Orna NiChionna is the SID at Burberry and chairs its remuneration committee, and is also the SID at Saga and a trustee of the Institute for Fiscal Studies. She recently stepped down from the role of deputy chair and interim chair of the National Trust. After spending 18 years at McKinsey’s London office, where she was the first woman to be elected partner, she served on the boards of Bank of Ireland UK, Bupa, HMV, Royal Mail, and Said Business School, and was chair of the Soil Association.
These have surely been “interesting” times, but the first few months of the pandemic were actually quite frustrating for directors in some companies. Not so much because of the technical challenges — learning to use Zoom, dealing with poor connections — but because the first stage of this crisis was about operations and cash conservation and there were limited ways for non-executive directors to contribute to that.
The plans put forward by management teams were usually sensible, necessary, and focused on short-term tactics rather than on the strategic decisions where boards can truly add value. So, beyond supporting the chief executive and top team as best as you could, the scope of action was quite limited — which can be a difficult truth to accept. Of course, once that stage was over and attention could turn back to strategy, there was plenty to think about and discuss, and indeed, in some industries, massive strategic pivots have had to occur to ensure survival.
“Boards remain the ultimate arbiter, but the frequency of their meetings has stopped being what determines how fast decisions can be made.”
One of the few positive outcomes of the Covid experience has been new initiatives to build strong cultures and a sense of belonging — and more confidence in management about moving on that, without waiting for discussions at the board level. Our HR teams, for example, took the lead on major mental health support initiatives early on: they informed us of what they had been doing, but they didn’t wait for our approval — they just made the right calls and did what had to be done.
More broadly, radical operational steps to improve efficiency and effectiveness were taken throughout organisations — in less time and with less discussion. Boards remain the ultimate arbiter, but the frequency of their meetings has stopped being what determines how fast decisions can be made, and we’ll all be more agile as a result.
I wouldn’t attribute it all to Covid, but ESG is now a key part of the agenda. And, importantly, all three letters are now being paid consideration:
The “G” hasn’t changed much — but it didn’t really have to in many large plcs. We can always debate board composition or how remuneration committees should be structured, but if you’re a FTSE company there’s a good chance that your governance was adequate to begin with.
The “E” is the exact opposite. We’re finally waking up to what climate change will mean for all of us, and boards are starting to acknowledge that the problem isn’t remote but is instead directly caused by the decisions that they make. We’re not quite there yet, and I remain anxious about how many business leaders only vaguely understand the scale of the crisis — and think that banning plastic straws is “playing their part”. But the Greta Thunbergs of this world are getting through to the kids of the people in the boardroom — and to their employees too, who are often leagues ahead of directors on these issues — and that influence can finally be felt around the board table.
“The Greta Thunbergs of this world are getting through to the kids of the people in the boardroom — and to their employees too.”
Finally, the “S” has been exacerbated by the pandemic and by the BLM movement. Mental health, especially, has been top of mind, and is only going to become more of an issue for directors as they start having to deal with the aftermath of an entire generation spending several of its formative years in lockdown and having its confidence destroyed by social media. Whilst the jury is still out on the effectiveness of the measures being taken by boards, inclusivity and well-being are certainly on their agenda in a way that they weren’t before.
When I was at McKinsey, our US colleagues used to promote Enron, which was run by a McKinsey alumnus, as an example of business excellence — until it all collapsed and he ended up in jail. So I’m always wary of suggesting specific boards to emulate! That being said, a few things come to mind:
Go for aggressive targets. If you set an ambitious goal without knowing how you’ll reach it — say, “We’ll be carbon-negative by 2030” — the worst that can happen is not fully succeeding. But if you don’t set a goal for fear of not being able to reach it, the worst that can happen, in the case of climate change, is hundreds of millions of climate refugees. The asymmetry is so massive that it doesn’t make any sense not to be bold and urgent in ambition.
Frame the conversation. These days, ESG vs profits is a false dichotomy and, all things considered, doing the right thing is often the cheaper option. Some of these are easy to prove: solar panels on, and LED lights in, your factory pay for themselves in a matter of months. Others are less obvious: for example, “This initiative cost us X but led to improved customer loyalty that generated Y.” Don’t assume that everyone will be as passionate about these topics as you are, and make it explicit that it’s not just the right thing to do but also the smart business thing to do.
Get the right skills around the table. So many companies will proudly say that they’ve achieved a digital transformation, when all they did was convert the letters they used to mail you into PDFs that they email you. Few actually rethink what the thing they provide you with is for, and how it could be shared in a way that’s beneficial to you — and not just to their operating costs. And that’s simply because few at board level really understand or are comfortable with digitalisation. So, bring on board people who do.
“So many companies will proudly say that they’ve achieved a digital transformation, when all they did was convert the letters they used to mail you into PDFs that they email you.”
The same thing goes for understanding your customers, who are sometimes merely an abstraction for directors. On one of the boards that I sit on, we regularly try going on the organisation’s website and on competitors’ websites to try to purchase what we sell — it’s a simple exercise but can be quite telling of the experience that your customers go through.
Inequality. Between the war in Ukraine and Covid, prices are rising, and it will have an impact on ordinary people that the well-paid people at the top of organisations will struggle to fully comprehend.
“Prices are rising, and it will have an impact on ordinary people that the well-paid people at the top of organisations will struggle to fully comprehend.”
The past decades have accustomed many of us in the West to standards of living that rose sharply thanks to digitalisation. Streaming brought down the cost of entertainment; messaging apps made long-distance calls free; sharing platforms such as Airbnb and Uber brought down the price of holidays and car rides… But we’ve reached a point where our digital world cannot get any cheaper than it already is, just as the basic elements in the physical world are getting much more expensive — and many boards have not yet worked out how they’ll be navigating such an environment.
Putin’s People, by Catherine Belton. The war in Ukraine is a war against a terrible evil that threatens all of us, and that’s my attempt at understanding it a little better.
And on a less gloomy note, I’ve just finished Patrik Svensson’s The Gospel of the Eels, which focuses on “the eel question” — that is, we can’t figure out how they breed or where they come from. It’s a mystery that’s been perplexing scientists for centuries, and it made for a surprisingly interesting read.
Never give up.
“There’s almost always a solution, so keep pushing — but be smart about it.”
If something needs changing, there’s almost always a solution, so keep pushing — but be smart about it. Look at what others have done in similar situations. See if technology can help. Have conversations with a variety of people. And listen hard to the objections of whoever is blocking you. There’s probably a way through.
This interview was conducted by Niamh Corbett, Dr Scarlett Brown, and Maximilien van Gaver.