Sir Malcolm Williamson is Chairman of Resolution Ltd and Friends Life Group plc, the FTSE 100 provider of pensions, investments and insurance. He is the former CEO of Visa International and Standard Chartered, and has also been Chairman of Clydesdale Bank and Britannic Group.
From your experience, what makes for an effective board?
There are four points that stand out to me.
First of all you need to build a board that is congenial as well as diverse. It’s a difficult combination to get right: you need diversity of thought, but too much grit in the oyster and you end up with dysfunction.
Secondly, you need to keep the board to a manageable size.
Thirdly, with the right mix and number of people in place, you need effective board packs and agendas. The information the board receives must be clear with the key points spelt out and not buried within bloated reports.
Finally, all of this requires not only a strong chairman but also a high calibre company secretary. I believe in separating the roles of general counsel and company secretary, or there’s a tendency to be short-changed on the secretariat support. A good company secretary will be highly knowledgeable of the ever changing legal and regulatory landscape and they’ll have the strength of character to be unpopular when they need to be.
Are the regulators helping or hindering the governance of financial service firms?
I sympathise with their predicament but from my perspective they’re making it harder to run an effective board. CSFI, a think tank I chair, publishes the Banana Skins survey each year which reveals the City’s own perceptions of its biggest risks and this year regulatory risk came top. The concern is that the increased expectations of regulators on board responsibilities are distracting them from the more urgent task of running profitable businesses.
The regulators are also making it hard to recruit a high-calibre board. They expect a non-executive to display the same detailed knowledge as the executives – and with such onerous expectations it’s not surprising that few are willing to take on the job. I recently approached 30 women for a non-executive role and each one turned it down. “Why would I do it?” they asked. The mismatch between the risk and reward has become too great.
What policy would you introduce to support British enterprise?
he perception that our government can do much to drive enterprise is misplaced (except by reducing red tape): our fortunes will rise and fall with Europe’s. However, the government can make things worse. Many large companies are very liquid but uncertainty, aggravated by the EU referendum, is stopping them from investing. They should also sort out tax legislation. As a board we want to do the right thing, but is tax avoidance the prudent management of shareholder funds or is it immoral? There’s too much ambiguity — clarity would be helpful here.
What book is on your bedside table?
Good old fashioned blood and thunder fiction, like James Lee Burke.
What is your golden rule?
I have three. Firstly, don’t lose your sense of humour. Secondly, don’t lose sleep worrying because you can be pretty sure what bites you won’t be what you were worrying about anyway. Thirdly, stay physically fit. I recently climbed Mount Fuji and went on a cycling holiday to Burma. Mental balance is important.
And if you could rip up the rule book…?
I actually think we have a pretty good system. If anything, we should be doing more to encourage other countries to adopt our model of governance as it’s light-years ahead of many others’.
As chief executive of Visa International I spent a number of years in the United States, so I’ve seen at close quarters just how lucky we are. Everyone should follow our lead with the separation of CEO and chairman. Without that, as I know from my days in the US, you are unlikely to have meaningful challenge on a board.