Keith Skeoch is chair of the Aberdeen Standard Investments Research Institute and interim chair of the Financial Reporting Council. He’s also a member of the UK Takeover Panel as well as a trustee of Edinburgh International Festival. Prior to this, Keith was CEO of Standard Life and then Standard Life Aberdeen.
Great board meetings turn governance into practice. They are the ones where you get into the meat of an issue that has a direct impact on your strategy or business model, make a collective decision that will have a positive influence, and leave the organisation with a clear direction to follow.
“Great board meetings turn governance into practice.”
The chair’s role in this is to stimulate the debate and steer it towards a resolution. And to do that effectively, there are two conditions:
There are plusses and minuses to both virtual and physical settings.
Virtual meetings tend to overrun less and make a more efficient use of time — in part because they drop some of the formality. All of us at some points have had screaming kids or barking dogs in the background, and it’s made meetings slightly more relaxed and human.
“Virtual meetings tend to overrun less and make a more efficient use of time.”
But they also make it harder to foster creativity and connectiveness. Ideas don’t start flowing the way they would if you were all standing together around a whiteboard. And it’s harder to create an emotional connection with other board members — which is such an important factor to enable frank conversation when the board has to make tough decisions.
As a chair, you’re not the decision maker, you’re the convener. Yes, you are the person that ultimately has the last vote — but it’s a failure if you have to make the decision by using it. So, your job, in its simplest form, is two-fold:
“As a chair, you’re not the decision maker, you’re the convener. Yes, you are the person that ultimately has the last vote — but it’s a failure if you have to make the decision by using it.”
With that in mind, when I started chairing the Financial Reporting Council at the end of 2020, one of the things I did was book a lot of informal time with board members so that we could get to know each other. Importantly, you should do this an open fashion — no one wants secret conversations going on and undermining trust.
In normal times, these chats would happen organically around the watercooler or a cup of coffee, whereas right now you have to reach out through a screen — which can feel a bit contrived. But a new chair needs to have these discussions nonetheless. In your role, the numbers will be easy to deal with, and the business model or strategy will be fairly simple to grasp too — it’s getting to know the people that should be your focus.
I like regular “temperature checks” that ask very simple questions and help you know how people across the organisation are feeling and what their main issues are. The board’s job is to listen to that feedback and identify where it can take action to make a difference quickly. And, crucially, you need to be transparent — the surveys’ results should go to the board but also be made available to everyone else in the organisation.
Some of the things you’ll get will be quite simple — such as, “Our laptop screens are too small to work comfortably from home.” Don’t think of it as a trivial matter that’s wasting the board’s time. Rather, it’s an opportunity to fix things that directly affect people in the organisation — which lets them know that the board values their opinion and that they can safely raise their concerns.
“Some of the things you’ll get will be quite simple. Don’t think of it as wasting the board’s time. Rather, it’s an opportunity to fix things that directly affect people.”
The governance code doesn’t mandate it, but I also find it helpful to have a director in charge of employee engagement. Not only does that role give employees an alternate route to voice their concerns at board level, it also allows the board members to crosscheck that the feedback they’re getting correlates with what that director is saying and that they’re not only being given the positive news
Regulation is a public good when it’s done well. If you look at history, societies always benefit from an effective rule of law, and a regulatory environment that’s simple, clear, and stable. Get it right and everyone thrives.
Section 172 was quite a shock when it was introduced. But over the last 15 years — especially in the aftermath of the Great Financial Crisis and the mounting concerns around climate change — boards have turned it into a way to broaden their horizons of the risks that could affect them — not just the financial ones, but everything else, starting with their social licence to operate. And their businesses are stronger as a result.
Now, we’re talking about increasing directors’ personal responsibility, and there’s some understandable nervousness around the impact it could have. But the steel of corporate governance is forged in the fiery furnace of corporate failure — and the past few years have shown that, sadly, there’s a minority of directors asleep at the wheel, who aren’t being challenging enough. We’ll all be better off, organisations included, if directors only join boards when they truly believe that their voices will be heard and that they’ll be able to make a difference.
“We’ll all be better off, organisations included, if directors only join boards when they truly believe that their voices will be heard and that they’ll be able to make a difference.”
It’s only the start of the journey, as both society and investors will increasingly be expecting first-rate governance. Luckily, I’d argue that UK boards are well-prepared for that future because of two advantages:
I have two right now.
The first one is Fundamentals, by Frank Wilczek, a Nobel laureate. It’s my attempt to educate myself about modern science and physics — which is very much a work in progress!.
And the second is What Does Jeremy Think?, by Suzanne Heywood and her husband, the late Jeremy Heywood — a fascinating look at the life of an influential public servant.
In life as well as in the boardroom, it’s the difficult things that are worth doing.