An insurance company asked us to undertake a
Board Review. The purpose was largely to satisfy a regulatory request. The
- 3 Non-Executive Directors who
represented an overseas parent company and were based overseas
- 2 Independent Non-Executives one of
whom was the Chair
- 4 Executive Directors
The three Board Committees, Audit, Risk and
Executive were to be included in the review.
We proposed a four-stage review;
- Stage 1: Desk based research covering
- 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 in stage 1 established
that the Terms of Reference for the Board and the Executive Committee were unclear
in terms of the decision-making power that each member had, particularly when
it came 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 1 individual had only done
this in 3 out of 4 meetings.
Stage 2’s 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 Chair’s attention to detail which was felt to be
excessive and unnecessary.
Interviews with Non-Executives overseas in stage
3 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 Chair ignored them. These points were borne out by the Board observation.
Before releasing any results, our team of
experienced specialist consultants had a meeting with the Chair 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 potential
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 were addressed in a formal report
which the Board accepted and agreed to act upon.
The non-attending Non-Executive agreed to stand
down as his other commitments gave him insufficient time to commit. In addition
the Chair agreed that the Board would only consider underwriting issues not
review all major transactions.
We then 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 on, the Board feels it is working as a
team and focussing on strategic matters together.