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FT NED CLUB MEETING

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  1. FT NED CLUB MEETING “THE EFFECTIVE NED ON A BOARD OF A FSA REGULATED COMPANY” MANNIE SHER Director, Bvalco Ltd Director, Group Relations Programme, Tavistock Institute of Human Relations Tuesday 16th November 2010

  2. From the Walker Review … • “Improvement in corporate governance will require behavioural change …” • “Needed behavioural changes are unlikely to be fostered by regulation fiat … “ “Principal deficiencies in BOFI boards are much more to do with patterns of behaviour than to organisation.”

  3. The Walker Review … • “Governance practices are organic, dynamic and behavioural rather than akin to black letter regulation.”

  4. The Walker Review … • The principal emphasis is on behaviour and culture. We wish to avoid proposals that attract a box-ticking conformity as a distraction to much more important substantive behavioural change.

  5. Walker Review … • Wider analysis of the behaviour of groups and subgroups is plainly relevant to the functioning of committees of boards. • … but which sub-groups?

  6. FRC Combined Code: Main conclusions • “There is a recognition that the quality of corporate governance ultimately depends on behaviour, not process, with the result that there is a limit to the extent to which any regulatory framework can deliver good governance.” • “The FRC has therefore sought to change the tone of the Code to signal the importance of board behaviour.”

  7. FRC Combined Code: Main conclusions • “There is concern that the code is too often viewed as a compliance exercise rather than the means of promoting appropriate behaviour by boards and good communication between boards and shareholders.”

  8. Research: Prof A Kakabadse • 80% of Board members do not know what their role is • 70% of Board members do not know how to raise difficult issues • Unable to say is: "I don't know" • Dynamics, insight and awareness are the deepest of problems on boards • 30% of Board members actually do not commit to the shared vision – they support the vision in public, but in the Board they consistently undermine it

  9. Role unique combination of: • responsibilities of the job • the individual application of ideas, attitudes, aptitudes, strengths to do the job. • What is the role of NEDs?

  10. Stewardship … • “Stewardship” refers to a responsibility to take care of something owned by someone else. • Stewardship is an ethic that embodies cooperative planning and management of resources to actively engage in the prevention of loss and facilitate long-term sustainability

  11. Task … the single most important thing a group/organisation has to do in order to stay in business

  12. Boundary … a semi-permeable line, but more usually a region that distinguishes between the inside and outside of an entity, across which only certain items that support the entity's task, are permitted to cross.

  13. Authority … the degree of sanction given to an individual or group to act in a role.

  14. Building Blocks of Boards… Individuals?

  15. … or Sub-groups

  16. THE BOARD OF COMPANY X