Working with over 6,000 board teams across Europe, we are in a privileged position to understand first-hand the impact a board director can have in propelling an organisation forward.
To explore an effective director's qualities and uncover how to identify and empower future board members, we spoke with experienced non-executive director (NED) Michael Bernard. Here, we summarise our wide-ranging conversation and examine some of the issues raised.
You can also listen to the full interview with Michael here:
About Michael
A former Chief Marketing Officer for IBM, Michael Bernard started his NED career working at an advisory level on the board of two companies connected to his position at IBM. The experience motivated him to find additional NED roles, and it's fair to say that variety has been vital to him ever since.
Michael has served on the board of numerous charitable organisations, a private school, an NHS foundation trust, a mental health technology company, a business school, and as an executive volunteer for a climate action organisation. Despite varied remits, Michael points out that their board teams all have a common thread running through - he gets to work alongside a team of talented people committed to adding value individually and collectively. Drawing on this experience, Michael shares his take on the issues he feels are shaping the role of a modern board director.
Governance is evolving
The role of board directors is changing rapidly in the current business environment. Michael acknowledges that board directors are expected to be more active in ensuring their companies comply with environmental, social, and governance (ESG) standards.
However, despite no consistent framework for measuring or addressing ESG, it is an area of particular focus that will shape boards of the future. Yet, studies reveal that many NEDs feel their organisation and executive team are behind on ESG matters.
In a 2022 study, half of the board members surveyed felt their executive team had the skills to develop and deliver an ESG strategy for their organisation. Furthermore, just 10% of respondents felt their company had the systems and processes needed for ESG data collection.
“The survey highlights that non-executive engagement on the ESG agenda has room for improvement, particularly given the confidence levels around the skills and competencies of the executives and their teams to integrate an effective and robust ESG strategy that underpins the overall business."
NEDonBoard/Grant Thornton
Michael agrees, highlighting that ESG is increasingly essential for all boards, especially those he serves. However, he believes that most NEDs have little experience in this area, so the board team must regularly challenge itself, asking difficult questions rather than consigning them to the ‘too difficult pile.’
He also argues that the board can demonstrate authentic leadership by putting ESG at the heart of executive discussions. Alongside the standard governance required by regulators and the demands of shareholders or consumers, he believes companies that don’t actively embrace ESG now are simply storing up what he describes as a massive crash down the line.
Two essential ingredients for an effective board
Besides ensuring ESG is front and centre of the agenda, Michael believes there are two essential building blocks for every successful board.
- Have a variety of voices and acknowledge that diversity of thought, insight, and experience is essential. Robust discussion is critical and should be welcomed.
- Choose NEDs based on their potential contribution rather than their personality type. Naturally, the chemistry needs to work, but not everyone has to get on with each other all of the time.
They are simple rules, and Michael believes they create a bedrock to build a more effective board. In particular, he highlights that a board with a homogenised viewpoint can be dangerous, and regulators agree.
The UK’s Financial Conduct Authority (FCA) position is that a homogenised stance, or groupthink, is when a group of people “prematurely coalesce around poor decisions.” History shows us the dangers of allowing it to flourish, such as the collapse of banking giant HBOS in 2008, which regulators criticised for groupthink during board-level decision-making.
“The regulators considered that discussion in HBOS Board meetings was limited by virtue of the fact that the Chair would signal his (dis)agreement with the proposals in advance of a Board debate. The fact that directors reached consensus views in advance of Board meetings, leading to insufficient debate and a blindness to colleague concerns, was also cited as an example of poor governance approach.”
Linklaters
Navigating the line between the diversity of opinion and groupthink is challenging. However, healthy debate is not only desirable but essential too, and for Michael, it’s something the company or board secretary has a vital role to play in managing. Company Secretaries are the glue that keeps a board functioning positively; they’re enablers and problem solvers and need equal amounts of foresight and hindsight to advise the chair and the wider board. Of course, they are also tasked with ensuring good governance procedures are followed, and while regulation of the role varies by country, Michael recognises their essential role.
Having experience in varied sectors and types of organisations, Michael highlights the qualities he has witnessed in the most successful Company Secretaries he has worked with.
Five qualities of a successful Company Secretary
1. They stay clear of drama
Being a facilitator in the boardroom means the board secretary can support each individual to shine. Michael argues a board secretary that can do this while staying neutral in the face of conflict helps the board function more smoothly.
2. They anticipate the board’s needs
Spotting both opportunities and challenges the board faces enables a board secretary to anticipate information requirements. This can often mean being the one to clarify deadlines, scope, and responsibilities too.
3. They support new board members
Helping new NEDs to navigate the way the board works stems from the board secretary’s unique position and experience in managing board dynamics and processes.
4. They help navigate board politics
A deep understanding of the dynamics between board members means a great board secretary can manage relationships, recognise potential conflicts, and seek compromise and solutions.
5. They are an expert in governance
Naturally, a Company Secretary is responsible for ensuring legal and regulatory requirements are met. However, those with in-depth knowledge of the company's sector elevate their contribution further.
Working with many different board teams, we have seen that the qualities Michael describes here are complimented by the ability to communicate, multi-task, and translate governance theory into practice. While the role of a Company Secretary is essential in ensuring good governance, their role is also pivotal in many other ways. This inevitably impacts how they work as board roles evolve and adapt.
Remote board working is here to stay
As remote board meetings have become commonplace, Michael highlights the importance of maintaining board effectiveness. He believes that while virtual board meetings work, they can lack what he calls ‘the extra spark’ from in-person discussions before and after a meeting or during coffee breaks.
This shift means directors must collaborate more effectively over digital platforms, utilising tools that make board meetings as dynamic and efficient as possible. While remote board meetings have undoubtedly created new challenges, new opportunities exist to draw on technology that enhances and supports board success. Ultimately, mixing in-person and virtual meetings is probably the most effective solution, and technology such as board portals ensure convenience and accessibility are combined with efficient and secure outcomes.
Looking ahead
We wrapped up our conversation with Michael by exploring the issues and trends he feels will shape board work over the next 12-18 months. He references three key issues that can be summarised as people, balance sheets, and sustainability.
Finding and appointing the right people to an evolving board is a challenge for many organisations, and competition for experienced NEDs is intense. Meanwhile, board directors must continue to focus on financial performance during economically challenging times. Michael reminds us that even when the numbers look good at the top, asking difficult questions and probing what is underneath the headlines is vital.
Finally, Michael believes that building a sustainable organisation must be a priority for every board. Understanding the environmental and social risks an organisation faces and how to mitigate them contributes to its long-term success more than ever. In conclusion, Michael emphasises that from environmental protection to inclusion and social responsibility, every company, board, and NED must strive to ‘become a good citizen in the world we operate in.’
To further explore board effectiveness and the role of a multi-board member, listen to the full conversation with Michael Bernard here:
