Charles Randell: “The best way to get NED roles is through relentless networking”
We recently welcomed Charles Randell, currently Chair of the FCA, to BCKR. Charles joined Slaughter and May in 1980 and stayed for 33 years, despite various efforts to ‘escape’. He interviewed widely for other jobs before becoming a partner, but concluded they were equally as ‘bad’. So, he took partnership but set himself a target to leave by the age of 50. On approaching 50, he accepted a job chairing a government owned business which was in the process of being privatised but he had a change of heart over the weekend and pulled out. This decision set him back quite some way on future jobs in the public sector!
He was still at Slaughters when the financial crisis hit. By the end of the crisis period, he had nothing left in the tank for transactional client work – particularly pitching to clients and the ensuing rejections. But he did know many more people in government and the Bank of England. One of these rang to encourage Charles to apply for a non-executive position on the Prudential Regulation Committee at the Bank which was to be his cornerstone commitment, and he finally handed in his notice at Slaughters. There had been hope of him remaining as a partner while fulfilling the Bank’s role but, at his first meeting at the Bank of England, there were so many conflicts that he realised he had no choice but to leave.
At around the same time, he joined the Department of Energy and Climate change board, which again came about through personal contacts gained through his work. He ended up Chairing the Audit and Risk Committee there too.
In his experience he has found that visiting head hunters was universally a disappointing experience. Despite that, he still did the rounds with them all.
It is well known that Chairs don’t actively seek to have lawyers on their boards, for the reasons we all know too well. He still gets asked if he has any comments to make on the minutes!
Reflections on the role of a NED
- The job of a NED can be quite lonely and certainly an enormous contrast to being at a law firm where you can have useful conversations about issues with colleagues on a casual basis. It is difficult to find the right level of engagement, so you are not isolated from what matters in the everyday workings of the organisation you are working for. The dangers lie in not being able to walk about and find out what’s going on.
- The Bank of England was initially very structured and difficult to penetrate – though it is becoming more relaxed.
- Good governance is key. There is the Code but, in his experience, good governance is incredibly rare. In a financial services firm, the tell-tale signs are:
- Chief Executive dominance
- Culture of high executive pay
- An imbalance of material information between the executive and non-executive teams
- A chronic lack of succession planning by powerful Chief Executives.
The PRA does have a watch list of financial services firms and plenty are on it.
With this in mind, the most critical thing in looking for a NED position is to have/choose the right NED colleagues. If you are not the Chair, it is obviously much harder to change the culture of the board and organisation. NEDs are most effective when working persistently to raise issues with the executive – as a group. Be dogged in a constructive and helpful way.
Freedom to poke about and a good quality exchange of information with the executive are essential. If you are not getting that, something is wrong with the culture of the organisation.
Risks of being a NED
Compared to the unlimited liability you undertake as a lawyer, the risks are minimal.
Yes, there is a risk of public humiliation if things go wrong. Personally, Charles doesn’t think the risk is so great.
Financial services are no worse than many other industries and at least they are highly regulated so you have the comfort that others are also doing the checks.
The key risks relate to there being a lack of diversity of thought amongst the board. If you are just reacting to stuff being fed to you rather than delving into the underlying issues perhaps you aren’t giving it the mental space that is required. You need to maintain a freshness of approach.
Charles has found it useful to look at the agenda and identify the issues before reading through the board pack.
He has found being the Chair of an organisation much more intensive. The workload is considerable and the challenge as chair is to ensure that the right things get to the top of the agenda – focusing on the core objectives. This is not always easy.
How did you find the public appointment process?
It is formalised and less open. If the process doesn’t produce the right candidate, they will ring up the right candidate and suggest they apply. You need to assume that those making the appointment have an agenda.
There is undoubtedly more bureaucracy around the process in the public sector.
The approach of ministerial boards go either way. The willingness of the Secretary of State to engage with the board and use it as an advisory body varies enormously. Departmental boards are a very mixed bags. Your best bet is to ask around before joining a board. They can be very dependent on the minister (as Chair) – from full engagement to not turning up at all.
Non-departmental public bodies/Quangos are much more settled environments as they are not subject to the vagaries of reshuffles etc.
What signs should you look out for recommended to the when applying for senior public appointments?
Each post will have two candidates recommended to the minister so that he/she always has a choice. The key is in the integrity of the selection panel. Ministerial add-ins do happen but don’t necessarily get far.
How do you break from the issues of the day as board Chair and get time to add the right things to the agenda?
It is a job you never finish. It is usually more a question of getting stuff off the agenda. Often on government bodies it is part of the reward structure for people to present papers to the board. These things appear on the agenda months in advance. The struggle is to get control of the agenda and to fill it from the top down.
When you look at when you left Slaughter and May did you get the timing right?
Charles thinks he lucked out. If you look at the triggers enabling him to be able to find a job, it came down to random chance and the result of happy coincidences, chance conversations and luck. You have to make your own luck by working your contacts.
Like many lawyers he does not enjoy self promotion. He is happiest with pen in hand. A lot of lawyers think they don’t have a network. You have to start with the people you know through work and personal contacts and then just plug away making new connections with every cup of coffee you have. It does get easier as you go through the process as you realise what you need to get out of the conversations. If you lack that persistence, then you probably aren’t cut out to be a good NED anyway.
When it comes to risk – as a NED – how do you know what you don’t know?
When he joined the Bank of England, he took about 6 months to learn what it was all about.
In 2-3 years your insight will be better informed. You will pick up areas which you think should be on the agenda. If you are fobbed off – don’t give up. Don’t be afraid to ask the dumb question and have the strength of your convictions. For instance, with Carillion, the board papers would have said one thing, but the reality was different. If the executive team aren’t providing the board with the right information, how can a NED be expected to know what’s missing.
You won’t catch everything. If you want total control, being a NED is not for you. You can though, keep an eye on areas that might typically show up problems:
- Sales incentives
- Accounting anomalies
- Divergence between cash and P&L
Ask the basic questions. Do the best you can.