NOWADAYS every business apparently aspires to best practice and every leader to excite their staff and customers alike. Despite the fine words, many UK (& Eire) Chief Executives actually prefer an easier life. One often lucrative way to guarantee C-suite contentment is to stuff boardrooms with yes wo/men while ensuring that responsibility for being kept in line falls to powerless shareholders or notionally credible Chairmen and cadres of hand-picked but toothless paper tiger non-executive directors.
You don’t have to look far to find CEOs, who prefer the flavour of their Chairman and non-execs to be vanilla and their analytic posture to be relentless supportive and suitably supine.
Almost every industry sector has leaders who should be held to account (or guided) by their Chairmen or non-execs but actually aren’t. Corporate governance expert and independent directorship evangelist Gerry Brown picks out some newsworthy business leaders – in retail, banking, transport, football and aviation - who prefer the window dressing of good governance but really operate in a business world where their non-execs and Chairmen need to demonstrate much more independence.
Barclays Bank Chief Executive Jes Staley attempted to use Barclay’s internal security team to track down the authors of two anonymous whistleblowing letters sent to the board and a senior executive at the bank last June. Since then Staley enjoys the full support and backing of his Chairman John McFarlane (especially for his post-Brexit restructuring of Barclays) though, completely unconnectedly the Head of Whistleblowing has recently left the organization.
Sports Direct Chief Executive Mike Ashley has survived and thrived despite his organisation being dogged by scandals. Known to care little for the niceties of corporate governance or the authority of government sub-committees, his Chairman Keith Hellawell continues to remain in post (as a human shield) despite ongoing shareholder objections to his super ‘light touch’ approach to corporate governance. Billionaire Ashley owns Newcastle United but has recently put them up for sale pleading poverty. “I’m nowhere near wealthy enough to compete with clubs like Man City. I don’t have the ability to write a cheque for £200m….in theory I’m a multi-billionaire, but in reality my wealth is like wallpaper - it’s all in Sports Direct shares.”
Govia Thameslink Railway Ltd Chairman Charles Horton continues to preside over a Driver Only Operated trains fiasco that continues to badly inconvenience millions of Southern Railway passengers. Fortunately, Horton is incentivised to do so and, stranger still, he is aided and abetted in this destruction of shareholder value by Secretary of State for Transport Chris Grayling rather than held to account for this strategic mis-step. Whenever he travels to work from his North Hampshire “Tadley mansion”, Horton famously doesn’t ever use Southern Railway.
Over in Ireland things aren’t much better. Despite enjoying the supervision and advice of a magnificent 11 non-executive directors (five with previous employee relationships), Ryanair CEO Michael O’Leary remains secure and pathologically combative in his leadership position despite (Private Eye reports) the recent sudden cancellation of the flights of an estimated 700,000 passengers and a likely compensation bill in excess of €25 million. In many other aviation businesses this would be catastrophic but not so for this self-styled uncharming man.
Football Association Chairman Greg Clarke has too many lowlights to find time to list but unresolved ongoing scandals besieging the organisation under his leadership include racism, child sex & bullying. Allegedly responding the government threats to clip his wings via reduced funding, and never one to suffer from false modesty, Clarke allegedly responded, “they won’t do a thing…we have all the power”. Clarke has plans in 2018 to shuffle the C-suite deckchairs by reducing his board size and appointing three “lady” non-execs. Until they can hold him to account or give guidance, Clarke’s trademark strategy appears to be to spew forth soundbites, blunder in public forums and, otherwise, lie low.
To avoid such corporate governance mis-steps and blunders, Gerry Brown’s tried and tested 10 key tips for successfully hiring an effective independent minded non-executive directors (NED) are useful in any business or industry and include:
1. Involve the whole board, ideally through a formal nominations committee with a majority of NEDs and Chaired by a NED.
2. Use a professional executive search/recruitment consultant to advise the Board, take the opportunity to discuss options for the Board membership/organisation.
3. Use the appointment to help to diversify the Board to achieve a broad range of experience, gender and race.
4. Aim high!
5. Define the role clearly with the skills, experience and chemistry most needed to complement existing Board.
6. Consider a wider search than traditional sources. For example, divisional directors who are not yet on the main Board of a PLC; seek candidates from the public, voluntary and academic sectors (or armed forces); address equality composition.
7. Seek individuals with genuine independence.
8. Appoint for a specific term.
9. Ensure that fees and remuneration are appropriate.
10. Be creative and imaginative; seek agents of change who can really assist with growing.