David Kelly is chair and non-executive director across several businesses, including The Gym Group and Forest Holidays. In this interview, David discusses the relationship between media scrutiny, ESG, and the ever-increasing importance of the NED…
I think the last 10 years have seen executives begin to realise that boards aren’t just there to mark their homework. They can really add value to the strategic and operational discussion. Boards are also slowly becoming more diverse. Don’t get me wrong, we’ve not corrected the lack of diversity and inclusion at the board level by any means, but we’re in a better place than we were 10 years ago. There's been a clear shift in gender make-up. But we're also seeing more diversity of thought. Boards have started to dip into the pool of first-time NEDs when hiring, meaning you get a fresh perspective. New NEDs ask questions that others wouldn’t necessarily ask.
“Boards have started to dip into the pool of first-time NEDs when hiring, meaning you get a fresh perspective.”
The habit of presenting information that everybody’s already read during a board meeting seems to be dying a death too! The most impactful boards now have well-oiled processes in place to ensure everyone gets the key information ahead of time and are using the meeting itself for constructive discussion and challenge. That doesn’t mean sending 10 – 20 different files across or overloading people with reports. It means using smart tools that make the board pack compact, concise, digestible, with the key information signposted.
Yes, I think the challenge is gleaning non-financial information, particularly ESG progress. A lot of businesses don’t know what their ESG north star is, and what they want to stand for. It’s therefore difficult to identify the key deliverables that will help them stay true to their north star, and how to track progress against these deliverables.
Boards need to think more deeply and creatively about this, whether it’s having designated NED roles or KPIs for ESG related matters such as net-zero targets or bolder social goals. I think we are starting to see some great examples of boards creating more clarity in this area. For instance, I chair a B Corp, and the B Corp framework has been leading thinking in this area. It focuses on the business’s impact on wider society, and the legacy that it leaves.
Businesses recognise that they’ve got to evidence that they are focused on the right thing, the authentic thing, and not just when they’re under a media spotlight. Having said that, the pandemic and global movements like Black Lives Matter and the #MeToo movement have helped drive these important conversations. Businesses are being publicly tested on their response to these challenges. They’re being asked, “Do you understand the problem?” No? Then it is time to listen, understand, and reflect before acting.
“Businesses are being asked, ‘Do you understand the problem?’ No? Then it is time to listen, understand, and reflect before acting.”
With businesses and individuals being held increasingly accountable, NEDs must demonstrate they are inquisitive and doing much more to challenge what they are presented with. For NEDs to fulfil this duty, they must understand the business much more. They must know what’s happening at the “coalface” and partner with relevant functions of the business at the right time, and then use these learnings to ask the right questions in the boardroom.
And they need to look wider —at how political and economic turbulence will impact the core business. They need to be so much more inquisitive, in short, while also understanding where the line is. Even after 10 years of being a NED, I still have a stick-it note on my laptop that says, “ask questions.”
“Even after 10 years of being a NED, I still have a stick-it note on my laptop that says, ‘ask questions.’”
Be relentless in pursuit of perfection. But be careful of unintended consequences.