A London Market firm asked BP&E Global to undertake a
Board Effectiveness Review. The purpose was part of their triennial cycle of
good governance. They were also due a regulatory visit and knew the regulators
had some concerns about the rigorousness of the Board.
The Board comprised:
- 3 Non-Executive Directors, 2 who represented an overseas part-owner parent company
and one of which was Chair and a major shareholder himself
Executive Directors including the CEO, FD, CRO, Head of Legal and CUO
We proposed a four-stage review:
1: Desk based research to check the governance
structure in place, the reality of what was happening and how this was recorded
2: A questionnaire to highlight any
areas of concern and open-up thinking in preparation for interviews
3: Individual interviews to explore
any concerns and dive deeper into questionnaire responses
4: Board and Committees’ Observation
to see the Board and Committees in action. The desk based research showed that
the chair was very involved.
The agenda was very high level and there were always many ‘tabled’
items, or AOB discussions instigated by the Chair. The minutes conveyed a very
high level of input from the Chair. The questionnaire showed that there was
satisfaction with how collegiate the Board was, but conversely frustration at
the leadership by the Chair.
In the interviews with the Board, members expressed their
frustration at the lack of challenge and seriousness, with much being discussed
‘on a whim’. Papers were always late and of poor quality. They also felt that
the lines separating governance and oversight/delegation were often overstepped,
especially by the Chair and the CEO was therefore disempowered. These points
were borne out by the Board and committee observations.
The Chair was enjoying his retirement and coming to see his
firm and friends, without consideration for regulatory requirements or what the
company needed to grow and be sustainable, with a fully functioning Board.
BP&E Global recommended that the agenda be reviewed with
an annual cycle of agenda items, both strategic, risk, regulatory and
operational, and deep dives on a cycle. We also recommended that there were
strict guidelines on Board papers in terms of content, layout and timeliness to
reduce the number of tabled items. We recommended that the INEDs were rotated
off the Board as two had served over 9 years and one was a personal friend of
From a Board composition perspective, we questioned whether
they were still the right fit for what the Board needed going forward. We also
spoke privately to the Chair about empowering the CEO and entrusting him with
the business allowing him to run the company.
The Board agreed to our recommendations and we worked with
the firm to design an appropriate Board paper in house style for them, with a
rolling agenda. We worked with the firm to identify the best Board composition
for them and the INEDs were gradually changed and the new INEDs carefully
chosen to fit culture and what the business needed going forward. The Chair
also saw how he was not helping his own firm and had not considered the impact
of his over-involvement.
Since our work with the organisation, the Board has timely
papers, which are well structured set within a robust agenda that is followed
appropriately. The Chair has instigated more pre-Board and post-Board dinners
and lunches so that he still gets the social interaction and the feeling of a
level of involvement he enjoys, but has fully empowered the CEO who has really
grown in the role.