|Call for widening of director gene pool|
|Written by Groupe Intellex Global|
|Monday, 05 October 2009 11:43|
Company nomination committees should consider experienced candidates from the voluntary, public and professional sectors for board appointments.
Delegates at this week’s International Corporate Governance Conference are to be asked to widen their search for potential directors. According to Prof. Colin Coulson-Thomas “Recent events have called into question the value added by many boards, particularly those of financial institutions that have been bailed out or whose assets have been written down. The banks rescued by Governments are not obscure companies run by inexperienced directors. They include household names, whose board members have included the ‘great and the good’ of the City establishment.”
Coulson-Thomas feels that “Despite their directorial pedigrees, clear duties and responsibilities and regular attendances at meetings, many directors seem to have neither noticed nor questioned dangerous practices. Executive directors have not been held to account. Boards have presided over bank cultures and practices that suggest a short-term focus, self-interest and greed among those for whom they have been responsible.”
The author of Developing Directors will suggest “an alternative to ‘safe directors’ who ‘look the part’ with their smart suits and ‘track records’ of service on plc boards, and who can be relied upon not to question, challenge or probe. We need to look beyond the ‘normal suspects’ for people of integrity who would be willing to ask difficult questions and who would welcome an opportunity to ‘make a contribution.’ ”
Coulson-Thomas believes “Given the evident deficiencies of the current narrow gene pool from which directors are selected and the lack of value some of them appear to add it ought to be possible to do better. A new generation of directors are required, selected from people of integrity who have their feet on the ground, are alert to risks and the reality of what is happening around them, and who think for themselves.”
Having helped to improve the performance of over 100 boards Coulson-Thomas has encountered directors in many arenas and countries. He points out “Charities have a big impact on the lives of many people. Yet those who serve as charity trustees are often unpaid. They have significant legal duties. They attend and contribute to board meetings, and discharge their responsibilities without any hope of personal financial gain. Their motivation derives from the vision, purpose and work of the organisation and their reward comes from the satisfaction of contributing to its success.”
The major professions, many of which are self regulating, can also have a significant impact upon the lives of most citizens. Despite their responsibilities and what is at stake, committee and council members generally give their time for free. Like charity trustees, all they normally draw is out of pocket expenses, such as the cost of travel to committee meetings. Again Coulson-Thomas finds “They want to make a difference.”
Some areas such as the NHS are inherently complex and a large Primary Care Trust (PCT) can spend over £1 billion locally on health care. There are various committee and sub-committee meetings to attend, and the added challenge of holding executives to account when main meetings are held in public. Coulson-Thomas’s experience of local, regional and national public sector boards is that “many members devote much time to preparing for meetings and often engage in rigorous questioning that would be unusual in some private company boardrooms.”
In any sector some directors and boards will be more effective than others. However, Coulson-Thomas’ view is that “There is much that private sector boards can learn from the voluntary, public and professional sectors. Directors do not need to be mercenaries whose first thought may be to arrange alibis and disclaimers and maximise their remuneration. It is possible to find people of integrity with directorial qualities and experience outside of the relatively narrow ranks of the City establishment and those who already have plc director experience.”
Coulson-Thomas argues that “Outside of the rarefied atmosphere of plc boardrooms, and in other walks of life, motivated citizens are giving considerable time, much of it unremunerated, to service upon boards that have a significant impact upon their fellow citizens. Many of them are displaying directorial qualities that would put some high profile directors of large corporations to shame. Few of them fit the caricature of the ‘nodding donkey’ or the ‘cardboard cut out’. Most are committed and highly motivated to provide effective governance, and within the parallel dimensions in which they operate – whether charities or the public sector – significant effort may be devoted to ensuring their directorial knowledge and skills are kept up to date.”
Although he believes nomination committees should broaden their investigations to embrace candidates from the voluntary, public and professional sectors Coulson-Thomas does not expect sudden or large scale change: “Directors have onerous duties and responsibilities and because of what is at stake selectors need to exercise a degree of caution. A core boardroom team of competent and experienced directors with more conventional backgrounds may first need to be put in place before existing directors feel confident enough to consider additional appointments from beyond the ‘normal suspects’ that might bring greater diversity and fresh thinking into the boardroom.”
A full version of Professor Coulson-Thomas's address to the International Corporate Governance Conference is available here
The 10th International Conference on Corporate Governance was organised by the World Council for Corporate Governance and was held at the Royal Overseas League in London on the 9th and 10th of October. The theme of the conference was "Re-energising corporate governance by realigning the moral compass of the boardroom".
Directors of over 4,000 organisations from smaller firms to major corporations and public bodies have participated in Prof. Coulson-Thomas’ research programme which identifies what the most effective directors and boards do differently. His books ‘Developing Directors’ and ‘Winning Companies; Winning people’ set out the differing approaches of those who are most and least successful. Both are published by Policy Publications and can be ordered from: http://www.policypublications.com.
Critical success factors for key corporate activities that have been identified by Prof. Coulson-Thomas’ research programme are set out in 20 reports that are also published by Policy Publications. Lessons from the investigations are incorporated into twenty five courses for directors and boards on particular activities that are vital for corporate success. Further information can be obtained from http://www.adaptation.ltd.uk.
Boardroom consultant Prof. Colin Coulson-Thomas of Adaptation is also Chairman of Bryok Systems and Cotoco and Chair of the Audit and Governance Committee of