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The important role of company secretary: Changing times?

28/2/2019

The company secretary, a role defined in law in most jurisdictions, is an important actor in company boardrooms; a servant of the board with a mandate to ensure the smooth running of the board and its activities. Specific tasks include supporting the chair and chief executive in assembling board documentation; ensuring effective communications between key actors and external parties; recording and publishing minutes of meetings; and providing process support to the board as and when needed. Such a role seems clear.

But in recent times, company secretaries have assumed greater roles including speaking at meetings; exerting influence over decision-making processes, even to the point of presenting papers; and speaking for the board in the market square. This has been encouraged by associations representing company secretaries with the term 'governance professional'. Times are changing, for sure, but are these developments sound? Most of the contributions listed here come dangerously close to the secretary acting, or being seen to act, as a director.

But the company secretary is not a director.

Rightly understood, the role of board secretary should—indeed must—remain one of servant to the board, not part of the board. If governance is a profession (a debatable point, given almost anyone can be a director and professional standards are not enforced), then it is directors not secretaries who are the rightful claimants of the title 'governance professional'. Some other questions boards may wish to consider are:

The company secretary's modus operandi needs to founded on service, discretion and trust, not power. Is this reasonable, or do you disagree?
How does your board secretary actually operate? How should they?

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Governance: An act of leadership or service, or both?

19/2/2019

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I have just returned home from a busy but most invigorating week on the East Coast of the United States. The purpose of the trip was two-fold. First, to invest in myself by attending a course; and second, to participate in a series of meetings and discussions to explore matters relating to boards, board effectiveness and how high performance might be achieved.

The following paragraphs summarise some of my learnings. If you want to know more, please get in touch.

The Boards that lead programme at Wharton Business School attracted 49 serving and aspirational directors from ten countries. Professors Michael Useem and Ram Charan and their colleague Dennis Carey led the course incredibly well; a highly interactive exploration of when boards should lead, when they should follow and when, simply, they should get out of the way. The insights and commentaries from both the course leaders and several highly-esteemed company chairs, activists and academics during 'fireside chats' provided great assurance that it is possible to make a difference. A notable theme was that directors cannot afford to be aloof in their role. If [strategic] decisions are to be informed and value is to be created, directors need to ensure they understand the business of the business well—and that takes time.

Many boards in the United States are still caught in the 'compliance' trap—the protection of personal and professional reputation continues to be a more pressing priority for many directors (than the achievement of performance goals). As a consequence, boards are not paying sufficient attention to the strategic future of the companies they govern. While compliance matters are by no means discretionary, boards need to get more courageous with their time allocation, and also demand better reporting, to ensure compliance matters do not dominate the agenda.

Several directors lamented—some at length—that the promotion of ESG in recent years has been counter-productive. Rather than focussing boards on performance dimensions beyond money (the intention), boards have in practice become more concerned about adherence to prescribed 'best practice' frameworks. The directors I spoke with said that 'G' (governance) element in particular is problematic—adding little in terms of focussing boards on the creation of value over the longer-term. The alternative that sits more comfortably with directors I spoke with is SEE (social, environmental, economic).

The value of purpose reared its head in several discussions—director awareness of the need for clarity in relation to why the companies they govern exist is increasing. However, more needs to be done, to ensure a collective understanding is achieved. Time spent explicitly sharing thoughts and assumptions, with the intention of reaching agreement on a single, stated purpose is crucial: A North Star for decision-making.

The diversity discourse continues to evolve. Thankfully, a growing cohort of directors are realising that physical attributes of boards (number of directors, ethnic or racial heritage, or gender diversity, for example) provide little assurance of board performance let alone company performance. A more sophisticated understanding is crucial. My colleague, James Lockhart, has been vocal on this point for some time.

I was asked on several occasions to explain the Strategic Governance Framework, a key finding to emerge from my doctoral research completed in 2016. Both individual directors and boards were fascinated to learn that a framework for better board effectiveness (one informed by actual board observations) is now available for consideration and deployment. This was most gratifying. Boards interested in exploring this framework further should contact me directly for a private discussion.

Capping off the week, I spent 36 hours in Washington DC, taking in the sights and sounds of the National Mall, and visiting a couple of two of the Smithsonian Institution's fine museums. Returning to the hotel, the last eighteen words of Lincoln's address at Gettysburg rang in my ears. If companies are to prosper in the future, boards need to embrace a strong sense of purpose and service—to the company and legitimate stakeholders. Anything less is not only selfish, it is unsustainable.

Finally, and more personally: to the many unnamed folk I met through the week, thank you for your generosity. If the high level of interest throughout the week is any indication, the likelihood of me spending more time in the United States, to wrestle with both the opportunities and challenges of rethinking board effectiveness, and concentrate on company performance more so than compliance tasks (although such tasks cannot be neglected), is high.

If you would like to discuss any aspect of this summary, challenge my observations, or explore implications for your board, please get in touch, I'd be delighted to hear from you..

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The important role of company secretary: Changing times?

Governance: An act of leadership or service, or both?

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Peter Crow PhD CMInstD