Clare Spottiswoode is Chairman of Energetix, a NED at G4S and a member of the Independent Commission on Banking. She is former Deputy Chairman of British Energy, Director General at Ofgas, and has been a NED at Tullow Oil and Booker.
A successful governance system enables talent in the boardroom to change when change is needed. The UK split of CEO/Chairman supports this – it empowers the Chairman to replace the CEO. However, I’m not convinced the FRC’s move to directors’ annual re-election is sensible; although well-intentioned, in practice directors are being waved through to next year’s board without thorough evaluations of their performance. It was more effective when re-election was done by rotation, because an in depth discussion was guaranteed at least every three years.
One recommendation that is particularly topical is that every board should have a Board Crisis Response plan. It isn’t enough just to have management’s Health and Safety response or Disaster Recovery plan mapped out; the board itself needs to know how, in practice, it would interact with management and who would take the lead between CEO and Chairman. Practising when times are good for when times are bad, is a hugely valuable exercise. No board should think it won’t happen to them!
Boards in the United States have become much more focused on their supervisory role and legal responsibilities. Fortunately, UK boards haven’t gone to this extreme but they are increasingly conscious of the time constraints they are under. One of the ways I try to tackle this is encourage my boards to meet for an informal dinner before each meeting. There’s no agenda for this, just free-range conversation, so it’s an opportunity for people to get things off their chest and discuss possible risks and opportunities facing the business, without board meeting time pressures. You just need to watch out for too much hunting-shooting-fishing chat!
Information is the life-blood of the boardroom. Boards need to be shown the things that matter and in a format they can digest. If you can’t see the wood from the trees it’s hard to be effective, let alone spot the information gaps and manage the risk of ‘unknown unknowns’.
It may sound obvious, but when deciding between competing investment opportunities you have to know the wider context and have the options presented to you in a like-for-like manner. And once you’ve made your decision, you need to track whether you actually achieved your goal. Boards need to know the consequences of their decisions.
Joining Energetix as Chairman last year. It’s a fantastic AIM listed company that develops innovative, green energy products with global appeal - our boiler generates electricity whenever it’s used for central heating or hot water. I’m proud to be backing it and excited about its future.
Hilary Mantel’s latest book, Bring up the Bodies. But I’ve had too many emails to start it yet!
I have two! Never join a board unless the culture is right. And you only have one life, so make the most of it.