Eamonn McGrath has been an audit partner Ernst & Young LLP for over 25 years and has worked with FTSE 100 and FTSE 250 clients, as well as other listed and unlisted audit clients. He is a member of the assurance practice Professional Standards Panel.
He was appointed UK Head of Regulatory & Public Policy in 2015. Eamonn also joined the UK Board of EY at that date. In his new Regulatory & Public Policy role Eamonn engages with our key stakeholders; regulators, public policy makers, investors and other interested parties.
Eamonn remains an active audit partner with a portfolio of clients. Following a NEDonBoard panel evening, we asked Eamonn about what makes an effective board of directors.
What are the most effective boardroom behaviours you have witnessed ?
I would certainly start with constructive challenging, but one where people are treating each other with respect. The chairman sets the tone, and if it’s a poor chairman then people will be treated with disrespect [and perhaps a] curt manner. You’ll find non-executives trying to do executives’ jobs, trying to be the second FD.
So, I think what one needs to do is have the non-executives allowing the execs to do their work, but as I say, constructively challenging them.
How does this affect the corporate culture of an organisation?
If the tone is set at the top by the board then that filters all the way down through the organisation. An organisation is made of a lot of micro cultures. Your boss’s boss / your boss, whether or not you’re in the Manchester office or the London Head Office, will set your culture. But he’ll get his guidance, or her guidance, from the board, and I think that starts with the Chief Executive. So, if the Chief Executive is there to run the company and the Chairman is there to run the board then the Chief Executive sets the culture.
How can boards ensure that they are covering key factors in their organisation?
You have to start with the purpose of the company and its strategy – the risks are those that would cause the strategy to fail, [and] the principle risks, those that would call into doubt the success of the business. And as a consequence of which, they’re the ones that need to be tested and reviewed during any risk assessment process.
What is the importance of an effective audit committee?
An effective audit committee needs at least somebody who’s financially literate, so they understand the numbers that they’re seeing. But also [importantly], they are there, as I’ve said before, to constructively challenge particularly the finance team in this perspective. (Not to do their job for them, but to make sure that they’re doing their job.) And in that regard, getting comfort that the risks are being managed, [and] the process and control of them are in place to support the strategy.
In looking for non-executive director roles, it’s important to know what value you bring to a board, and what particular experience and expertise a specific board is looking to cover. The definition effectiveness in the boardroom has dramatically changed over the last decade and recruiting and developing directors who go well beyond basic needs is the secret to building high performing boards. If you want to raise your NED career to the next level, please visit: www.NEDonBoard.com