Achieving effective board performance
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BPandE Case Study Improving Board Performance

The Problem

An insurance company asked us to undertake a Board Review. The purpose was largely to satisfy a regulatory request. The Board comprised:

• 3 Non-Executive Directors who represented an overseas parent company and were based overseas.
• 2 Independent Non-Executives one of whom was the Chairman
• 4 Executive Directors

The three Board Committees, Audit, Risk and Executive were to be included in the review

The solution

We proposed a four stage review:-

Stage 1: Desk based research covering governance standards
Stage 2: An on line questionnaire to highlight areas of concern
Stage 3: Individual interviews to explore concerns and establish potential remedies
Stage 4: Board Observation to see the Board in action

The desk based research established that the Terms of Reference for the Board and the Executive Committee were unclear in terms of the decisions that each had the power to make particularly with regard to changes in strategy implementation.

The minutes conveyed a passive attitude by the Board with little challenge from Non-Executives. Board packs were very detailed and much of the information seen by the Executive Committee was re-iterated.

Attendance records showed that the Non-Executives based overseas rarely attended Board meetings in person and usually dialled in although one individual had only done this in 3 out of 4 meetings.

The questionnaire showed that there was irritation with Board packs in relation to the level of detail and the timing which often meant that they were received only 2 days before the Board. There was also concern about the Chairman’s attention to detail which was felt to be excessive and unnecessary.

 The interviews with Non-Executives overseas indicated that they were largely ignored when they dialled in and found it impossible to follow the debate on particularly detailed issues. They felt that the Chairman ignored them.
These points were borne out by the Board observation.

Before releasing any results we had a meeting with the Chairman and put these points to him. He admitted that he did concentrate on the detail of underwriting as he believed that this was the area of greatest risk to the business. When challenged that this showed a level of distrust concerning the oversight provided by the Executive Team he was startled that this could be a conclusion, but agreed that he felt he could rely on the Executive team to pick up any issues.

He also agreed that by ensuring that those dialling in positively confirmed their agreement to decisions/conclusions reached on agenda items he could ensure that they were engaged in the process.
The remaining points concerning Board attendance, and the content of Board packs was addressed in a formal report which the Board accepted and agreed to act upon.

The results

The non-attending Non-Executive agreed to stand down as his other commitments gave him insufficient time to commit.
The Chairman agreed that the Board would only consider underwriting issues not review all major transactions.

We worked with the Company Secretary and the Executive team to extract issues that the Board should consider from the mass of information and implemented a process that ensured Board packs were received 6 working days before the meeting. This took 6 months to achieve but is now established practice.

Most importantly the Executive are clear about the decisions they can make and if a matter is urgent and important that requires the Board’s approval, interim meetings on specific issues are called at short notice.

One year one, the Board feels it is working as a team and focussing on strategic matters together.

If you would like to discuss any of the issues raised in this case study please email or call +44 (0) 20 7764 0721

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