Session 5: The effective board and its officers the Chair Claire - - PowerPoint PPT Presentation

Session 5: The effective board and its

• fficers – the Chair

Claire Lea, Thursday 28 September 2017, 4pm My microphone is currently muted

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Session 5: The effective board and its

• fficers – the Chair

Claire Lea, Thursday 28 September 2017, 4pm

Today’s plan

• Introduction
• Good boardroom practice
• Succession planning
• Induction and evaluation
• The Chair of the Board
• Concluding remarks

Good boardroom practice

‘An effective board develops and promotes its collective vision of the company’s purpose, its culture, its values and the behaviours it wishes to promote in conducting its business. In particular it:

• provides direction for management;
• demonstrates ethical leadership, displaying – and promoting

throughout the company – behaviours consistent with the culture and values it has defined for the organisation;

• creates a performance culture that drives value creation without

exposing the company to excessive risk of value destruction;

Good boardroom practice

In particular it:

• makes well informed and high-quality decisions based on a clear line
• f sight into the business;
• creates the right framework for helping directors to meet their

statutory duties under the Companies Act 2006, and/or other relevant statutory and regulatory regimes;

• is accountable, particularly to those that provide the company’s

capital; and

• thinks carefully about its governance arrangements and embraces

evaluation of their effectiveness.’

FRC Guidance on Board Effectiveness 2011

FRC – Corporate culture and the role of Boards (2016)

Sir Winfried Bischoff, Chairman of the FRC, writes: ‘There needs to be a concerted effort to improve trust in the motivations and integrity of business. Rules and sanctions clearly have their place, but will not

• n their own deliver productive behaviours over the long-term. This report

looks at the increasing importance which corporate culture plays in delivering long-term business and economic success.’

Key findings of study (2016)

• Recognise the value of culture: A healthy corporate culture is a valuable asset
• Demonstrate leadership: Leaders must embody the desired culture,
• Be open and accountable: Respect a wide range of stakeholder interests.
• Embed and integrate: The values of the company need to inform the behaviours

which are expected of all employees and suppliers.

• Align values and incentives: performance and reward system should support

and encourage behaviours consistent with the company’s desired culture

• Assess, measure and engage: Align indicators and measures
• Exercise stewardship: include engagement about culture and encourage better

reporting

What makes boards great? – Sonnenfield (2002)

Great boards:

• Create a climate of trust and candour
• Foster a culture of open dissent
• Use a fluid portfolio of roles
• Ensure individual accountability
• Evaluate the board’s performance.

ICSA: Boardroom Behaviours (2009)

Effective boardroom behaviour is characterised by:

• a clear understanding of the role of the board
• the appropriate deployment of knowledge, skills, experience and judgment
• independent thinking
• the questioning of assumptions and established orthodoxy
• challenge, which is constructive, confident, principled and proportionate

rigorous debate

• a supportive decision-making environment
• a common vision
• the achievement of closure on individual items of board business.

Succession planning

• Delegated to the nomination committee
• Planning for EDs and NEDs
• Terms of office and criteria for independent
• Refreshing board membership
• Oversight of induction
• Evaluation of board and committees
• Evaluation of individuals as board members

The Chair of the Board

'People do what the chief executive asks because they are in an employer- employee situation….. but the chairman's role is about influence and persuasion; it's about making sure that the board has a proper discussion about the things that really matter. 'The chairman has to be both a cheerleader for the board and its chief of police… they are trying to be both coach and challenger. It's a somewhat schizophrenic role.'

The Chair of the Board

‘Good chairs understand their role in helping their trusts embrace a large cultural shift [as required by the duty of candour]. They lead by example; they are a critical but supportive friend of the chief executive and make sure they do not get dragged into the detail. The new duty of candour places even more weight on the shoulders of NHS trust chairs. There is no hiding from mistakes and top chairs recognise this and use candour as a driver for improvement. Above all, chairs need to understand that success is about relationships, whether this involves creating the right environment for an effective board meeting, or helping clinicians understand management processes. The best chairs understand this and will invest time in developing and nurturing their board members.’ What makes a top chair? -Hunter Healthcare 2015

NHS expectations of the role of the Chair

The NHSI sets out that the Chair is accountable to the Secretary of State through the NHSI, for giving leadership to the NHS trust board and delivering value for money for NHS resources in terms of quality of service and financial balance. They will:

• provide leadership to the board, the trust, the other NEDs, the CEO and

EDs; and ensure the effectiveness of the board in all aspects of its role and agenda; including directing the organisation towards achieving FT status;

• ensure the provision of accurate, timely and clear information to the

board and directors to meet statutory requirements;

NHS expectations of the role of the Chair

• ensure effective communication with the board, staff, patients and the

public in a changing healthcare environment;

• arrange the regular evaluation of the performance of the board, its

committees and individual non-executives, directors, and the CEO;

• plan and conduct board meetings with the CEO;
• facilitate the effective contribution of NEDs and ensure constructive

relations within the organisation and between executive and NEDs, and

• share and use relevant expertise of all members of the board.

Effective chairmanship

GOOD CHAIRS

• Pick NEDs who are sufficiently diverse and strong-minded to challenge the executive

directors.

• Maintain a five-year perspective. The executive directors are focused on this year, the

senior managers on this month. The Chair’s job is to take a longer view.

• Support the CEO as best they can, know their personal circumstances, priorities and how

long they want to stay.

• Put their network and wider business experience at the disposal of the board.

Effective chairmanship

BAD CHAIRS

• Dole out non-exec jobs to their old mates.
• Get too chummy with the CEO which makes it much harder to sack them if and when the

time comes.

• Pull rank on a director in front of their boardroom colleagues.
• Have been heard to say: 'This is how we did it when I was the chief executive ...’

Behaviours of an effective chair

• Independence
• Time commitment
• Integrating the board’s collective thinking
• Empathy and promoting openness
• Facilitating interaction.
• Developing others.
• Communicating complex messages succinctly.
• Collaborating across boundaries.
• Continuous improvement

Attributes of an effective Chair

• courage
• strength
• agility
• curiosity
• tenacity
• approachability
• emotional resilience and integrity.

Good communication skills were also seen as key alongside an ability to listen effectively

Key relationships

• The CEO
• The Company Secretary
• The Senior Independent Director
• The stakeholders

Past question – June 2017

The Walker Report 2009 argued that the character of board members and the board culture are both important for an effective board and that the main weaknesses in the boards of UK banks had been caused by behavioural factors and a failure to challenge. The report stated: “The sequence in board discussion on major issues should be: presentation by the executive, a disciplined process of challenge, decision on the policy or strategy to be adopted and then full empowerment of the executive to implement. The essential “challenge” step in the sequence appears to have been missed in many board situations and needs to be … clearly recognised and embedded for the future.” Required Using examples from either a CCG, FT or NHS Trust, discuss how behavioural factors can affect the board’s ability to provide sufficient and robust challenge. (25 marks)

Examiner’s comments

This was very poorly answered with only 6% of those attempting it, managing to

• pass. The question asked about the behavioural factors that can affect the board’s

ability to provide sufficient and robust challenge. These are comprehensively covered in the Handbook and encourage candidates to think beyond process and procedures and to think about behaviours, attributes and character required for good governance. The answers focused on process and procedure and therefore failed to pick up many of the marks available.

Suggested answer

Walker Report - findings and relevance 2 ICSA Boardroom Behaviours, Mapping the gap 2 FRC Board effectiveness 2 Effective Boards in the NHS 2 Healthy NHS Boards and social systems 2 UK Code - diversity 1 NHS examples relevant to organisation type 5 Examples of failure to challenge and relationship to culture 4 Examples of behavioural issues 4 Concluding remarks or suggestions for improvement 4 Total marks available 28 Maximum marks awarded 25

Following this session

• Session slides and content
• Reminder - deadline for November exam is has been extended to 2 October at

6pm

• Practice Task 1 – instructions and guidance (already given). Due Friday 29

September at 12pm (no webinar)

• Session 6 on Key roles within the Board: Friday 20 October, 4pm
• Further questions

Task 1

Practice task 1 (due Friday 29 September 2017) Meeting targets has been used as the measure of the quality of trust leadership because ‘‘compliance was an indication that boards could effect change within their own organisations where their lesser colleagues might struggle’’ http://www.nhsproviders.org/blogs/john-coutts-blog/time-to-rethink-the-risk-assessment-framework/

Task 1

Task 1 requires you to set out: The responsibilities of an NHS board or governing body (8 marks) How its governance procedures would meet these responsibilities and (10 marks) How does the well led framework move boards away from the use of targets as an assessment of the board’s effectiveness? (7 marks)

Thank you