Mark Hoban is Chairman of Flood Re, a reinsurance fund to protect homes at risk of flooding. He is also a Non-Executive Director of the London Stock Exchange and an advisor to IHS Markit and PwC. Mark was the Member of Parliament for Fareham for more than a decade and is a former Financial Secretary to the Treasury and Minister for Employment.
This runs the risk of sounding trite, but we need more diversity in the boardroom. Gender and ethnic diversity are an important part of this, but it also requires diversity of ideas and thinking styles.
We’ve achieved this at Flood Re, where gender and ethnic diversity is supplemented by a mix of backgrounds and perspectives at our boardroom table — reflecting the complexity of the organisation. We have a senior actuary sitting alongside the former CEO of the Environment Agency, and someone with deep financial services operational expertise working with people with Whitehall and Westminster knowledge.
There will be those who say they have tried to build a diverse board but they simply can’t find suitable candidates. Truth be told, it is hard but it can be done — those who say they can’t, aren’t trying hard enough.
They do differ; let me give a couple of examples:
In business, boards play a major role in decision making; in government boards scrutinise the work of the department but have no decision-making powers. This is not to say that they are without influence, but it is more informal than formal — dependent on personal relationships rather Board terms of reference.
Secretaries of State also do have more unfettered power than CEOs. This does mean that the Government can be nimble in tackling issues, but sometimes the quality of decision making is compromised by the absence of checks and balances that you’d see in a corporate structure.
At the interface between the two. I can explain to each how the other works. I understand how government works in practice — and this is not the same as knowing a lot about politics, which plenty of well-read people can lay claim to.
Boards take decisions based on the best available data at the time. But if high-quality data is either poorly presented or buried within less relevant data, it can be overlooked. The data that goes up to the board needs to be useful and usable, which requires management to think quite hard about the format and content of data presented.
Looking to the future, boards should access more diverse sources of information. And we should explore how to harness the power of big data and machine learning in the boardroom.
The disconnect between business and society is real. You see it in the Exec Pay and Brexit debates. Today’s emphasis by business leaders on defining company purpose could be seen as an acknowledgement that, for many years, they lost sight of this. Businesses need to reconnect.
Boards need to get out to meet their customers and their employees. And they should keep an eye on their company’s social media feeds, staff turnover data and complaints handling. What are people complaining about? And how does the business respond? Do they take responsibility and seek resolution? The way an organisation handles complaints can be telling.
The days of laissez-faire are over. Government needs to be more proactive in support of business. When it comes to skills, talent and infrastructure, businesses are heavily dependent on partnership with government.
I have two books on the go. The first is The Future of the Professions: how technology will transform the work of human experts, by Richard and Daniel Susskind. The automation of manual labour is well understood. But the potential for technology and artificial intelligence to challenge the relevance of doctors, journalists, lawyers and accountants is new and it raises interesting questions. If a machine can digest the full canon of medical research and make sense of it, what role does that leave for the doctor?
The other book I am reading is The rise and fall of American Growth – the US standard of living since the Civil War by Robert J Gordon who argues that the era of unprecedented productivity growth is behind us. Around the 1900s we saw the introduction of electric lighting, telephones and urbanisation, which triggered exponential growth. By contrast, today’s innovations are relatively marginal and the productivity gains that follow are nothing like as significant. This seems counter-intuitive given today’s pace of technological change. But the difference between having and not having a phone is more dramatic than a slightly better built-in camera.
I would take an infinite supply of cookery books. I love cooking! I always have.
Make the best of what you’ve got. And get on with it.