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Developing the Board & Executive connection

by Frank Toop MBE | Sep 4, 2019 | Governance & Policy

ICSA: The Governance Institute has recently published “A View at the Top” which reviews Boardroom trends in FTSE top 100 companies comparing 1991 and 2017. It reveals some interesting changes (1991 figures are bracketed):

  • Average Board Size is 12 (11)
  • 26% (49%) of directors are executive
  • 28% (4%) of directors are female – 24% are NEDs & only 3% are executive directors
  • Average age 58 (56)
  • 49% (38%) have an accountancy/finance background
  • 25% (33%) were educated at Oxford, Cambridge or Harvard

On the basis of the above statistics there has been progress but there is still quite some way to go before we have truly diverse boards. It would be interesting to review the statistics for Higher Education.

I found the reduction of executive directors interesting – if the Board size is 11 this means there are normally just 2-3 executives – often just the CEO and the CFO. The report’s reflections on this change mirrors some of the discussions that I have had in Higher Education. The reduction in the numbers of executive directors was prompted by the Higgs report (2002), and the ICSA report questions whether this comes at a cost if the Board sees the executive team less frequently. The potential cost could be through the non-executive Board members having less:

  • in-depth knowledge of the operational details of the business,
  • ability to evaluate the executives’ capability to implement the strategy,
  • ability to evaluate the succession potential of other members of the executive team,
  • leadership development opportunities including enabling the other executives to have their ideas tested, to gain experience in the Boardroom and to understand and anticipate the Board’s concerns in the papers they write.

Writing in my last blog on the OfS challenges for HE Governance I noted that “the management team needs to be of the right quality to be trusted to manage the implementation of the University Strategy, Council decisions and the detailed operations of the University. Council needs to let them do so. However, the Executive also needs to be properly accountable for their performance to Council, justifying and maintaining Council’s confidence”.

If Councils are to do this, the management team needs to be visible to the Council:

• Each University has its own way of doing things but often there are very few members of the executive team on the Council as many of the staff posts are filled by election. The HE sector is well ahead of the corporate sector (which is only just starting to consider this) in having employees and students on its Boards. However, there is a case for reconsidering the balance between having members of the executive team on the Council and elected staff so that the number of the executive team on Council is increased.

• Having members of the executive team who are not Council members attend the Council can be very useful in many ways, provided the numbers of attendees does not become excessive and there is a clear understanding that they are not members of Council. They may attend to present papers, take it in turns to attend or a select number may regularly attend.

• Briefing Sessions and Awaydays for Council members can be an easy way to involve the executive team in presenting informative sessions on their areas of responsibility and in allowing informal interaction with Council members

• Encouraging Council members to link informally with members of the executive team, initially at induction, but also when they would like to understand issues in more detail can also be helpful, provided Council members maintain a distance and do not become advocates for specific areas.

• Involving Council members in the appointing of members of the executive team can also be useful. Some institutions hold to the management line that Council appoints the Vice-Chancellor and then it is for the Vice-Chancellor to appoint his or her team. Others have Council appointing some or all of the senior members of the executive team. Like many of these issues the right answer involves achieving a balance between involving the Council and respecting the role of the Vice-Chancellor.

• Having a mechanism for Council to evaluate the performance of the executive team and to discuss team development and succession planning.

Good interaction between Council members themselves and with the Executive will always be key to understanding the University and good decision-making.

Frank Toop is a Consulting Fellow for Halpin – the home of experts in higher education governance.