Richard Meddings: Network, broaden your business knowledge and get up to speed on issues facing businesses today
We recently welcomed hugely experienced Chairman Richard Meddings to BCKR.
Richard began by stressing that anyone hoping to join a board (particularly in the commercial sector) should realise the amount of the work that’s done outside the boardroom. One of Richard’s early boardroom mistakes was to underestimate the importance of the informal interaction, both between the board members themselves and also between the executive team and members of the board. It is easy to assume that you just turn up for the meetings, when actually it is an area of significant communication and ‘social dynamic’.
How are boards built?
As a Chair, you obviously have to tick certain boxes when appointing NEDs, such as appointing the chairs of Audit, Remuneration and (particularly in Financial Services) Risk. And you need to have some back-up in place, do some succession planning. In addition to the formal board committees, some boards now have new sub-committees, for example for Strategy and for Tech. Tech is fast becoming a new type of board sub-committee; however the challenge is that the current available experience and focus tends to be on Cyber risk – but the board’s focus on technical issues needs to be broader than that. The Senior Independent Director (SID) is also a very important role, a form ‘consiglieri’ or trusted adviser to the Chair and other board members.
For lawyers, this is a difficult area to break into, as the Chair generally feels that legal advice can be bought in as and when needed and that the CEO has his/her General Counsel anyway. So, to overcome that hurdle you need to demonstrate different, broader skills. Boards are not composed of people because of their specific executive skills, they need to be able to advise the business as a whole. So when making your case, DON’T lead with your Legal experience!
And remember that an effective Chair is always looking at the dynamics of the board and is in constant contact with the board-level head hunters, so, looking ahead, make yourself known to the head hunters.
Do you really want to do this?
The regulatory pressures are very demanding these days, particularly in Financial Services. Being on a FS board can be a very intense regime; you have to expect difficult days ahead. Financial Services is a highly complex area and produces large quantities of very detailed reports; boards are expected by the Regulator to understand the micro detail.
So why would you do it? After all you don’t get paid very much.
One of the main reasons that people are motivated to join a board is a wish to remain ‘relevant’ after completing an executive career which will have had momentum and intellectual stimulation. Being able to continue to learn new things is also a very important motivation.
In many ways, being on the boards of smaller companies is more interesting and is often an easier place for NEDs to contribute in terms of actually running a business, rather than focusing more on regulatory and compliance issues.
Richard feels he was lucky in that his first external board role was at 3i plc, at a time when he was Finance Director at Standard Chartered plc. The bank felt it was very important for their main board executives to get non-executive experience, partly in order to gain an understanding of what it is like for the NEDs ‘on the other side of the table’ and 3i provided that very well.
You learn pretty quickly that there is limited opportunity in the boardroom for asking questions. You might have the chance to make around six comments during a meeting. What is important is that the NEDs don’t try to use the board meeting to ‘to crowd’ the executives on the board. NEDs should bring a current general commercial perspective, not just rely on their particular past functional executive experience.
Networking and visibility
Your first board appointment gets you into the general NEDs network. Head hunters host frequent lunches and receptions for board members. The earlier you start the better; cultivate senior external contacts and learn from them. This is just as important if you are targeting non-commercial roles (Not-for Profit, Government boards etc) – by the way Government NED roles are really interesting!
For all would-be NEDs, you need to be known and seen – and you need to be able to display broad commercial knowledge and judgement. Law firms tend to lack this kind of profile so you need to think hard about how you can get into these networks.
As a profession you lag behind in the self-promotion stakes – particularly compared to Investment Bankers. They have greater success that Lawyers in getting onto boards but probably less to contribute once they are there. But they are more adept at showing they understand the dynamics of companies and sectors, which is very important.
What do you think of Not for Profit board experience when building your own boards?
They tend to be less managed but potentially provide good experience and often there are NEDs/Trustees from the commercial sector on these boards. For example Teach First has a very interesting mix of different skill sets on their board. Government boards seem open to lawyers coming onto their boards, and the work is very interesting.
Go to meet head hunters (unfortunately they are very powerful and some are incredibly lazy, particularly about thinking out of the box)). You need to stay at the top of their pile. Don’t present yourself as a lawyer but as someone who runs an international business.
You need to provide other reference points. Provide some ‘soft referees’, people who can talk about your judgement and range of experience and how you manage people issues. Though board diversity is a big topic with the head hunters, there doesn’t seem to be much real desire for diversity of career background.
What do you think Private Equity companies seek from their NEDs?
They are deep into the financials – NEDs have to be right up to speed. Relevant sector knowledge is important and so is an ongoing focus on the actual performance of the company..
Network….and broaden your business knowledge and be up to date on issues such as diversity, environment and climate change.
Generally, as a profession, lawyers and law firms generally really need to raise their profiles. ’Have a view’ and be able to engage on non-legal business issues Bankers always have an issue they can talk to companies and directors about.
Your first role is important – but don’t think you have to get a role on a FTSE listed company board. You get many more interesting roles as NEDs at the smaller cap end and in non-listed companies, where you can get closer to the actual running of the business, as well as in the Not for Profit sector.