Extraordinary events such as the COVID-19 outbreak are powerful catalysts for governance change, as they suddenly bring obscure regulations into public focus. And with their vast number of business headquarters, few places experience that effect like the Channel Islands.
So, last month, we took our Governance Grand Tour to Jersey, to find out about the unique challenges faced by local governance professionals, and how they’re tackling them. Here’s what we learnt.
The Channel Islands: A playing field like no other
Organisations in the Channel Islands face a unique set of challenges, in addition to those commonly faced by UK entities.
To reap the benefits of offshore structures, organisations must adhere to strict substance laws, and hosting local board meetings is key to meeting these requirements. Many organisations also operate in heavily regulated industries, such as Real Estate and Fund Administration. This brings a heavy focus on compliance — making sure you’re playing by the rules — which can make it harder to focus on strategy, or addressing future, emerging challenges.
An additional, unique factor is the role of Trust & Corporate Service Providers (TCSPs). A typical TCSP will provide governance support services to a wide range of organisations, bringing expert advice but also producing hundreds of board packs a year, and facilitating countless meetings.
For each board meeting to be a success, the board must carve out time for the priorities that really matter. Across our clients, from FTSE 100s to small charities and fast-growing SMEs, we know how much of a challenge that is for governance professionals. Now, just imagine doing that across multiple businesses at a time.
Too bogged-down to move?
So what do governance professionals in Jersey think are the biggest issues for them and their boards in today’s climate? The majority (nearly 60%) agreed the growing burden of regulatory responsibility and risk was the single largest issue for Channel Islands-based boards. With ever-changing regulations in already heavily regulated industries, this was an area many felt passionate about.
Do board members share this view? More than half of those surveyed felt their boards were prioritising operational performance over anything else — leaving little room for forward-looking conversations, or engaging with the implications of a changing regulatory landscape. Equally worrying, one-third of governance professionals felt their boards were poorly equipped to address this state of affairs.
Change starts in the boardroom
So, if boards need to focus more on regulatory change and less on operational performance, how can they achieve this in practice?
Much starts with the meetings themselves. There are several factors to consider when setting a board meeting up for success, the relative importance of which can vary from business to business. For the governance professionals we spoke to, the most important were:
- Having the right people in the room.
With varying skillsets, experiences, and backgrounds to enable true diversity of thought. Most importantly, this group needs to be chaired by someone aligned with the organisation’s priorities and who can get the most from each individual member of the board.
- Having focused discussions.
Discussions need to be focused on outcomes, with good decision-making the main objective for each conversation. This is where a good chair will shine. Boards must also have access to accurate and insightful information ahead of time, to enable them to take decisive action efficiently.
- Being united by a shared purpose.
If boards are to govern with purpose, time must be spent adequately on the topics that will enable the organisation to achieve said purpose and the organisation’s goals. A thoughtful agenda — which ensures you focus on the big issues up front, rather than wasting energy on admin tasks — is the first step in achieving this.
One widely held concern was around the willingness of boards and governance professionals to adopt such measures, due to ingrained habit and convention. But in the current crisis, will old ways of working survive?
Boards and leaders need real-time communication, supported by real-time information, to make quick, emergency decisions. As the pandemic has them adapt to meeting remotely, this idea of real-time boards is becoming a reality. And there’s no reason for it to disappear once physical meetings become a thing again, either: a board connected by technology and unified behind a shared purpose shouldn’t only be reserved for times of crisis.
In Jersey just as elsewhere, now is the time for boards to challenge their ways of working.