Peter Crow
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Apprentice directors: an on-ramp to a successful career?

14/3/2015

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The 'profession' of company director seems to be beset with an interesting challenge: how can or should young directors be introduced to boardrooms? In the eyes of the law, all directors are created equal. Young directors need to be competent and effective from the very minute they are appointed. Yet an important element of directing—experience and judgement—can only come from time spent in the boardroom. Do you see the Catch–22?
I have been exploring this challenge with directors in London, Leeds and Oxford this week. The prevailing view is that the profession has a problem. Many senior directors are reluctant to retire (the stated motivations are interesting in themselves, but that's another muse), and they don't seem to be interested in blooding new directors. Solid answers were few and far between. However, one option that did emerge was the notion of an 'apprentice director': one who is exposed to the full workings of boards and board practice, but without the demands of holding a formal appointment. The people I spoke with thought that apprentice director schemes may well have merit, but only if certain parameters are adhered to:
  • Apprentices are of an age, whereby they hold sufficient 'life' and 'business' experience to make sage decisions. The general consensus was that those less than 40 years old were unlikely to be suitable (although there will be the odd exception).
  • Apprentices need to be members of a directors' institute and have completed a recognised professional development programme. The courses offered by the Institute of Directors, Australian Institute of Company Directors and the Institute of Directors in New Zealand were all mentioned.
  • That that board requests a legal opinion, to ensure that an apprentice is not caught by the 'deemed director' interpretation that those on so-called advisory boards are exposed to.
  • That terms of apprenticeship are established and documented, including a fixed term (twelve months was the most common suggestion).
  • That the apprentice is paired with an experienced company director to act in a mentor capacity.
The notion of an apprentice scheme has considerable merit in my view. In-country directors institutes are ideally placed to take up the challenge of creating a scheme and of actively promoting its uptake amongst the boards of privately-held and publicly-listed companies. They should also consider 'accrediting' graduates (who would have to sit and pass an assessment), to provide a level of confidence to those recruiting directors. 
If you have a view on this, as a director of a board that has considered or apprenticed a director, or as someone with an alternative suggestion to solving the inexperience problem, please share it here.
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How to keep strategy alive in the boardroom

7/3/2015

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A couple of weeks ago I had the privilege and pleasure of working with 20 company directors on the strategy day of the Institute of Directors' Company Directors Course. Several delegates had a particular interest in how to keep strategy 'alive' in the boardroom. In their experience, boards start with good intentions but they quickly return to what they know best, monitoring and controlling. They agreed that boards are responsible for company performance (which means boards need to make decisions about the future of the business), so boards need to take strategy seriously. But many don't, which suggests that an important questions remains unanswered. How can boards keep the important matter of strategy alive?
I put the question to the group and we had a great discussion. After about 20 minutes of to-ing and fro-ing, the group seemed to settle on four main suggestions, as follows:
  • To tip the agenda on its head. Rather than discuss action items, the risk register and performance reports (typically the chief executive's report and the financial report) first, the group thought strategic items should be discussed first, particularly if some major items were expected to need considerable time and careful attention.
  • To ensure that reports were aligned directly with strategy. If the company was working to (say) four strategic priorities, then the chief executive's report should have a business performance overview followed by four sections, to demonstrate progress against each strategic imperative. The reports should also comment on the results actually being achieved vis-a-vis expected results.
  • To ensure that a major element of strategy (one of the strategic priorities, for example) was tabled at every second meeting (to allow space for annual reporting, budget cycles and other compliance oriented matters that also need attention at other meetings). The purpose of the agenda item is to debate progress, explore environmental and contextual matters pertaining to the strategic priority.
  • To create space for new information—particularly emerging trends and competitor news—and then to check whether the extant priorities were still valid and appropriate, or whether adjustments might be required.
These are great suggestions, and they are consistent with my research and experience. They appear to have 'reach' as well, from smaller companies just starting out with boards, right up to publicly-list enterprises. What was most heartening though was the reality check that came at the end of the discussion: many of the delegates agreed that the 'urgent' can and often does get in the way of the 'important'. Consequently, business-as-usual (monitoring and compliance items) can supplant strategy. A strong and vibrant relationship between the chairman and chief executive was thought to be vital, to ensure that the agenda was appropriate; that the reporting was at the right level; and, that the chief executive had the resources to execute on that which they were expected to deliver upon. Notwithstanding such efforts, individual directors need to make a commitment—to themselves and each other—to keep the conversation focussed on strategy, for the sake of the future performance on the company.
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HSBC's big call: an external chairman

2/3/2015

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Reports emerged today that the next chairman of troubled banker HSBC will be an outsider. If this is what "completely overhauled" means, then HSBC might have just made an inspired decision. However, it is not a slam-dunk. The decision is the first of many that will be required to get the organisation back on the rails and to re-establish much-needed credibility in the marketplace. 
Another word of caution: an external chairman is no guarantee of success. Boards needs to be led well, and a high-performance culture and an effective strategy are also crucial elements. But to make the move away from appointing a chairman from amongst the executive team is a very big step in the right direction.
Well done for taking an important step HSBC.
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Dr. ​Peter Crow, CMInstD
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