Warren Partners Webinar Series: Creating value with Board evaluations

Warren Partners Webinar Series: Creating value with Board evaluations

Our Webinar brought together Dr Sabine Dembkowski, Founder/Managing Director of Better Boards, Carolyn Ferguson, Company Secretary of FTSE250 Go-Ahead, and Stephen Billingham, Chair of Urenco and Senior Independent Director of FTSE250 Balfour Beatty.

Welcoming a cross-sector audience of Company Secretaries (CoSecs), Non-Executive Directors (NEDs) and Chairs, Joëlle Warren facilitated the session, exploring a different approach to conducting Board evaluations. Could Chairs and Boards benefit from having better data and insight to understand what characteristics new Board Members should bring to the table? Could it help individual Board Members to become more impactful in the Boardroom?

Key themes from the discussion:

Board dynamics...

Stephen opened the discussion, reflecting on his experience and expectations of Board evaluations: “Board evaluations are really about what I call ‘furniture and chemistry.’ Furniture refers to the Board papers, the cycle of Board meetings, the presentation style of the Board, and then there is the chemistry, how the Board and individuals on the Board interact with one another, how the relationships play out in the Main Board and the committees. It is those human interactions that deliver either a good or bad dynamic and make the difference between the Board meetings you want to turn up to and those that are a chore.”

Board evaluations examine these dynamics, build upon them and provide a useful lens on how Board Members can add real value. Sabine commented: “These dynamics are exactly what Better Boards focus on and they are the exciting parts of Board evaluations, but there is a different way of doing the evaluation. First of all, our premise is to generate reports based on real data and research-based evidence. Secondly, it is important to put context around a Board evaluation at the outset and make sure we look at what matters to a Board at the time; finally, we provide the Chair and each member of the Board with individualised reports, setting out positively and constructively what role they can play going forward and how they can be more impactful”. Grounded in scientific data...

Using academic literature and research, Better Boards have looked at the key cornerstones of effective Boards. “We looked at the variables that impact Board effectiveness and identified seven hallmarks of effective Boards namely the composition of the Board”, i.e. what know-how and role behaviours do we have on the Board, how are the strengths of each member leveraged, is there clarity around roles and responsibilities, what is the shared vision, how does the Board tackle conflict resolution, is work organised and structured and, does the Board take regular time out to review and reflect about its work.

“Too many reviews tell the Board what they should do, then go on to describe how they are and which gaps need plugging. Most Boards do know what their gaps are. The more crucial question is, how do we become better within the context we are operating in?"

Board evaluations put into real context...

One criticism levelled at Board reviews is that they do not always take enough consideration of ‘context.’ After all, businesses go through cycles and what matters to one organisation or Board is different from another. Sabine expanded: “Too many reviews tell the Board what they should do, then go on to describe how they are and which gaps need plugging. Most Boards do know what their gaps are. The more crucial question is, how do we become better within the context we are operating in? Which is why Better Boards asks different questions, namely: tell us which areas are most important to you, how well is this area developed at present and who demonstrates the greatest skills in each area? The aim is to empower each Board Member to be more effective.”

Another criticism levelled at Board reviews is that they tend to look back and focus on what has gone wrong when, arguably, there is more benefit to be had from a ‘forward feed’ approach. Even effective Boards have seen value in taking this more constructive approach. Carolyn, who has worked with Better Boards noted: “When it came to rotating our NEDs, understanding what skill was leaving the Board and being able to map our skills and strengths against our strategy gave us a clear view on how best to change the composition of the Board; it allowed us to manage Board succession in an informed way, leading to a much clearer briefing for our head-hunters, specifically outlining the skills and behaviours we needed going forward.”

A key and unique feature of setting the context and taking this empowering approach, is that the Board does all of this together, in unison. Sabine explained: “It is not about an external Board evaluator making all of the recommendations. Better Boards provides the data and steer but fundamentally, the Board works together to agree on what can make each member more effective.” Carolyn added: “The focus is more on what we can do to be better in the future and this forward-looking approach engages everyone right from the start. At Go-Ahead, it delivered tangible improvements across the dynamics of what was already a very effective Board. The insights individual Board Members had about themselves and each other created a bridge to really good, open and constructive discussions and decision making. We understood each other’s roles better, generating greater respect for each other and, in turn, leading to even better teamwork. It also helped shape our Board agenda, our reporting and our Board’s purpose.”

"Objective data can help Chairs and CEO’s understand what skills to leverage and how..."

Objective data can help Chairs and CEO’s understand what skills to leverage and how, and equip them to allow each voice to be heard, like instruments in an orchestra. Stephen commented: “Data is really useful. Board reviews tend just to pick up the high performers and the underperformers and tend to deal with extremes. Most Board evaluations do not give the granularity you need to help everyone participate more positively, and so a data-led approach can help you to move the whole team on collectively rather than focusing on the top and bottom of the team. For example, it helps understand who on the Board has specialist vs. generalist skills and then how to help the specialists broaden out beyond their comfort zone and how to ‘mesh’ everyone together.”

The crucial role of the Company Secretary...

The panel also reviewed the crucial role of the CoSec before, during and after a Board evaluation - making sure the Board review is appropriate and tailored to the specific needs of the company and the Board, ensuring engagement and buy-in and recording agreed actions, monitoring progress and assessing effectiveness. A champion of the importance of the role of the CoSec, Stephen explained: “They are a pivotal partner to the Chair in a Board review process because they are both ‘in the room and not in the room.’ They help provide a different angle and optic; they can see things that maybe the Chair cannot see; they are the eyes and ears of the Board and therefore can give you real colour and nuance around the Board evaluation, around the process, which rightly sits in their space, and how the evaluation is delivered, not to mention of course ensuring the Board adheres to regulation and governance. They also have a critical role in making sure action is taken and in tracking progress at the half-year and year-end”. Sabine highlighted that Better Boards could provide CoSecs with a license to use the Board evaluation platform. Carolyn here also highlighted the benefits of using the digital platform which provides a practical way for Boards to check in and produce rigorous, individualised follow up reports in years two and three.

Closing remarks

There is no ‘one size fits all,’ which is why Board evaluations, Board size and composition all need to be tailored. Stephen commented: “While questionnaires, for example, can give you high and quick response rates, they can give you staccato answers, and so one to one interviews can bring more colour around fundamental issues and bring out common themes. When it comes to Board size, the best Boards I have sat on have been small ones and made for great interactive discussions. This is ideal in a fast-moving business where commercial decisions need to be made quickly, like a pub business, for example, where the focus is on performance; compare that to other sectors, NHS Trusts, for instance, where the emphasis is more on quality assurance, governance and process. In my experience, a Board of 12 is probably the maximum number beyond which bringing everyone in takes too long and becomes unwieldy”. Carolyn remarked that: “This needs balancing, however, with the absolute need for diversity and here, again, understanding what skills and behaviours are most complementary is key; it can take away personal sensitivities and give the Board permission to be more diverse, beyond gender and ethnicity.” Based on her experience of appointing more contemporary profiles to address legacy issues on Boards, Joëlle remarked that some Chairs are less comfortable in processing feedback from younger generations. Better data can give Chairs the confidence to admit what they or the Board are missing openly. It can also provide a useful aid and insight to support one to one evaluations / catch-ups.

There is a strong need for scientific data, for putting evaluation in their proper context and for developing detailed forward-looking insight so Boards really understand the resources they have and how best Chairs can deploy them in the Boardroom. Pulling on each Member’s strength is a skill at the best of times; ‘virtual chairing’ is making this even more of a challenge, but this topic we shall leave for another Warren Partners’ webinar…

Posted by Joëlle Warren on

Joëlle Warren

Joëlle Warren

Executive Chair & Founding Partner

Joëlle is Executive Chair & Founding Partner of Warren Partners and leads chair and non-executive director searches.