
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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
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Effective decision-making
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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
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Reassert the distinction between governance, strategy and
operational matters
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Emphasise the importance of the board proactively crafting
policies, processes and systems to ensure the delivery of
its strategic objectives
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Ethical sensitivity?
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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
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Importance of induction
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Development and training
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Need for on-going support and development
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Access to operations and staff
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External advice
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Benchmarking directors’ performance – evaluation
Competencies
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A breadth of experience
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Team player who leaves their ego at the door
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Independent adviser, able to challenge as well as support
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Committed and prepared
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Articulate communicator and good listener
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Sharp mind and good judgement
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Visionary, creative, and passionate
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Build strong relationships and act as ambassadors
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Self-confident without being dogmatic
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Enhance their contribution through feedback
Source: Whitehead Mann
Weaknesses
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Being a passenger or nodding dog
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Critical but not supportive – not adding value
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Still acting as a Chief Executive or frustrated
Executive/Director
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Sloppy thinking or not up to the job
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Self centred
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Demanding too much detail and overloading
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Unprepared
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More on “broadcast” than “receive”
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Lacking courage to disagree
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Divisive and dogmatic
Source: Whitehead Mann
The independent director
YES, I am
independent
YES, I
understand
the business
YES, I
challenge our
executives
YES, I keep up to
date with current
developments
YES, I attend
board
meetings
The Boardroom Framework
Roles
Objectives
Responsibilities
Purpose
Drives
Outstanding
Performance
Promotes
Strong
Management
Facilitates
Quality Working
Practices
Skills and Skills
development
People
Board
Composition/
Structure
Relationship
Management
Communication/
Reporting
Process
Board
Meetings
Business
Knowledge
Policies and
Procedures
Ongoing
Development
Guidelines, Regulations, and Commercial/Sporting Requirements
Boardroom behaviour
ICSA report concluded:
“Best practice boardroom behaviour may be characterised by
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A clear understanding of the role of the board …
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Independent thinking
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Challenge which is constructive, confident, principled and
proportionate
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Rigorous debate … and
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Supportive decision-making environment”
Appropriate boardroom
behaviours
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Develop a culture of constructive and robust challenge in
the boardroom
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Avoidance of “groupthink” culture
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Interrelationships within the boardroom
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Group dynamics, as well as the contribution of (key)
individuals
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Interaction with employees
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Social context (dinners, away-days, events)
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Ground rules for meetings
Board agenda and meetings
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Standard agenda items and annual plan
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Allocate sufficient time
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Presentations by key executives
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Role of board papers
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Robust discussion & challenge
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Behaviour
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Corporate message - unanimity
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Accountability
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Use and role of committees
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Focus on strategy, financial management, governance,
performance/participation, risk
Governance oversight
There are three levels
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Institutional – are the corporate governance policies and
architecture fit for purpose?
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Organisational – has management installed adequate
processes and systems?
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Behavioural – are directors exhibiting the appropriate
behaviour?
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Sport & Recreation Alliance
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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
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Who is involved?
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Chairman
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Directors (executive & independent)
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Staff
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Independent observer?
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Process: robust assessment of strategic plan and
outcomes
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Frequency and facilitation
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Potential conflicts of interest
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Nature and importance of board evaluation
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How outputs of the process can be meaningfully disclosed
without compromising confidentiality
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Notification to stakeholders
Resources
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www.icsa.org.uk
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Corporate, voluntary & community sector
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Committee terms of reference
• Audit, Executive, Nomination, Remuneration, Risk
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Guidance
• Joining the right board: due diligence for prospective directors
• Induction of new directors
• Directors’ duties
• Job/role descriptions
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Financial Reporting Council
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The UK Corporate Governance Code (June 2010)
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Guidance on Board Effectiveness (March 2011)
Sport Management Consultancy
www.versec.co.uk
M: 07771 814929
T : 01727 855512
F : 01727 855501
E : craig.hunter@versec.co.uk
Registered in England at 39 Alma Road St Albans AL1 3AT
Company Number: 3999397
VAT Number:706 0811 65