Improving Board Performance

Requirement  

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 Chair
  • 4 Executive Directors

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

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 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.

Results

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.

Click here to read our other case studies.

You can also email info@bpandeglobal.com or  call us on +44 (0) 20 7764 0721 to discuss how our insight could make your Board more effective.  

BP&E Global – Board performance matters 

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