Terri Duhon is the chair of Morgan Stanley Investment Management Ltd and a NED for both Morgan Stanley’s international board and Rathbone Brothers — where she also chairs the Risk Committee. Once part of the team which developed the global credit derivative market, Terri is an Associate Fellow at Oxford’s Saïd Business School and the author of How the Trading Floor Really Works.
What has been the most valuable lesson you’ve learnt during the Covid-19 crisis?
There are two that stand out to me.
The first one is that boards in the financial services industry did relatively well throughout 2020 thanks, in part, to the strengthening of their risk management frameworks following the global financial crisis.
Finance is no stranger to shocks: we have big “events” on a fairly regular basis, because it’s quite literally our job to take risks. But 2008 was a wake-up call that, among other things, we had to better prepare for such moments. And since you can’t predict the future, the only way we could do that and anticipate what’s coming was to start making up scenarios, go through them in detail, and plan for the hypothetical “what if”.
2020 wasn’t smooth sailing by any means. But, unlike 2008, because boards in the financial service industry had been having these discussions frequently for over a decade, there wasn’t much where we found ourselves thinking, “How did we get this so wrong?” Not that we could accurately predict the future, but that we had thought through stressed scenarios and had planning in place to manage extreme situations.
“Unlike 2008, because boards in the financial service industry had been having discussions about hypothetical ‘what ifs’ frequently for over a decade, there wasn’t much where we found ourselves thinking, ‘How did we get this so wrong?’”
The second big lesson is that it’s finally okay for those in charge to take mental wellbeing seriously and talk about it.
Many industries tend to make that absurd assumption that syndromes such as burnout or depression correlate with weakness — and so it’s not a topic that’s been addressed enough at board level in the past. But the pandemic psychologically impacted so many of us — very senior people included — that these views have been finally debunked. Mental wellbeing has become something we discuss at nearly every board meeting, and that’s a real silver lining to this crisis.
What’s the one question every board should be answering right now?
“Why are we where we are, coming out of this crisis?”
The pandemic hasn’t affected industries, it has affected players — some of which are doing extremely well, and some of which aren’t. We’re now in a “K-shaped” recovery, and you need to know which part of the “K” you’re on, and how you got there.
“We’re now in a ‘K-shaped’ recovery, and you need to know which part of the ‘K’ you’re on, and how you got there.”
Of course, nobody could have predicted this pandemic or the drastic reactions to it. And, of course, some sectors were hit harder than others. But if you were caught out because you missed the digital transformation trend of the past decade, and are only thinking about it now, you probably need to change a few things within your board. Have you really had the right voices around the table to truly challenge, support, and enable your executive team over that period?
What’s your biggest bugbear around board information?
Too often, we compartmentalise the board’s discussions as if individual papers existed in a vacuum. So, we’ll go through the CEO’s report, then the CRO’s report, and so on. But that’s not having an agenda — that’s just having a list of board papers.
Complex issues usually span across multiple parts of the business, and if you wish to cover them adequately, then your agendas and board packs need to connect the dots between the individual papers. It’s not the CEO’s report or the CRO’s report per se that directors want or need to talk about — it’s ESG, return to work, conduct and culture, and all these other big, complicated themes that boards should add value on.
“Complex issues usually span across multiple parts of the business, and if you wish to cover them adequately, then your agendas and board packs need to connect the dots between the individual papers.”
One way to do that that I’ve found to work quite well is to have a quick, private chat with the non-executives before the meeting starts, where I ask, “What struck you in the board papers, and what do you want to know more about?” And we do a similar debrief afterwards. That helps pinpoint what themes the meeting should be about, and — over time — align what the board gets with what the board needs.
Is it harder to foster good board dynamics remotely?
Zoom’s weakness — or strength, depending on who you ask — is that it sanitises conversations.
Virtual meetings are formal processes: one person speaks, then the next. You can’t really throw in a remark, or even a joke to lighten the mood, because as soon as you do your video feed replaces the speaker’s — and your comment becomes an interruption rather than an interaction.
Some boards prefer that kind of well-delineated engagement — but that’s not for me. When chairing, I want to hear the full dialogue: not just the arguments being made by the speaker when it’s his or her turn, but the body language throughout the room, the eye glances, and the “hang on a minute” interventions too.
What book is on your bedside table?
The Wall Street Journal — I’m afraid I can be a bit of a bore. Otherwise, sci-fi when I’ve got energy, and trashy romance when I don’t!
What is your Golden Rule?
You don’t have to have an opinion on everything.
Directors should be involved — that’s their job — but there are certain questions we must ask ourselves first to make sure our contributions are effective: “Is my opinion informed, or is it just an opinion? Am I asking open-ended questions? Does it create a conversation? Am I just repeating something that’s already been said?”
There’s a limited amount of time available during a board meeting, so, when I’m not chairing, I try to limit myself to no more than two or three interventions. It forces me to raise my game.