Clare Chalmers chaired the discussion organised by NEDonBoard on the Wates Corporate Governance Principles for Large Private Companies in May 2019. The event featured Sir James Wates as the keynote speaker, was hosted by Herbert Smith Freehills and introduced by Ben Ward, Herbert Smith Freehills partner. In an interview recorded prior to the conversation with Sir James Wates, NEDonBoard asked Clare Chalmers what regularly surprises her when she engages in a board evaluation assignment.
Mrs. Chalmers is “most regularly” surprised by board information, which is a key issue that is often identified as an area of improvement for most boards. The information that boards are given is critical to board members’ understanding of operational and long-term strategic issues and decision-making. The key points that need to be thought-through, discussed, debated and on which NEDs and other board members need to give a strategic opinion are often lost in the reams of board papers. This is one of the biggest challenges of NEDs as the work they perform is part-time by nature with meetings scheduled every 6 to 8 weeks.
Clare Chalmers reported that within the FTSE 250, efforts have been made to reduce the length of board packs but overall, more needs to be done. Cutting down the size of board pack requires a commitment from the chair, CEO and company secretary as well as time. Mrs. Chalmers indicated that it took two years to a financial services company to achieve a board pack length of 100 pages, which is highly unusual especially in a highly regulated industry. Writing lengthy papers is easier than writing concise and short board packs that deliver the right amount and type of information.
NEDs encouraged to go beyond board information
Clare Chalmers encourages NEDs to engage with the wider organisation on which they serve as board members. Even if board papers are of a high quality and standard, there is value in NEDs engaging with employees and middle-management and performing site visits. This helps NEDs in understanding operational issues and debating with the executive board members using new perspectives, insights or information that may not have been shared with the board in previous board meetings. In addition, engaging with the workforce allows NEDs to assess the corporate culture.
The full interview with Clare Chalmers can be accessed by NEDonBoard Standard and Event members. Next week’s blog will discuss some of the key issues with board materials and outline best practices (members only).
If you are not a member, join NEDonBoard today and unlock the benefits of joining the UK professional body for NEDs and board members: https://www.nedonboard.com/become-a-member/.
For more information and training on board materials, please contact [email protected]. NEDonBoard offers on-line modules on the topic of board papers to those interested.
Elise Perraud, on behalf of NEDonBoard