Upload
victoria-merritt
View
214
Download
0
Tags:
Embed Size (px)
Citation preview
Boardroom Dynamics 023 8074 4450 1
Benefits of NED’s in the SME Sector
Presented by
Leslie Spiers MA MBA DMS CertEd
Boardroom Dynamics Ltd
Boardroom Dynamics 023 8074 4450 2
The business literature is unanimous
Board is no longer a cosy affairProactive and transparentGrowth in status of NED = more scrutinyDiverse opinions improve the board decisionsEffective boards = Mix of Exec and NED
Boardroom Dynamics 023 8074 4450 3
Appointing NED’sHistorically poor - Smoke filled roomsFewer than 4% have formal interviewFewer than1/3 Chairs help NED inductionDiversity vs. group think vs.quotas
Boardroom Dynamics 023 8074 4450 4
Directors’ legal requirements Now codified in Companies Act 2006
Act within your powers
1. Promote the success of the company for members
2. Exercise independent judgment
3. Exercise reasonable care, skill and diligence
4. A general duty to avoid conflict of interest
5. Duty not to accept benefits from 3rd parties
6. Duty to declare an interest in proposed transactions
Boardroom Dynamics 023 8074 4450 5
The Board
AccountabilityTo the companyTo OwnersTo regulators and legislatorsTo StakeholdersEnsuring Directorial Audit
Policy Formulation
Stating PurposeCreating Vision and ValuesDeveloping corporate climateMonitoring the external environment
Strategic Thinking
Market PositioningSetting corporate directionReviewing resourcesSetting implementation processes
Supervising ManagementPerformance ManagementBudgetary ControlReview of key business resultsOrganisational capability
SHORT TERM LONG TERMOperations Review Cycle
INTERNAL
EXTERNAL
Governance Review Cycle Strategy Review Cycle
Responsibilities of the Board
Boardroom Dynamics 023 8074 4450 6
Board composition & organisation
"A Board may be composed of brilliant individuals and yet be ineffective.
It can only fulfill its true potential as a Board if it is properly selected, organised and led."
Good practice for directors – Standards for the Board
Boardroom Dynamics 023 8074 4450 7
Directors……Establish clarity of mission, vision and values
to lead the broad direction of the company
Decide upon the strategies and structureto ensure the company's survival & prosperity
Delegate to management and involve staff to effect implementation of strategy, policies & plans
Exercise responsibility to shareholders and other interested partiesto promote & meet their legitimate interests
Boardroom Dynamics 023 8074 4450 8
The Role of the NED
“To help build a successful company”
Higgs suggests 4 components– Strategy– Performance– Risk– People
The role is to balance monitoring with strategic aspects
Boardroom Dynamics 023 8074 4450 9
NED Engagement in Strategy
SWOTPEST LIEDPorter Boston BoxAnsoff Matrix
Strategic Alternatives
Strategic Choice
StrategyImplementation
Where most CEOs
Engage their
NEDs in Strategy
Optimal Point to
Engage NED
in Board Strategy
Boardroom Dynamics 023 8074 4450 12
People and performance
Confidential, structured interviews typically conducted by a third party but sometimes conducted by the Chairman, the Chair of the Nominating/Governance Committee or the corporate secretary; this methodology is used by 43% of UK boards
What was the most significant decision this board made in the past year?
If you could change one thing about this board, what would you change – and why?
What do you see as the board’s most important priorities over the next 6, 12, 18 months?
How would youdescribe the working relationship between the board and the CEO?
What are the major risks facing this company?
Boardroom Dynamics 023 8074 4450 13
What are the benefits of an NED?• Strategic and long term perspective
• Financial scrutiny, business compliance and governance
• Monitors executive decisions
• Independent mentor and sounding board
• Constructive challenger, reflector and pain in the bum
• Performance monitoring and driving ethical matters
• Dealing with risk and managing change
• Director evaluation and remuneration
• Source of appeal (and reason), fire fighter
• Over reliance on one person
• Restrains power mad entrepreneurs/motivates lazy devils
Boardroom Dynamics 023 8074 4450 14
NED RemunerationFees for <£5m Turnover
LQ Median UQChairman 6000 18000 35000NED 10050 15000 29350Fees for >£5m to <£50m TurnoverChairman 18337 30000 41750NED 10000 20000 28750Source: IOD Croner Reward, Director Remuneration, October 2008
Boardroom Dynamics 023 8074 4450 15
NED Time Input (Days pa)<£5m Turnover
MeanChairman 24NED 14>£5m to <£50m TurnoverChairman 44NED 14Source: IOD Croner Reward, Director Remuneration, October 2008
Boardroom Dynamics 023 8074 4450 16
Strategic DirectionContributes creatively and realistically to planning
2
Can balance needs and constraints 2
Has deep knowledge and understanding of strategy
1
Holding to AccountAccepts personal accountability for delivering agreed actions
2
Challenges constructively and effectively 3
Contributes to effective governance
1
Influencing & CommunicationManages board meetings and board processes well
2
Persuades with well-chosen arguments 3
Uses facts and figures to support argument 3
Uses subtle and informal tactics to persuade
2
Team WorkingInvolves others in decision-making process
2
Respects other team members 1
Understands the Non-Executive Chairman’s role 1
Coaches and mentors other directors 2
Shares expertise and knowledge freely 3
Personal QualitiesAssertive without being aggressive
2
Acts confidently and is accessible 2
Willing to accept a challenge 2
Enthusiastic and a champion of the business 2
Emotionally resilient and a stable influence on the board
2
Boardroom Dynamics 023 8074 4450 17
Characteristics
What is the make up of the NED?
What are implications for
– Selection
– Induction
– Performance Measurement
Boardroom Dynamics 023 8074 4450 18
NED Requirements
SkillsSkills ExperienceExperience
CharacteristicsCharacteristics
Boardroom Dynamics 023 8074 4450 19
NED CharacteristicsCounsellor Speak-outer Sounding
BoardWailing Wall Bullet-biter Stand-in
Put in toucher Team Leader Stimulator Nurturer Adviser Expeditor
Disagreer Encourager Comparer Follow-upper Copywriter Enhancer
Partner Kite flyer Critical friend Intervener Idea provider Teacher
Substitute Questioner Seller Facilitator Catalyst Recommender
Helper outer Tactician Dismisser Challenger Drafter Mountain Guide
Listener Autocrat Judge Jury Negotiator Supporter
Boardroom Dynamics 023 8074 4450 20
Why Characteristics Matter
Characteristics
Tasks
Job Complexity
Simple Difficult
Boardroom Dynamics 023 8074 4450 21
What drives our Behaviour?
SkillKnowledge
Social RoleSelf Image
TraitsMotives
Easy to acquire
Harder to acquire
Boardroom Dynamics 023 8074 4450 22
So, what is needed?
Understanding Context
Relationships
Influencing the context
Proactive
Self Confidence
Insightful Integrity
Working the Context
Boardroom Dynamics 023 8074 4450 23
Insightful Integrity
The foundation stone of the NED Not just about honesty Alert and engaged Guarding against complacency Scan the business and its context Ask brave and probing questions Identify and distil important issues Willing to act in line with insights
Boardroom Dynamics 023 8074 4450 24
What is needed?
Understanding Context
Relationships
Influencing the context
Proactive
Self Confidence
Insightful Integrity
Working the Context
Boardroom Dynamics 023 8074 4450 25
Proactive Self Confidence
The confidence to challenge the Board/CEOFacing the issue of being a minorityComfortable asking the awkward questionHaving positive intentChallenge with supportKnowing when and how to make impact
Boardroom Dynamics 023 8074 4450 26
Proactive Self Confidence
Asking questions and feeling stupid at times
Not just sitting and being dumb
If it does not sound right - open it up
Action without rocking the boat
Boardroom Dynamics 023 8074 4450 27
What is needed?
Understanding Context
Relationships
Influencing the context
Proactive
Self Confidence
Insightful Integrity
Working the Context
Boardroom Dynamics 023 8074 4450 28
Working the Context
Ability to understand the contextKnowing the dynamics of the boardPossessing a degree of realismSustaining the right relationshipsInfluencing the contextAbility to make things happen
Boardroom Dynamics 023 8074 4450 29
Becoming an effective Non-Executive Director:
A leadership programme for aspiring and new Non-Executive Directors in the SME sector.
Board Development for Non-Executive Directors from Boardroom Dynamics Ltd.
Need more?
Duration, Date and Venue
Monday March 22nd 9.3am until 5.00pm Guildsrealm House, Ensign Way, Hamble, SO31 4RF