working with the board in the 21st century
TRANSCRIPT
The future of coaching and
mentoring:
evolution, revolution or
extinction?
Part 1
Journal of
the Association for Management Education and Development
Volume 21 ● Number 4 ● Winter 2014
____________________________________________________________________________________________________________ e-ORGANISATIONS & PEOPLE, WINTER 2014, VOL. 21, NO. 4 PAGE II www.amed.org.uk
Guest Editors: Pauline Willis and Anna Britnor Guest
Thanks to Triarchy Press for their continuing support.
© AMED 2014. ISSN 2042 – 9797. You may freely print or download articles to a local hard disk, provided they are for your personal and non-commercial use only. Please ensure that you acknowledge the original source in full using the following words
‘This article first appeared in e-O&P Vol 21 No 4, Winter 2014 and is reproduced by kind permission of AMED www.amed.org.uk’.
For permission to reproduce article(s) from this journal more widely, please contact the AMED Office www.amed.org.uk, Tel: +44 (0)300 365 1247.
The views expressed in this journal by both editorial staff and contributors are not those of AMED or any of the organisations represented by the editors, but reflect the opinions of the individual authors only. Cover illustration: Athena’s Owl - medallion made from a replica of an ancient coin photographed by Pauline Willis. For more information on the history of ‘Athenian Owls’, see http://athenianowlcoins.reidgold.com/ e-O&P Editorial Board: Bob MacKenzie David McAra
This edition of e-O&P may be downloaded from the AMED web site www.amed.org.uk , priced at:
£10 for networkers and non-members or
£5 for visitors to the Triarchy Press website
£0 for full members of AMED and e-O&P
subscribers
e-Organisations and People is also available on the EBSCOhost database http://www.ebscohost.com
____________________________________________________________________________________________________________ e-ORGANISATIONS & PEOPLE, WINTER 2014, VOL. 21, NO. 4 PAGE 49 www.amed.org.uk
Working with the board in the 21st century David Doughty
Keywords
corporate governance, directors, non-executives, coaches, mentors, consultants
The Challenge for the Board Corporate Governance in the UK as set by the Corporate Governance Code and the 2006 Companies Act
has a very different feel to it in the 21st century than in previous times when it was assumed that a director’s
duties started and finished with making sure that shareholders received an adequate return on their
investment.
Today, company directors are expected to create and maintain a sustainable business which creates
wealth for its stakeholders, employees, customers, suppliers and shareholders and adds value to society at
large – in sharp contrast to the ‘unacceptable face of capitalism’, asset-stripping, short-termism which was
prevalent in the 80s and 90s.
In parallel with this sea-change in company governance we have also seen the rise of a new breed of
leadership, reflecting the need to engage and empower employees rather than keep their ‘noses to the
grindstone’ or their ‘feet to the fire’.
The Board’s prime purpose is to set and maintain the organisation’s Mission, Vision and Values. Often it is
the values, which are seen as ‘soft and fluffy’ by a significant number of Small to Medium-sized Enterprises
(SMEs) which cause directors the most difficulty.
Yet, as we have seen recently with Tesco, it is when a business loses sight of its core values (protests
against new stores and boycotts by farmer suppliers) there is probably much worse to come.
Challenges
Boards of organisations of all shapes and sizes in the private, public and
voluntary sectors face new challenges due to the way society expects
businesses and not-for-profits to behave.
These challenges have been brought about by the corporate excesses of
the last century and the dramatic failures of the financial sector,
particularly banking, around the world since the 2008 crash.
Whilst demanding a new way of thinking from boards and their directors,
the new legislation and corporate governance code also provides new
opportunities for coaches, mentors and consultants to work with boards,
either on a one-to-one basis or as a team.
____________________________________________________________________________________________________________ e-ORGANISATIONS & PEOPLE, WINTER 2014, VOL. 21, NO. 4 PAGE 50 www.amed.org.uk
The Challenge for the Coach Given these changes in the ways boards are expected to work we can expect similar changes in the support
that boards and directors require. For example, it is now commonplace for executives to have a personal
coach or coach/mentor and the government backed GrowthAccelerator programme, now re-badged as the
‘Business Growth Service’, has funded a number of business coach interventions for SMEs with high growth
potential.
Boards are also looking for more
permanent support in the form of Non-
Executive Directors (NEDs). Looking at
the skillset required to be an effective
NED it is clear that there is a significant
overlap with the skillsets of Consultants,
Coaches and Mentors. Indeed many
people have built successful portfolio
careers by performing a number of these
roles at the same time (though probably
not with the same client).
Diagram 1: The Board support model
Examining the four roles, it is useful to consider
them in pairs, sitting at opposite ends of a spectrum,
as shown here. On one axis we have the Coach /
Mentor spectrum and on the other the Non-
Executive Director / Consultant spectrum. That is
not to say that the two axes are mutually exclusive –
in any given situation, individuals can perform a
number of roles, although one will always be
dominant.
NEDs
In the UK unitary board structure, Non-Executive Directors have exactly the same legal duties and
responsibilities as the Executive Directors. In a way, this is what gives them the authority to be listened to at
Board meetings – they have just as much to lose as the executives if anything goes wrong.
They do, however, perform completely different roles to the executives, who are full-time employees with
functional responsibility for running the business. Non-Executive Directors are part-time, ‘hands-off’, officers
of the company who take a longer term-strategic view. The NED role is best summed up by the two words
‘critical friend’, and it is striking the right balance between challenge and support that makes a NED effective.
____________________________________________________________________________________________________________ e-ORGANISATIONS & PEOPLE, WINTER 2014, VOL. 21, NO. 4 PAGE 51 www.amed.org.uk
Coaches
In the context of supporting the board, a Coach is a catalyst – someone who will enable the board members,
either individually or as a team, to develop and face challenges by self-realisation and awareness.
Mentors
Business Mentors provide guidance from the perspective of having ‘been there, done it and got the T shirt’.
The end points of the Coach / Mentor continuum are well understood but there is much debate about where
Coaching stops and Mentoring begins. In my experience, at board level, most support is delivered
somewhere near the middle of the spectrum – with a mixture of coaching and mentoring as appropriate. This
is likely to be delivered to individuals and the board as a whole.
Consultants
The prime difference between being a non-executive director and a consultant is that a NED has the same
legal duties and responsibilities as all the other board members, whereas a Consultant only has a duty of
care to deliver a specified programme of work.
There is a commonly held misconception, particularly amongst SMEs, that having a NED on the board is a
cheap way of getting consultancy. NEDs should be wary of this and should try to avoid getting sucked in to a
‘hands-on’ role within the business.
There are times in the life of a business or not-for-profit when it is appropriate for everyone, including NEDs,
to get stuck in to resolve specific issues – and there is nothing wrong with this, providing it is not a regular
occurrence.
I have known cases where, in order to avoid conflicts of interest, NEDs have resigned from the board,
undertaken a piece of consultancy work and then re-joined the board when the work was completed. This is
a little extreme, but as with the coach / mentoring axis, in reality individuals may be asked to provide a
mixture of non-executive and consultancy support and the key is to make sure that the nature of the
engagement is fully understood by the board with transparent arrangements for remuneration and
performance management.
The Challenges of Diversity Much is being made these days of the need for greater board diversity in terms of gender, ethnicity and
disability. There is certainly a body of evidence to support the proposition that a more diverse board is more
effective when it comes to making strategic decisions, and I fully support the move towards greater board
diversity, especially with regard to having more women on board.
However, there is no clear agreement as to how this increase in board participation by women, ethnic
minorities and those with a disability should be achieved. Countries such as Norway and Germany have
imposed a legally enforceable quota for gender diversity, but even within these countries this move is not
generally supported – especially by the ‘women on boards’ pressure groups. The feeling here is that women
should be appointed to the board on merit and not as part of some box-ticking arrangement.
____________________________________________________________________________________________________________ e-ORGANISATIONS & PEOPLE, WINTER 2014, VOL. 21, NO. 4 PAGE 52 www.amed.org.uk
It is generally agreed that the make-up of the board should reflect the demographics of the employees, which
in turn should be similar to the demographics of the wider community. The problem is that this is likely to take
some time to achieve, and until there is a sufficiently large pool of diverse candidates to draw from,
something more radical needs to be done to address the problem.
This is where our pool of talented, experienced, non-executive directors, consultants, coaches and mentors
can play a significant role. Due to the ‘baby-boomer’ population bulge, there is a significant number of people
with relevant commercial experience ideally placed to support boards as they become more diverse.
Unfortunately, it is these people, often white men, who are classed as ‘male, pale and stale’ and find it
difficult to secure NED appointments. As the majority of boards are not diverse and the number of candidates
with the desired characteristics, in terms of diversity, is low then this inevitably means that people will be
appointed to boards without the necessary skills, experience, background or qualifications – thus reducing
the effectiveness of boards which is exactly the opposite outcome to the one that is intended.
There is a solution to this problem and that is to use Associate & Alternate Director appointments to
introduce new blood to the board without diluting its effectiveness. Combined with suitable support from
experienced board members, this approach can achieve the aims of the board diversity agenda in an
acceptable timescale.
Developing Associate and Alternate Directorships An alternate director is someone who reports to a functional executive director and can take that director’s
place at the board if the executive is unavailable. It is a way of ensuring that the key business functions are
always represented at every board meeting and, by exposing non-board level staff to the workings of the
board, it is a way of succession planning for the board.
Similarly, associate director appointments can be used to add new non-executive directors to the board in a
non-voting capacity, so that they can gain valuable board experience and grow into the role rather than being
thrown in at the deep end.
In both cases, formalised arrangements for coaching and mentoring the alternates and associates by the
executives and non-executives are put in place with suitable one-to-one ‘buddying’. This arrangement
benefits from the significant skills, knowledge, background and experience of the established directors to
bring-on the aspirant directors before their first formal board appointment.
I’m a coach – get me in here! Boards in general and SME boards in particular are reluctant to take professional advice. This may be due to
the common perception that the meter is always ticking, racking up exorbitant bills whenever advice is
sought form an accountant or lawyer. But it is essential that boards, in all sectors and of all sizes, take
appropriate advice. Insolvency practitioners often tell me that if only businesses with financial difficulties had
contacted them sooner they might have been able to save them.
This reluctance to seek external advice is particularly difficult for consultants, coaches, mentors and those
looking for non-executive director appointments. There are a great many boards out there, many of them are
dysfunctional, and would benefit greatly from some external support. However, relatively few make effective
use of what is available.
____________________________________________________________________________________________________________ e-ORGANISATIONS & PEOPLE, WINTER 2014, VOL. 21, NO. 4 PAGE 53 www.amed.org.uk
One of the key duties of a board is to manage the strategic risks inherent in the business.
Effective risk management and assurance provides a framework for the board to determine how
it should devote its time, paying particular attention to the areas where it should seek external
advice and support.
The 2006 Companies Act Companies have been around since Elizabethan times, yet it is the 2006 Companies Act, which for the first
time, defines exactly what a company director’s duties are. One of the most important of the seven duties is
the requirement for all directors to promote the success of the company.
The Act goes on to explain that this means having regard (amongst other matters) to:
The likely consequences of any decision in the long term;
The interests of the company's employees;
The need to foster the company's business relationships with suppliers, customers and others;
The impact of the company's operations on the community and the environment; and
The desirability of the company maintaining a reputation for high standards of business conduct.
Implications for future coaches and mentors In pursuit of these objectives, with the goal of creating and maintaining sustainable businesses, boards can
make use of the guidance and support provided by Non-Executive Directors, Consultants, Coaches and
Mentors.
If you have the skills to work with boards in these roles, then it is vital that you have a thorough
understanding of the issues facing boards in the 21st Century which are shaping the way in which businesses
of all shapes and sizes in the private, public and voluntary sectors need to be run.
References
The UK Corporate Governance Code 2014
https://www.frc.org.uk/Our-Work/Publications/Corporate-Governance/UK-Corporate-Governance-Code-2014.pdf
The 2006 Companies Act
http://www.legislation.gov.uk/ukpga/2006/46/pdfs/ukpga_20060046_en.pdf
The Business Growth Service
http://www.greatbusiness.gov.uk/businessgrowthservice/
What skills do Non-Executive Directors need?
http://www.nedworks.net/non-executive-director-careers/skills-non-executive-directors-need/
The UK Model of Corporate Governance Institute of Directors
http://www.iod.com/intershoproot/eCS/Store/en/pdfs/policy_publication_The_UK_Model_of_Corporate_Governance.pdf
Is your board dysfunctional? Australian Institute of Directors Volume 11 Issue 11, 12 Jun 2013
http://www.companydirectors.com.au/Director-Resource-Centre/Publications/The-Boardroom-Report/Back-Volumes/Volume-11-2013/Volume-11-Issue-11/Is-your-board-dysfunctional
____________________________________________________________________________________________________________ e-ORGANISATIONS & PEOPLE, WINTER 2014, VOL. 21, NO. 4 PAGE 54 www.amed.org.uk
Acknowledgement I would like to acknowledge Pauline Willis for the numerous discussions we had in developing the thinking
for this piece and the Institute of Directors for their Chartered Director programme and continuing
professional development support
About the author David Doughty is a Chartered Director with a Masters in Company Direction from Leeds Business School.
He works with boards and their directors in the private, public and voluntary sectors to improve their
effectiveness and the performance of the organisations that they lead. David is a registered and approved
GrowthAccelerator Coach and a certified EQ Mentor.
You can contact David via E: [email protected], or M: 07876 653 563.
A note about AMED
AMED stands for the Association for Management
Education and Development, www.amed.org.uk. We are a
long-established membership organisation and educational
charity devoted to developing people and organisations.
Our purpose is to serve as a forum for people who want to
share, learn and experiment, and find support, encouragement, and innovative ways of communicating. Our
conversations are open, constructive, and facilitated.
At AMED, we strive to benefit our members and the wider society. Exclusive Member benefits include
excellent professional indemnity cover, free copies of the quarterly journal e-O&P, and discounted fees for
participation in a range of face-to-face events, special interest groups, and our interactive website. We aim to
build on our three cornerstones of knowledge, innovation and networking in the digital age. Wherever we
can, AMED Members, Networkers and Guests seek to work with likeminded individuals and organisations, to
generate synergy and critical mass for change.
To find out more about us, you are welcome to visit our website www.amed.org.uk, or contact Linda
Williams, our Membership Administrator, E: [email protected], T: 0300 365 1247