Good corporate governance

Newsletter articles

1 Jan 2012

HR Insight Issue 14

Paul Fairhurst, IES Principal Consultant

IES recently ran a joint early-morning seminar with Eversheds, focused on the importance of, and challenges in, ensuring that an organisation’s board is working as effectively as it can. There were senior HR people and company secretaries present from private, public and not for profit sectors and, whilst it was recognised that the starting point is to ensure that a board is not fundamentally failing in its duty, there was real interest in how an evidence based review of the board’s effectiveness can add significant value to an organisation.

In his speech, Stephen Haddrill, Chief Executive Officer of the Financial Reporting Council (FRC), emphasised that evaluations should should be bespoke in their formulation and delivery. He also noted that some companies are still reluctant to engage an external facilitator, with some boards believing that they are the best judge of their own effectiveness. However, he responded, “We believe that, over time, as Boards learn to value the benefits of external evaluation… these doubts will ease.”

The FRC, in the introduction to its updated Corporate Governance Code states that: “The challenge should not be underrated. To run a corporate board successfully is extremely demanding. Constraints on time and knowledge combine with the need to maintain mutual respect and openness between a cast of strong, able and busy directors dealing with each other across the different demands of executive and non-executive roles. To achieve good governance requires continuing and high quality effort.”

Building on our reputation for evaluation as an independent, objective, apolitical organisation, IES has developed a rigorous approach to assessing a board’s adherence to the basic principles of good governance. In addition, we believe that there are higher levels of board performance that are based more on the people and relationship issues, such as how effective board meetings are and what they focus on, rather than just whether they happen or not. Our suite of evaluation tools allows organisations to choose what level of assessment and support they want to deliver their required business outcomes.