Lady Judge is Chairman of the Institute of Directors, a Business Ambassador for UKTI and Deputy Chairman of the Tokyo Electric Power Company. Prior to this, Lady Judge was Chairman of the Pension Protection Fund, the first female Director at News International and the youngest ever Director of the SEC.
How would you make UK boardrooms more effective?
Obviously I’d want to see more women on boards – not because they're women, but because boards need a range of views from their customers, stakeholders and employees. The recent debate around board composition has focused on employee representatives and, whilst I can see the merits, I think this should be encouraged rather than enforced. To be an effective board member you can’t just represent one interest group. And we can’t parachute workers into board seats without first equipping them for the job and giving them training.
In terms of practical things that help me prepare for a board meeting, I make it my business to have one-on-ones with a couple of executives to find out what’s really going on. For the Japanese board I sit on, I’ll fly out and have tea with the General Counsel before dinner with the Chief Executive. These meetings ensure I’m up-to-date and can make a real contribution in the meeting.
What are the differences between US and UK corporate governance?
I’d like to say that UK governance is better and in some respects this is true. For instance, I prefer the flexibility of the UK’s ‘comply or explain’ model to the US rule-based approach. And I like the UK’s balance of executives and non-executives. In the US, non-executives only really get to know the CEO and CFO – the other executives just present to the board and then leave. But I think it’s important for non-executives to get to know the people running the business and to form relationships beyond the CEO.
On the other hand, there are some rules in the UK which are seen as absolutes when they aren’t necessarily. The UK Corporate Governance Code calls for separate positions of Chairman and CEO, but separating the roles isn’t a fait accompli for good governance.
The other area where I think UK governance is too prescriptive is the nine-year term rule for independent board members. Having independent voices is important but, in complex financial institutions for example, it can take up to three years to get to grips with the organisation. The nine-year term can be restrictive and some boards are frustrated by it.
How important is information in the boardroom?
It's how we make informed decisions – without it you're at sea.
Too much disclosure is as bad as non-disclosure and a board pack that’s two inches thick is unlikely to be read. I restrict my reports to four pages; there can still be an appendix for extra detail, but a four-page report is substantive enough to draw out the key facts and issues, yet short enough to be read and retained.
What single government policy change would you make to support British enterprise?
I’d give the pensions regulator enhanced powers so that every deal above a certain threshold would need their sign off, to ensure pensioners’ interests are protected. The infrastructure is there, the regulator just needs the power.
What is the smartest business decision you’ve made?
Listening to my mother’s advice to become a lawyer and not a “starving actress”. She said that if I wanted to act, I should do so in front of a jury.
The other decision which stands out is applying for a role at the UK Atomic Energy Authority in 2002. I was unemployed and knew I wanted to go back into government, but I had no experience of the energy sector. What I did have though was a strong academic record and the ability to learn things fast. I got the job and went on to become Chairman, and am now a specialist advisor to companies on nuclear energy.
What book is on your bedside table?
The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies by Brynjolfsson and McAfee. I was recommended it by a friend who knows how worried I am about the swathes of people losing their jobs to machines. I'm all for technological advancements and efficiencies, but what’s going to happen to these people?
I share the authors’ view that we urgently need to invest in these people, educate and equip them with the skills so they can embrace the digital revolution and not lose out.
What is your golden rule?
In whatever you do, work as hard as you can. If you don’t, you’ll only regret it. After all, if it’s worth doing, it’s worth doing well.