What Makes a Good Board – with guest speaker Sir Nigel Rudd.
BCKR members were this week pleased to be joined by experienced chair Sir Nigel Rudd.
Sir Nigel currently chairs BBA Aviation, Heathrow Airport Holdings, Aquarius Platinum Limited and the Business Growth Fund. He is a NED of Sappi Limited (a South African pulp and paper company) and a Senior Advisor to Barclays. Previous chairmanships include Invensys, Alliance Boots, Pendragon and Pilkington and followed his executive career as founder of Williams plc, seeing that company through to its de-merger in 2000 into Chubb and Kidde. Sir Nigel is Chancellor of Loughborough University, Deputy Lieutenant of Derbyshire and a Freeman of the City of London.
Sir Nigel wanted to share his views on what makes a good board together with what lawyers might bring to the table and what might be holding them back.
Summary of meeting with Sir Nigel Rudd;
What makes a good board member? It is more about the softer issues – how people work together and get on. A bit like a marriage.
The Chair’s relationship with the CEO is pivotal. There needs to be a relationship of trust. The Chair is the sounding board for the Chief Exec. You need to be able to read the body language around the table.
A good Chair will facilitate debate and encourage his board members to speak their minds.
How are they relating to people? Is the CE being listened to? Is the team behind them? If the CE loses the team then it can be disastrous, as we’ve all seen with Tesco.
It is important to have a good mixture of people on your board – in terms of sector knowledge, diversity etc. The role of the NED is to support their Chair. The most successful boards are where people speak their minds. It’s about asking the tough questions but in a supportive way. It is useful for the Chair to have some NEDs who have run a business so they understand the kinds of pressures a CE has.
Board meetings aren’t management meetings and shouldn’t focus on historical events. They are about strategy. Strategy is an area where NEDs can get some satisfaction. It’s a chance to engage in the process and debate.
Lawyers on Boards
You need to analyse why you want to become a NED. Not all these are good or realistic reasons!
• Your reputation?
• To make a difference?
• To be part of something successful?
Headhunters are not predisposed to put lawyers on boards due to the following misconceptions about lawyers:
• considered to be risk averse
• find it hard to make decisions
• will run for the hills if their reputation is at stake
• will want to go into too much detail
On the positive side, lawyers’ attributes are:
• diverse knowledge of many different businesses
• highly ethical and intelligent
• a good source of female talent for diversity purposes
• involved in large businesses making tough decisions about people, businesses etc. and
• they will definitely read the board papers!
How do you think lawyers can overcome the negative preconceptions?
• form a relationship with key headhunters
• become better at self-publicising
• find a way of putting their business experience above legal skills on your CV
• start small to gain experience and get to know how a board works
Also, the plus side to lawyers being risk averse is that they are skilled at managing risk which in an ever increasingly regulated world makes your skills attractive to Risk Committees.
The shift in attitude in being willing to view law firms as businesses rather than as a profession is very recent – around 1990s whereas accountancy firms started making this shift in the 1930s. There’s a long way to go to catch up!