Michael O’Higgins is Chairman of the NHS Confederation and of Investec Structured Products Calculus VCT, and a Non-Executive Director of Network Rail. He was previously Chairman of the Pensions Regulator and a Non-Executive Director at HM Treasury.
There are three questions that every board should ask themselves. Do I really know what is going on? Are we focusing on the right things? And are we asking the right questions? The lurking dangers are rarely what you find on the risk register.
Boards should constantly be asking management and themselves what has surprised them over the past few months and with the benefit of hindsight, what would have made a difference. Coming out of the financial crisis it is clear that stress testing didn’t pinpoint the weaknesses that would bring a company down and we should learn from this experience.
It’s also important that boards focus on where they can really add value. Boards should focus on risk and changes in strategy and circumstances, not simply the matters with the highest price tag.
It is a privilege to sit on a board but the increasing pressure on non-executives to know the minutiae is at risk of turning a board position into a fall back executive. There is a danger that, in retrospect, everything is perceived as a board issue. Boards need to be clear about the boundaries of their strategy and stewardship roles.
I think there is an important question we should be asking: should the Board Secretary work for the executive or for the non-executive? Too often the Board Secretary’s role is an administrative one.
But I think there is a case to be made – as a handful of companies have – for developing the role into a more powerful one and morphing the secretariat into the Office of the Chairman. If the non-executives were better resourced they might provide a better challenge function to the overly powerful Chief Executive.
The right information is vital. But too much information can be a dangerous thing. It gives the impression of full disclosure when in fact the board is blinded with information and often not the right information. The right information will pre-empt the questions on my mind so that we can use our time productively when we meet.
If I can see from my papers that the operations of the business are in good health, we can spend our meeting time talking about bigger picture board level issues instead.
I think British business can cope with most things, provided they don’t keep changing. So if I could do one thing it would be to persuade the next government to set out their plans for business and to stick to them for the full five years.
If I approach the question from a different angle and ask myself what I would do for British jobs, then I think we need to be very careful about the continuing pressures to increase national insurance, which is a tax on employment. The smaller the gap between the gross cost to the employer and the take-home pay of the employee, the greater the likelihood of the marginal jobs being created, particularly for lower-paid jobs.
I think the outlook for Britain is good. Employment statistics are encouraging and the longer term trends look promising too. You can already see the cost of production rising in the east but staying fairly steady here, so the benefits of offshoring may start to decline.
That said, our focus should be on the value-adding jobs and in the wake of the banking crisis we need to be wary of denigrating financial and professional services. For all that has happened, we are still a world leading financial centre and we should be proud of that.
Roger Bootle’s The Trouble with Europe. I am a pro-European but I also subscribe to the point that David Cameron made last January, when he said that Europe needs to change for its own sake and not just for ours.
You can’t lead without followers. And the secret to leadership is encapsulated in the 5 Cs: Clarity, Consistency, Confidence, Communication and Celebration (to reinforce the successes).
What rule book? Get the culture right and people follow the right rules without even knowing their details.