Sir Brian Bender is chairman of the London Metal Exchange, a non-executive director at the Financial Reporting Council and Pool Re, and a governor of Dulwich College. Previously, he was permanent secretary at DEFRA, the DTI and served as EU adviser to John Major and Tony Blair.
If you could wave a magic wand, how would you make boards more effective?
The first thing I’d do is get a better focus on boards’ wider responsibilities. This is covered by Section 172 of the Companies Act, but that has no legal force and there is unlikely to be any early legislation. But legislation aside, more should be done to strongly encourage boards to report on their broader responsibilities — for example, to the company’s customers, staff, community and environment.
The second thing I’d do is promote greater diversity — not just gender diversity, but how boards can avoid groupthink. Part of the answer is having a board with a variety of backgrounds, experiences and so on.
Finally, I’d tackle boards’ responsibility for the overall culture of the company. The day-to-day culture is set from the top — by the CEO and his or her senior team — but the expectations are set by the board.
How can boards monitor and influence a company’s culture?
There needs to be a spirit of openness from the CEO and senior management, and they should be held to account by the board. On a practical level, regular employee surveys are a good way for boards to get a feel for what’s going on in the organisation. And NEDs should also undertake site visits to hear direct from staff what they’re thinking and feeling.
How have boards changed over the last few years?
The biggest change is the greater focus on risk and regulation, which is largely a fall-out from the financial crisis. Some of that is good, such as the active and more thoughtful engagement with risk. But some of it is slowing us down, with boards shying away from even the smallest level of exposure, and we need to avoid a tick-box approach to risk management.
What is your biggest bugbear about board reports?
Volume! And whether the executive summary brings out the key points of the paper. There are also challenges around giving the board what they actually need to see, rather than every detail on every topic.
When I was in Brussels, Ministerial meeting agendas were divided into ‘A points’ and ‘B points’. ‘A points’ were the items for formal adoption — for example, the latest banking or accounting standard — which had already been agreed at official level; whereas ‘B points’ needed to be properly discussed and debated by those sitting around the table. That clear delineation of what really needed input versus what didn’t was helpful.
What is your proudest achievement to date?
Leading the sale of the London Metal Exchange to the Hong Kong Stock Exchange in 2012.
LME had been owned by its trading members — household names like JP Morgan and Goldman Sachs. We had an unsolicited offer, when we weren’t for sale, from an American exchange. We then ran a deliberately protracted process which involved a lot of socialising with shareholders to find out what the crown jewels were that they didn’t want to lose. There were 50 or so shareholders who had 90% of the shares and then a long tail. We had four serious bids — none of them British — with the sale to the Hong Kong Exchange receiving a gratifying backing of the shareholders of over 98%.
What book is on your bedside table?
Alan Johnson’s autobiography, This Boy. If you haven’t read it, I really recommend it.