1. ICSA
Issued as a supplement to CHARTERED SECRETARY March 2011
A wider
view
How can we make boardroom diversity happen?
In association with

2. The 3rd ICSA
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3. Welcome In association with
A wider view
» Editorial
Editor: Rachael Johnson
020 7612 7094
rjohnson@icsa.co.uk
Assistant Editor: Gareth Pearce
020 7612 7038
gpearce@icsa.co.uk
The fifth Chartered Secretary Roundtable discusses board composition,
Senior Graphic Designer:
Mareike Schulz
constituting a timely debate of an issue which is currently high on the
020 7612 7046 political agenda.
mschulz@icsa.co.uk
E-mail for editorial Fundamentally, attendees acknowledged that progress towards greater
enquiries only:
diversity has stagnated, and that something needs to be done. With that
rjohnson@icsa.co.uk
gpearce@icsa.co.uk in mind, there was strong support for quotas as an option that has the
strength of purpose to challenge the status quo. Other alternatives, such as
» Advertising and
reporting on diversity and greater scrutiny of the recruitment
sponsor enquiries
Sponsorship Manager: process, were also considered.
Sunil Singh
020 7878 2327 The topic is a wide and varied one. As such extensive
sunil.singh@tenalps.com
debate around it is required in order to identify an
Ten Alps Media effective method to bring about change. In this context
Commonwealth House the roundtable discussion was very useful for airing
1 New Oxford Street
what is a fascinating debate.
London
WC1A 1NV
» Publisher’s note Rachael Johnson
Chartered Secretary Roundtable is
Editor of Chartered Secretary
published by ICSA Information &
Training Ltd for ICSA International.
rjohnson@icsa.co.uk
Opinions published herein are those
of the authors and participants
and unless stated otherwise do not
necessarily reflect ICSA policy.
ICSA and ICSA Information &
Training accept no responsibility
for loss occasioned in any person
acting or refraining from action as Welcome to the first Roundtable of 2011, which focuses on the very topical
a result of any views expressed in theme of board composition.
these pages. All material published
herein is copyright of the publishers
The Financial Reporting Council requires that boards
and may not be reproduced without
permission.
consider diversity and composition. Within this
supplement a group of industry experts explore
All advertisements appearing in these why this is still an issue, why we do not have much
pages are as far as possible checked
for accuracy, but persons accepting or
diversity on our boards and finally how we can make
offering to accept goods or services this happen.
contained in any advertisements do so
at their own risk. Diversity was deemed as being much wider
Photography of Roundtable event by than gender and caused some interesting
Simon Wright Photography: viewpoints and opinions, which I hope you
www.simonwrightphotography.co.uk will find insightful.
Venue for Roundtable event
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w w w . c h a r t e r e d s e c r e t a r y. n e t 3

4. Board composition
Hurdle
practice
Rachael Johnson considers possible solutions
to the current stagnation in developing diversity
in the boardroom, asking if there is more that
the company secretary can do.
I
n recent issues of Chartered symptomatic of a board’s desire to
Secretary we have made recruit members in its own image.
the case for greater diversity The conversation naturally focused
in board composition. The on the gender issue as the group
evidence suggests that having recognised that because this issue is
a more diverse board boosts currently the most high profile, it might
the financial performance of a act as a catalyst that eventually brings
company. In practice, however, change change in other areas. The idea of
is proving slow to materialise. There quotas was met with more enthusiasm
must be barriers in place that are than they sometimes receive from
preventing change, but what are they other groups; there was an awareness
and how can we overcome them? in the room that ‘something has to
With this in mind, the fifth give’. However, a word of caution
Chartered Secretary Roundtable was was sounded in relation to tokenism,
held to discuss the topic of board as the argument was made for more
composition. The discussion raised than one woman to be present in
some interesting issues and opinions. the boardroom. Indeed, the 30 per
Attendees thought that one of the cent target was highlighted as a good
reasons companies might be wary yardstick to aim for, avoiding tokenism
of appointing someone who falls and acknowledging that not all women diversity might make reporting as a
outside the standard director mould behave in exactly the same way. whole more compliance-based, rather
would be the market’s reaction to than strategic. An alternative might
such an appointment. It may be that Taking the right steps be to consider a shorter tenure for
companies are reluctant to cause a One of the key questions the group directors, or to perhaps use personality
stir and frighten potential or existing centred on was, ‘What can be done?’ profiling in recruiting directors, or
investors. However, it was asserted Reporting was considered as an at least have a more instructive
that the idea that there is a certain ‘fit’ option. The argument for reporting relationship with the headhunter to
for a particular board, which makes was that it often drives greater make sure that the board sees all
some candidates more suitable than behavioural change than any other qualified candidates. Fundamentally,
others, should be challenged. Such solution, the argument against being it was acknowledged that chairmen
a notion is too vague and is often that a requirement to report on need help in making their boards more
4 w w w . c h a r t e r e d s e c r e t a r y. n e t

5. In association with
diverse; some are not closed to the
possibility, but need to be shown how There was an awareness in the room
it can be achieved.
Might there be a role for the
company secretary here? Indeed, at
that ‘something has to give’.
the very least, the company secretary’s
relationship with the chair should be what is to stop them from taking a question of widening ambition as
such that he or she can advise on the on a non-executive role at another much as anything else. 
benefits of diversity and persuade company? Their unique understanding
the chair to consider less predictable and experience of boardroom » About the author
candidates. But perhaps company procedure and function make them
Rachael Johnson is Editor of
secretaries should be thinking bigger: a perfect candidate. Perhaps this is
Chartered Secretary magazine.
w w w . c h a r t e r e d s e c r e t a r y. n e t 5

6. Board composition
Meet
the 4
6
panel 1
2
3
5
1. Maggie Heasman
Head of Corporate Affairs,
Chartered Institute of Management
Accountants (CIMA)
In addition to her role as Head of
Corporate Affairs at CIMA, Maggie
is the Membership Secretary of the
Association of Women Chartered
Secretaries, an ICSA Members
group, which aims to provide
professional support and networking
opportunities for female ICSA
Members and students.
2. Janet Cooper Company Secretary at Amersham for Society, Peter has worked for more
Partner, Linklaters (Chair) five years prior to its takeover by GE in than 25 years in the share registration
Janet has been a Partner at Linklaters, 2004 and at Prudential for four years. industry. Peter is Chairman of the ICSA
a global law firm, for 20 years, and She joined Smith & Nephew in May Registrars Group, and is a member of
has been one of the longest serving 2009 as Company Secretary. the Company Secretary’s Forum, the
global practice heads. Janet sits CBI Companies Committee and the
on a number of boards, including 4. Peter Swabey Shareholder Voting Working Group.
UNWomen, which is the United Company Secretary and Industry He is a regular speaker at industry
Nations organisation that works to Leadership Director, Equiniti conferences and events, with an
empower women globally. Peter is the external face of industry-wide reputation as a technical
Equiniti and responsible for the expert on shareholder and corporate
3. Susan Henderson development and support of all the governance matters.
Company Secretary, Smith & Nephew share registration and corporate
Susan Henderson MA FCIS has 25 governance services offered by 5. Julie Bamford
years’ experience as a company the company to its clients and Joint Head of Policy, Corporate, ICSA
secretary in a wide range of their shareholders. This includes Julie Bamford recently joined ICSA
businesses, covering board support, the company’s engagement with as Joint Head of Policy, Corporate.
corporate governance, corporate market, government and regulatory Prior to that, she spent six years with
transactions, share registration, contacts; representing registrar and Standard Chartered as Deputy Group
listing obligations, corporate social issuer interests on industry bodies; Secretary. She has more than 20 years’
responsibility, pensions, insurance and managing Equiniti’s responses experience working as a Chartered
and employee and executive share to formal and informal consultations. Secretary in the financial services
plans. She has held various company A history graduate, Fellow of ICSA, sector, initially in life assurance and
secretarial positions, including Deputy and member of the Investor Relations pensions, then in investments, before
6 w w w . c h a r t e r e d s e c r e t a r y. n e t

7. In association with
8. Robert Armour
Director, David Venus & Company
Robert Armour became a Director of
David Venus & Company last year,
joining the practice after many years
as Company Secretary and General
Counsel of British Energy Group plc, a
FTSE 100 company until its acquisition
8 by EDF SA in 2009. Following a career
in private legal practice, Robert spent
almost 20 years as company secretary
7 of significant companies in the energy
sector and has experience of the issues
9 facing any company secretary sitting
round the board table or acting as
a director of regulated businesses.
Robert was in-house counsel of
10 the year in 2005 and awarded an
OBE in 2007 for services to the
electricity sector. Based in Edinburgh,
Robert chairs the Scottish Council,
Development and Industry and is an
advisor to Equiniti and EDF Energy.
9. Caroline Evans
Director, CSS
Caroline is Director of CSS, the
specialist company secretarial recruiter,
and its parent Beament Leslie Thomas.
Her early career was as a tax consultant
with two of the ‘Big 4’ firms, before
she moved into recruitment. Initially
specialising in management consultancy
appointments, she transferred to lead
moving into banking. During this time, He is a former visiting Professor at the team at CSS some ten years ago.
she has experienced many challenges both Warwick and Cass Business Caroline has a particular interest in the
in the financial services industry, from Schools. He is currently National growth and development of company
pensions mis-selling through to the Chairman for the Campaign to secretaries and is committed to raising
very recent banking crisis. She has also Protect Rural England (CPRE). the profile of the profession at the
worked through the many changes highest levels of the business arena.
in the regulatory environment and to 7. Lorraine Young
corporate governance best practice Chartered Secretary in Public Practice 10. Kerry Porritt
that followed. Julie is a Fellow of ICSA, Following a long career in the City, Deputy Secretary, Severn Trent
has a first degree in law from the Lorraine set up her own company Kerry qualified as a Chartered
University of London and a masters secretarial practice in 2003. This Secretary and initially worked within
degree in Corporate Governance. provides individually tailored and the investment banking industry. From
flexible advisory services for a variety August 2003 until December 2006,
6. Peter Waine of client companies. Lorraine is a she was Deputy Company Secretary
Director, Hanson Green policy advisor to ICSA and a facilitator of Brambles Industries, a FTSE 100
Peter has worked for manufacturing for its board evaluation service. She global support service provider with
companies and professional firms, is a regular speaker for ICSA training an Anglo-Australian dual listed
both as a director and a non-executive courses and writes for Chartered companies structure. Since 2007, Kerry
director. A former CBI Director, he Secretary magazine. Lorraine has has held the role of Deputy Secretary
acquired Hanson Green with Barry over 20 years’ experience as a of Severn Trent, a regulated FTSE 100
Dinan in 1989. He is co-author of Chartered Secretary, including as utilities group. In 2010, Kerry was
The Independent Board Director Company Secretary at Brambles appointed a Court Assistant to the
and Takeover, the business novel, Industries and Head of Secretariat Worshipful Company of Chartered
and author of The Board Game. at Standard Chartered. Secretaries and Administrators.
w w w . c h a r t e r e d s e c r e t a r y. n e t 7

8. Board composition
A wider view
We know that greater diversity of board composition makes sense, so how
can we make it happen?
Janet Cooper: The topic for today’s roundtable is diversity There’s probably about 30 per cent female representation
on boards. The Financial Reporting Council (FRC), in its UK on executive teams and 12 per cent on boards. Somehow
Governance Code now requires that boards consider their women haven’t passed the threshold into the boardroom.
diversity, looking particularly at gender. Why is this still an I think this may be partly due to other factors, such as
issue? Why do we not have much diversity on our boards boards looking for people who are already on major boards.
and particularly lack women on boards? It’s been a very slow evolution so far in increasing the
proportion of women on boards.
Peter Waine: I think there’s still not enough women,
even at the executive committee level, to consider. Even if Peter Waine: There aren’t enough people on current
one’s going for the plc, the sort of corporate entity, taking plc boards, especially the executive side, to satisfy the
diversity one step further from the traditional cadre of talent. non-executive requirement. Therefore they are having to
The graduates have been coming out 50/50 for many years. look below main board level. I think diversity will help to
But somehow there’s not enough people for headhunters to break that rather cosy feeling that boards have, like a
put forward. I feel that the vast majority of companies would little club with the same members. Plc main boards are
like to have more women on their boards. It comes down to now rather small as far as the executive is concerned and
whether we can offer them the right quality candidate. they can only have one non-executive position while
they are still currently an executive. I think they’re not
Robert Armour: I think that Cranfield said in its report just going like-for-like within their own cadre of plc
that there are about 2,800 women at the next level. main board.
8 w w w . c h a r t e r e d s e c r e t a r y. n e t

9. In association with
Relevant experience encourage them in that direction. Another factor to consider
is what the reaction to an appointment will be. How will the
market react to an appointment; how will the financial press
Janet Cooper: So what’s so special about being on the main react? Companies will want a wow factor which prompts
board that’s essential to becoming a non-executive director? people to think: I know that person, I know their track
record, they’re going to be a well-received addition. That
Peter Waine: The buck does stop at the main board in a sort of person is often a safer choice.
plc structure as far as strategy and budgets are concerned.
I think it’s a concentration in the plc structure at least Kerry Porritt: I agree with that, certainly from what I’ve
that makes it difficult for people outside that structure to seen in the guidance coming through. It’s very much
understand certain elements of a board’s agenda. Which around looking for people who have got sector experience.
also means that you’ve got to be a generalist rather than I think sometimes it’s difficult for people to look outside
represent each function. There’s quite a lot of psychological a particular remit, especially in financial services at the
difference as well. moment. That makes it hard for people to say: are there
other people out there in the public sector or in public
Janet Cooper: Looking at the availability of talent out there, service, such as judges, who are sufficiently challenging
do companies look at the public sector, where people have and who have a different mindset that would be a good fit
run very significant departments and where there tends to around the board, because these people may not have the
be a slightly broader, more diverse group of candidates? right experience of the plc sector.
Lorraine Young: I’ve seen several boards which have former Peter Waine: We make about 100 appointments a year,
male civil servants on them. Such people can be very sought which we’ve been doing for over 20 years. I don’t think
after, particularly those from the treasury. But I’ve not seen we’ve placed a single civil servant, nor has it been requested,
this as much with female civil servants. nor have we been able to push for it, despite the talent that
there is there.
Susan Henderson: If you look at the age of people who
would be suitable as non-executive directors, they’re Lorraine Young: Why do you think that is? It does seem,
probably in their 50s. Although there is a 50/50 split of from reading the papers recently, that people are trying
graduates now, if you look at the split of graduates say 30 to pull back on the size of their boards. And you can
years ago, when these 50-year-olds were coming out of understand that, but I think that could actually count against
university, that split would have been a lot different. There diversity. You know they want somebody who they perceive
are other issues, such as that some women will drop out to as safe, that they can be confident in, and this is the reason
do other things. However, that still doesn’t get back to 12 why the executives want someone who can hit the ground
per cent being a sensible number. running. They’re less inclined to say, well they’ve got suitable
In terms of diversity being more than just a gender issue, personal qualities, as you might have said about the civil
I think that looking at public sector is valid. To get a proper servants. They’re not willing to put the time and energy in to
balance of board members you will want some members train them, or to take the risk that they might fail.
to have had that range of plc experience, so that they
understand the difference between a big division and the Susan Henderson: I would like to ask Peter; do companies
listed company environment. It is also valuable to have a say, ‘we’re wanting somebody that’s been the chief
wider balance, with say people from the public sector who executive or COO somewhere’, or do they specify that or
look at some things and say: ‘You’re looking at it from a do they specify the qualities they should have. For example,
listed company perspective, but actually I’ve got a different someone who is going to be challenging or with a wide
perspective, which may also be relevant.’ range of experience’?
Janet Cooper: In terms of the companies that you’ve Peter Waine: Yes. It’s experience of having been on the
worked for, do you feel there was a supply issue, that main board that they are looking for, rather than necessarily
there weren’t enough women or people from different having been Finance Director. They need to be financially
backgrounds available to be promoted within your competent, although there are a few non-executives who
organisation or to get external, senior appointments? aren’t as financially competent as you might assume, having
been on the main board. I still think that’s a problem. But
Robert Armour: I think there are two things to consider. no, they don’t tend to say they want a chief executive or
In many cases there are good women on the executive former chief executive. In fact we would often caution
management team. But they may be in roles which against a current chief executive, because they are so busy
traditionally don’t go forward to the main board, such as at that stage, running their company and they’re not
HR Director. Perhaps it comes back to the fact that there shrinking violets. The combination of the two makes it quite
are a limited number of executive slots and a reluctance to difficult for them to adjust within three or four hours to
put people below main board level onto other boards or to becoming a non-executive.
w w w . c h a r t e r e d s e c r e t a r y. n e t 9

10. Board composition
concentration on evaluating the effectiveness of the board,
which may make people see that they don’t necessarily need
what they traditionally thought they needed.
Peter Waine: With some of the board evaluation exercises
that we’re currently doing, there has been a sort of reflective
moment by the board or by the chairman on what is really
needed. Sometimes we find boards are saying that they
don’t really know each other. They meet at nine o’clock,
and finish at three. It tends to be the global companies
whose boards actually know each other because they travel
together. I think that there’s a need for companies to bond
and understand each other and spend more due diligence
on chemistry and corporate cultures.
Julie Bamford: I think that when a lot of executives
first go onto the board that is when they may have real
difficulty focusing on the whole company, rather than just
their own area of operational responsibility. Some training
would help; directors have induction training when they
come on the board, part of that should focus on their legal
responsibilities. To dismiss people who haven’t had board
responsibility in the past is, I think, a bit narrow.
Quotas
‘Do companies look at the Janet Cooper: When Norway looked at this in 2001 they
public sector?’
introduced a quota to get 40 per cent of women on boards
and they found a supply very quickly. This was because,
Janet Cooper if they didn’t, their companies would be liquidated within
two years. No company was liquidated, because they all
complied. Does that mean that Norwegian companies are
Julie Bamford: We hear the term ‘fit’ a lot. However, now operating at a suboptimum level because they don’t
there’s a feeling that maybe boards need to change their have the right talent onboard, or was the talent actually
thinking. Major investors always comment on appointments there when they went looking for it?
and like to see a ‘track record’. Headhunters tend to follow
the company’s lead, which they should avoid doing, so Peter Waine: I don’t like quotas; I think they’re going
that boards don’t automatically get what they think they to be counterproductive. I know something needs to be
want. There should be more of a discussion around board done to smash this glass ceiling. Certainly a number of our
composition, to broaden people’s thinking, because this appointments have been women and the number of boards
question of ‘fit’ comes up all the time. And nobody can ever that are asking for women is increasing. I can’t believe
quite pin down what they mean by ‘fit’. It always seems to that companies have been so naive as to not seek talent
mean that the idea they’ve got in their head is of someone wherever they can find it. It’s just that they haven’t been
like themselves. Everybody needs to get together and flexible enough or open-minded enough to take one or two
broaden out their thinking on this. women onto their boards. In a small economy of a country
like Norway the standard must have dropped and that is not
Peter Swabey: It often seems to me that perhaps good for really talented women.
somebody who doesn’t ‘fit’ is actually more appropriate.
Janet Cooper: I’m not aware of any research showing
Lorraine Young: It’s back to the ‘groupthink’ problem. anything yet, because they say it’s too early to identify
whether it has had a positive impact on performance.
Julie Bamford: Yes, in many ways diversity means ‘not fit’.
The two terms are contradictory. Caroline Evans: I’ve read that Norway has exceeded its
quota, which suggests that the quota has created the
Peter Swabey: For me, awareness of board diversity may opportunity to view potential board members in a different
develop with the requirement for external board evaluation, light and to assess them differently. Maybe the mechanics of
making that requirement quite positive. There will be greater assessing someone’s suitability have to be altered.
10 w w w . c h a r t e r e d s e c r e t a r y. n e t

11. In association with
Kerry Porritt: I agree that it’s too early in the cycle to and I’m on your side. I’m a woman, on a plc board and
produce any results as to whether the quota’s working. A the shareholders seem to be happy – there’s a much more
second interesting point is that getting one woman on the promising story to tell.
board tends to be quite ineffective, because that person is
always seen as being a female representative, or the ‘woman Lorraine Young: Maybe you touched on something there
director’. Having two or three women on a board of, say – there’s a lot of fear out there. What you said about
ten, is far more effective because then they become part changing the chairman struck me. How do you do that?
of the usual debate; they’re no longer seen as the token. I’ve changed my mind a bit in my answer to that. I started
Although I don’t agree with quotas, in going to 30 per cent, off in the camp of let’s not have quotas; we’ve all got to get
you do away with the idea of the token woman on the there on merit. But actually if quotas are imposed after this
board. I do wonder whether that’s going to have a positive call for evidence it may not be such a bad thing. If you look
effect in Norway, because they have more than 30 per cent, at the numbers and how long it’s taken us to get not very
rather than just the one woman at the table. far, what is it that’s going to change the people that run
boards to make them come out of their comfort zone and
Peter Waine: But even having one woman on a board choose different people?
does change the logistics, the dynamism of that board.
That’s the feedback we get. I still feel that a more subtle Julie Bamford: As you say, the mechanics of the
approach can be more effective. In the UK corporate appointment process are important here. If we go for
scene that’s not quotas, but what’s been hinted at: quality quotas we may have a couple of years of disruption and
induction. Not just a half-day, but over a whole year in then things will settle down, because the culture of boards
different formats. The attitude of the chairman of that will change. What they are looking for will change. What
board is also important, because after all it is his or her they see as ‘fit’ will change. The momentum will build.
board. That can make a huge difference to the remit and I don’t have a strong view either way on quotas, but I can
the instruction that people like ourselves are given and the see the argument for them.
effectiveness of the appointment.
Robert Armour: I think you’re right. Personally I’m in
Kerry Porritt: I think that talking specifically around gender favour of quotas. I think the European average is about
and the diversity of boards could be a potential red herring. 12 per cent; it’s not that far off ours. I read that it would
We all know as women sitting around this table, that we’re take, at the current rate of progress, 70 years to get
all different and we work in very different ways. It’s not to parity. We’re not going to get there in a reasonable
always the case that if you have just one woman around timescale without some pressure. Whether you go with
a table, that she will work differently to the men. If she the Norwegian model of 40 per cent or not, it seems to
happens to have a lot of male characteristics, actually she me that you may need to take a leap of faith. Part of the
won’t. That’s not because she’s a woman, it’s because her reason you want diversity is to avoid groupthink. I think that
traits are that way. So actually, in the same way that five part of the problem is that there’s groupthink out there that
men around the table will all act completely differently says, ‘we can’t take the risk of widening board composition,
because they’ve all got different characters, I think it’s quite if we widen it from the collective usual suspects we are
generic to say that a woman has to act ‘like a woman’. going to dumb-down the board.’ Actually you’re going to
change things, but it’s that leap into the unknown, which is
Julie Bamford: I think you’re right. Bringing diversity to seen as risky, but which may not actually be any worse than
the board is as much about diversity of thinking. An example the current situation. Most surveys of the UK population
is appointing a lawyer to an audit committee. A lawyer find that they would like a more gender reflective board
comes with a different perspective and thinks about things structure than we currently have.
in a different way. It’s the different ways of thinking that
boards need. Julie Bamford: That’s important as boards have to reflect
their customer base. If they haven’t got that thinking at
Caroline Evans: Peter, when you said that when a woman board level they become detached from their customers.
comes onto a board things start to happen differently. Is that
received as positive feedback? Janet Cooper: The Catalyst survey in 2007 said that
companies with more than three women on the board
Peter Waine: Completely positive, if the women come to outperformed others by 83 per cent. In terms of the fear
the board as themselves the feedback is that the board will of appointing people who may not tick all the right boxes,
be different. It’s perceived to be different even before the those companies that have taken that ‘risk’ now seem
appointment’s made. If the women that we have placed to be outperforming as a result. How do we improve the
on boards in the last 12 months were here they would say, talent base, so that this fear can be removed? Do you
don’t get hung up about this, or worry about that, you’re think initiatives by Centrica, Unilever or Vodafone, who will
thinking too academically, too subtly. We’re actually on a always put a woman on the shortlist for senior executive
board and I can see how things are beginning to change appointments, are going to improve the talent base?
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12. Board composition
Caroline Evans: I think the talent is there but that it may Robert Armour: Of the people who come to you, Peter,
be dangerous to put a woman on a shortlist in order to asking to be considered, how many are women? If they
fulfil a requirement. I think the measures of talent and the don’t come forward by themselves, how do you find female
professional development programmes should all be looked candidates? Because taking Maggie’s point, if they don’t put
at and perhaps altered in order to make them fairer across themselves forward because they think they’re not going
a more diverse range of equivalent, but differently manifest, to get through and the statistics say there are less jobs for
talent. The ‘traditional’ talent is readily measurable against them, then they’re not going to try, in case they fail. It’s a
‘traditional’ criteria; the diverse group should be measured vicious circle.
differently. Perhaps we need to be more sophisticated in the
way we measure people’s capabilities and potentials. Peter Waine: A number of people do write in. Secondly
we get chairmen and non-executives who say, I think this
Peter Waine: I think that the Unilevers and the Vodafones person on our board should be considered, which is very
will have a huge female talent pool. Perhaps some of the useful. They’re not always recommended from their own
companies at the latter end of FTSE 250 may not have the board even, they could be recommended from a board that
sufficient depth and variety of talent because they won’t they’re also on in some other capacity. We do back certain
attract that number of world-class people. Even at board candidates we believe passionately in. Sometimes we add
level they only have one or two real stars. Unilever and them to a list and say, they’re not quite right for your direct
similar organisations will get the best from universities and specification, but they should be considered. They tend to
should keep most of them. I think their trouble is that they see that extra one, because it’s pretty pointless for us to
have too much home-grown talent and not enough diversity propose that person unless there’s some real benefit.
of experience. So they think they’re doing well compared
with internally set yardsticks, but the competition isn’t Robert Armour: Would that extra person you put forward
standing still. That makes their people pretty useless as non- actually be somebody appropriate from a diversity angle?
executives elsewhere, because they say the only way to do
things is the Unilever way of doing things, which is not the Peter Waine: I was thinking mainly about women in that
case. So it’s not quite as crisp and as neat as sometimes the particular category. But actually it’s not only women; nor
arguments or the articles convey. should it be. You talk about lawyers, especially within
regulated industries. I still find that financial services is a
Janet Cooper: It seems a powerful step forward, that the big, big problem when it comes to having a genuine desire
chief executive or the chairman in these firms has been to have a balanced board. But certainly lawyers are very
saying, right we’ve got a lot of women at the lower level, but good for regulated industries, the utilities and so on and
virtually nothing at the top of the pyramid. But the process we’ve made some exciting good appointments there. In turn
that they are using to get people to the top won’t equip that’s helped that candidate to broaden into a more general
them with the right talent to be moving into other businesses. portfolio of non-executive positions outside regulation.
Confidence Reporting and the
Maggie Heasman: Is there something to be said around nominations process
the fact that women don’t feel they can do it? That they
stop at a certain level and they’re not encouraged further. Janet Cooper: In terms of the nomination process, how are
Perhaps they’ve gone through an education system where, if the specifications for these board positions put together?
you’re in your 40s or 50s, you’re not encouraged to progress Are the required characteristics predominantly male, so that
up the ranks and so you don’t feel you can do that. You’ve it’s a self-fulfilling prophecy that a man will be taken on?
got the talent, but no one has ever encouraged you. So you
hold yourself back. Peter Waine: I don’t know. Being a man, I’m not sure
if I can see through what is actually presented to me
Lorraine Young: I think confidence is a huge factor. When sometimes. I’m not aware that they’re doing that. But I
I ran a department and was recruiting company secretaries am aware that they’re wanting, where possible, a woman
I found that you could interview a woman and a man on the board; it’s definitely what they’re asking for. It’s
who were reasonably equally qualified, but, in general, the inordinately slow, but I do believe the momentum is there.
woman would be far more modest about her achievements
and what she could do, than the man. Yet on paper the Susan Henderson: When I went to New York, I went to
woman may have been better, or the candidates would have Ellis Island, where they had processed everybody coming
been at least the same. into the US. The tests they had used to decide if you were
an acceptable person to live in the US tested aspects that
Janet Cooper: Do you feel that women are not putting were completely alien to people coming say from a rural
themselves forward; that they’re waiting to be asked? Eastern European society. They now recognise that the kind
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13. In association with
of questions they were asking were unfair, because they
were not taking account of a different range of skills and
experiences. I wonder if there’s something like that going on
subconsciously in the process of board appointment.
Julie Bamford: I think this links in to what Maggie was
saying that women who are in their 40 and 50s now may
not have been brought up to push themselves forward and
to strive for those kind of careers. They’re also dealing with
men of that same generation, who were brought up to see
women in this way. Often they don’t realise how they are
thinking, what they are saying, or what they’re doing.
Janet Cooper: In terms of the FRC UK Corporate
Governance Code, which says you need to describe the
nominations process in appointing new directors, are you
going to be putting more information about the nature of
the nomination process in your reports this year?
Susan Henderson: I did it last year. We had two new non-
executive appointments. We were looking for one to take
over as chairman of the audit committee. The headhunter
said to us: ‘here are some audit committee possibilities, but
there is somebody else we think you should see as you’re a
scientific company and innovation is your thing. This person
comes from a scientific background. That person was a
woman, who brought diversity along with an innovative,
scientific point of view, without the conventional financial
or plc listed background. She’s brought diversity when we
weren’t specifically looking for it, but we were open to the
suggestion. It is important for a board to define what it is
looking for, but also to be open to something else as well.
‘There’s a lot of fear
Janet Cooper: When you appoint women to the board, out there.’
is one of the first committees they join the nominations Lorraine Young
committee? Doing that might enable us to try and break
down this tendency for people to appoint in their own
likeness and to accelerate the consideration of diversity in change behaviours, so the more reporting we can have, the
the recruitment process. better, perhaps with companies setting internal targets and
reporting on how they are working towards their goal.
Susan Henderson: I tend to see nomination committees
composed of people that have been on the board a bit Janet Cooper: If one of the outcomes of Lord Davies’
longer, who know how the board works. committee is that there will be more reporting on diversity,
throughout the organisation, this will fall within your remit
Robert Armour: I don’t think people say, right we’ll put a as company secretaries. Do you think that level of reporting
woman on the nominations committee, as such. You have would be a good thing?
your list of non-executives and you sit there and say, how
am I going to allocate them? Let’s start with the chairs Kerry Porritt: Although reporting is a good thing that can
for these committees; have they got experience of that drive a change in behaviours, I think there is a problem
particular field? Then how do I divide them up to get the with that approach. From my perspective, the danger is
right balance of skills and approach? By the time you’ve got that the more obligations of this kind that come along the
to that stage you know the personalities around the table, more likely it is that corporate governance will become
so you know how they’re going to fit. very compliance-based, instead of being very strategic. The
ICSA guidance says that the composition of the board is
Julie Bamford: I think your point on reporting is very the chair’s vision and the chair should be feeding that into
important. Companies should report on their nomination the nomination committee. If the chair’s vision isn’t a very
process. This links into the evaluation process and focusing good one, or if there isn’t a process in place to define how
on this issue as part of board evaluation. Reporting tends to the company should align board composition to its strategy,
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14. Board composition
then I don’t think the nominations procedure will ever really launch of its report in December last year. It was suggested
change. I also think we should consider the terms of usual that these appointments should be on a website or at
employment. If you appoint somebody to the board, they’re least become more public. One or two companies thought
usually on there for at least three years, maybe six years or that was a good idea. Do you think doing that might add
even nine years. How do you know you’ve got the right value in bringing out more people who will put themselves
person? It’s usually within the first six months that you know forward, or will it actually just cause more work?
if it’s working. Maybe personality profiling is something that
the whole board needs to undergo, or maybe there is a Caroline Evans: I think it depends on how the applications
need for probation periods and coaching. Currently there is are reviewed and whether people look at them in the
induction and development, but is that enough? I wonder if traditional light or look at them in a slightly more lateral
the appointment and retention process for directors on a plc light. If they are looked at in the traditional light then
board is too one tone. perhaps the end result will be the same. But if the process of
sorting is adapted, then yes.
Peter Waine: If we’re not careful, with all these reports,
corporate governance will become an industry; an end in Kerry Porritt: You could put the advert wherever you like
itself. I think that’s where you, as company secretaries, play really, couldn’t you? But unless that advert is asking for the
a huge role. When I talk to chairmen, the successful boards right things, you’re never going to find the right candidates
are those where they don’t have to say, ‘we spend a lot of to review and, in the end, get the required mindset. You
time talking about corporate governance’, because they’ve need to ensure that the advert fits with what you’re actually
got a good company secretary who tells them exactly what looking for.
needs to be done. I think that’s a very powerful relationship
between the company secretary and the chairman; even the
more liberal, open minded chairmen need help. I think it is Action plan
important to emphasise chemistry but I think that profiling
would be a bit too difficult for some chairmen to take. Janet Cooper: What do we think businesses need to do, or
the Government needs to do, to try and move this diversity
Robert Armour: There is something in looking at the issue on to the next level? We can’t carry on doing what
process that’s important. The public sector has a much better we’re doing, with 12 per cent on the FTSE 100 and 7 per
balance of appointments, with almost 50 per cent of boards cent FTSE overall with women on boards. How do we move
chaired by women. Why is that, compared to the process for this forward if quotas aren’t the answer?
corporate boards? Looking at the differences, most of these
posts are publicly advertised. There’s a fairly strait-jacketed Robert Armour: We haven’t really talked about minorities,
process to public sector appointments, set by Government disability or international experience. It’s much easier to
bodies. Sometimes that is frustrating, but nevertheless it tackle gender as you can tell men and women apart; it’s
has achieved a result which is overtly fair. In many ways the much harder to enforce a quota for international experience.
corporate appointments tend to be less visible. Perhaps different approaches to different aspects of this
problem would work best.
Peter Waine: When we make public appointments we are
asked to advertise as a parallel exercise. Not once have the Peter Swabey: The requirements of each board will differ,
people from the advert got onto the shortlist. depending on the company.
Caroline Evans: I think what you say is interesting: if you Lorraine Young: I’ve found that on some boards, where
had a public sector appointment and were not allowed to I’ve done board evaluation, they seem to have a pretty
contact anyone except via the advert, do you think you good handle on their strategy and the kind of skills and
would have had the right people coming through? experience they need in a general sense. Although with one
evaluation that I did, honestly I think that if there were 10
Peter Waine: The answer is, we wouldn’t. or 12 directors there were 10 or 12 suggestions as to what
they needed to do about the next board appointment. If
Caroline Evans: I think there is a middle ground in they’re only a small UK company operating in the UK, the
recruitment between the hearts and minds and knowing international experience wouldn’t perhaps be relevant for
the ‘right’ person and having mechanical systems in place them, unless they are wanting to expand. A lot of them are
that encourage you to widen the net, so that you get a quite good at linking their requirements into their strategy.
different perspective, but still maintain the quality. It’s in The gender issue is perhaps just slightly different. Maybe
there somewhere, but I don’t know who takes the lead on that fits into what you were saying about disability and other
that; all of us probably. areas. There are almost two kinds of diversity, aren’t there?
Janet Cooper: This idea of making non-executive director Janet Cooper: Yes. Gender diversity is much easier to
appointments more public was discussed at Cranfield’s monitor and measure, because it’s very obvious. Everything
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15. In association with
Flexibility
Janet Cooper: So what are the steps we need to take?
Kerry Porritt: We need to look at a lower level in the
organisation. If women in their 40s and 50s are a bit
backward at coming forward, then let’s look at women in
their 20s and 30s. How do you push them, change their
expectations, make them want to go forward; how do you
build the networks? How do you make sure, as a corporate,
that you’re talking to other corporates so that these women
are gaining relevant experience so that when they get to
their 40s and 50s they can make that move?
Julie Bamford: I think we should recognise people that
are in their 40s and 50s now. Organisations need to value
people who don’t shout loudest about their achievements. If
a department does well, a man in charge may say, ‘I did this’
whereas a woman is more likely to say, ‘We did this – as a
department.’ Organisations need to shift their thinking, so
that the people who are quietly doing very well get noticed
as well as the ones shouting about their achievements. I
don’t think women are saying they don’t want to be put
forward. Talented women are there, they’re just trying to be
recognised in different ways.
Peter Waine: While talented women are definitely
‘Reporting tends to change there and there are enough to make a huge difference
to the diversity on boards, I think your comment is slightly
too hopeful that your generation of women, if they’re
behaviours.’ looked after and given more confidence and confidants
and mentored, are going to be different from the
Julie Bamford
previous generation.
else is harder to define, which makes it harder to measure. If Maggie Heasman: Often women still do have to look after
we want a more diverse board, which is more representative the family, so they don’t have the time there to take on
of customer base, gender is a factor. How do we move the these extra responsibilities.
argument forward, to achieve better diversity?
Peter Waine: It’s back to this very important point
Robert Armour: Most boards could measure diversity. of confidence.
Our companies measure ethnic diversity in the workforce
and could, if they wanted to, publish it. Public sector Kerry Porritt: It’s got to be about choice. A lot of the
appointments always ask about sexual preference and ethnic most successful female business people in this country
background, so we could do it if we had a mind to. But are entrepreneurs who start businesses from home to
maybe that’s not necessarily the right approach. Maybe the accommodate childcare. I think it would be wrong to
question should be more about the skills that the board say that every woman who decides to stay at home with
needs. The point of bringing different groups in is to avoid children should then be pushed back into work. However,
groupthink, where everybody comes from the same angle I know that companies like Deloitte for example have very
because they’ve come up through the same industry with good mentoring, where somebody has got a partner who
the same training. keeps them in touch with what’s going on and helps them
through that transition back to work after children. There
Peter Waine: We’ve got to be careful about trying to fight are bigger firms with the scope to be more flexible in how
on too many fronts simultaneously. We might find some they approach women and careers and childcare. But I think
chairmen who are very willing but who feel that they’re that for smaller companies it’s quite a big ask.
having all this thrown at them. Let’s pick one or two really
significant things and go for them, instead of this right Caroline Evans: I think there’s two things on that. I think
across the board approach; that’s not the way forward. one is that amongst SMEs and smaller businesses, the
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16. Board composition
success rate of women-run businesses is much higher. Caroline Evans: I agree entirely, but what about generation
Now that suggests that women don’t need the status Y? Talking about diversity, is generation Y going to want
and the structure and everything else to feel they’re being what we’re aiming to achieve, will that generation of
successful. Perhaps a lot of the big corporate environments women actually want it? A female partner in a strategy
make it harder to feel confident and successful, perhaps consultancy has recently commented to the effect that: I’m
it’s more isolating. I think at every stage women or any glad I’ve done it my way, but I’ve got a daughter and I don’t
minority needs a mentor as well. As agents we need to know if she’s going to want this. So are we trying to achieve
support, mentor, sponsor and push forward people or something that, by the time we’ve achieved it, generation Y
empower them by saying; you might think you’re here, is going to say, no thanks!
but actually I can see comparable people and actually
you are here, you’re better than you think you are. So
there’s a lot that can be done. I think perhaps it’s a power Age
struggle that maybe women just don’t want to waste
their time on. Robert Armour: This makes me think of another diversity
issue: age discrimination. We tend to put people over 50
Peter Waine: That’s a very good point, because I think on the board. You can get some very talented, able and
women can’t see the point of company politics. They just energetic candidates in their late 30s, early 40s. It’s quite
think that talent, per se, should get them there. And yet difficult to spot them and sometimes it seems a risk. But
there are company politics. actually, you know, one of the things... the groupthink that
we are trying to counter, often derives from the fact that
Janet Cooper: I think part of the issue is that they don’t everybody’s in that 50 to 65 age bracket.
know when to come forward. They don’t feel valued; they
don’t feel their skills are actually worth anything. Peter Waine: I think that’s changing. We’re finding that,
increasingly, people have had a lot of exposure by the age
Caroline Evans: There is also perhaps a perception of of 45 and their companies are very willing to have one non-
rigidity. They’ve perhaps gone down the entrepreneurial executive position of that age because they realise that no
route because they can manage their life as they want to. business problem is unique.
Why would you want to step back into a corporate, having
liberated yourself from that kind of structured working Kerry Porritt: There was a very good book published
environment? These people are crucially valuable in terms of about ten years ago now, called Funky Business, by Jonas
their skill set. Ridderstråle. His argument comes back to your generation
Y point, that there’s a lot going on in the world and people
Peter Waine: They’re just as valuable as the Unilever person now have so much choice. His quote was: ‘Sameness sucks.’
who has been cocooned and has never been in the outside The thing that’s making people invest in companies, buy
world in a way. Whereas this woman entrepreneur has had from companies, do business with companies is diversity.
to try and work out where she is going to find, A, the time And actually, he could foresee in the future that it will come
and, B, the money to pay the next stage, those Unilever down to having a connection with the people who were
people have never had that experience. leading these organisations. I think that’s still really relevant
today. I think you need to be looking on a much bigger
Caroline Evans: That’s interesting. You’re saying that you scale than just gender diversity to say: ‘How are we going to
couldn’t take someone from a big corporate out and put attract generation Y into our organisation? Do we do things
them in an entrepreneurial environment, but potentially differently? Do we look at things differently to get them to
what we’re saying is, you could take an entrepreneurial come in and buy into whatever the brand is?
achiever out and put them in a big corporate.
Caroline Evans: I think, yes, and I think the need to do
Peter Waine: I think you can in certain cases and you could so is reflected in hard commercial terms, isn’t it? If board-
do more if we’d all think it through a bit more carefully. But involved women are performing better then there’s an
it’s not just a neat automatic process though. investment decision for everyone to make; whether to
buy shares because there’s a woman/women on the board
Robert Armour: I think Kerry’s bottom-up approach has because you think it is their presence that is making the
got to be combined with the top network which says, company more successful.
we’re actually going to do a message from the top that the
culture, the tone of the organisation is going to encourage
a better gender balance. We are going to create more role Time to step up
models and more opportunities. That in turn probably goes
to raising confidence and courage in saying, ‘right, I’ll put Janet Cooper: Is there a supply issue, that there aren’t
myself forward because I can see a chance to succeed rather enough talented people from diverse backgrounds who
than a chance to fail.’ are available to take on these board appointments? Do
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17. In association with
we agree with that? Is there an issue? Or are there some
really talented women and people from diverse backgrounds
out there who should be considered for non-executive
director appointments?
Caroline Evans: Emphatically, yes. I’m struck almost daily
by the calibre of women available. The company secretarial
profession is a profession that holds a lot of women. Perhaps
historically there are two reasons for this. One is because
of the way the profession has been perceived. Secondly, I
think it’s because it plays to a lot of the less tangible skills
that are absolutely crucial to a successful business, such as
successful communication through business that women
have the capacity for. The women who are coming up the
ranks through the company secretarial field are supremely
well-qualified professionals in comparison with any other
discipline. In particular, having had boardroom exposure,
albeit perhaps in a secondary capacity, but they have that
experience of what goes on in the boardroom, perhaps
on a number of different boards but the years of exposure
that you get are hugely valuable, over and above any other
discipline potentially.
Janet Cooper: Now do you feel, as company secretaries,
that you have a reasonable financial background?
Lorraine Young: I think you’ll find there are a variety
of company secretaries. There’ll be some that take to
that and some that have got different skills. I think ‘Any minority needs
a mentor.’
across the board you’ll probably find the same with
other executives coming through the organisation. Some
company secretaries are running a big department and Caroline Evans
have to manage the budget, so they’ll need at the very
least the basics and there are accounting exams in the
ICSA qualification. But beyond that, I think some of that is Julie Bamford: That can also be a very good way of
people’s inclination, isn’t it? I can understand the numbers; questioning. If you’ve got something coming to the board
I don’t always find them very exciting. Having done loads for a decision, you’ll probably have someone from below
of minute taking you need to understand what the board level presenting it. It’s a good way of establishing
numbers are about and look at the reports so that you whether that person fully understands what they’re
can do the minutes. So I think most of us can, but not proposing. Because if someone on the board can say, ‘I
necessarily all of us want to. don’t understand this,’ that person will need to explain it to
them in another way and in terms they can understand.
Peter Swabey: I think I’d agree with that. I think most
company secretaries are financially literate. I question Peter Swabey: Yes, and then you’ll rapidly identify whether
whether it’s actually necessary for a non-executive director the person presenting fully understands the proposal.
to be completely financially literate. If they’re going to be
on the audit committee, yes that’s an issue. But then they’ve Caroline Evans: On the other hand, company secretaries
got to have reasonable financial experience anyway. Surely also have in-depth understanding because surely the act of
there are going to be some places for non-executives who minuting in itself must require a deep understanding of the
are not necessarily that financially literate. They’re bringing subjects under discussion? If the boot were on the other
other diverse skills to the board, which are not necessarily foot, could everybody else in the boardroom minute as well
financial skills. That’s going to mean that they feel able to as company secretaries?
question, in much more detail, financial information that is
just presented to them. Susan Henderson: I think there’s a distinction between
being a company secretary and then going onto the board
Caroline Evans: Sometimes you need that person in of that company. You’d avoid that at all costs, because
the room, don’t you, who’s prepared to say, ‘I just didn’t you need to be a dispassionate observer. Translating the
understand that.’ skills as a company secretary that you’ve developed at one
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18. Board composition
organisation into another organisation as a non-executive
director would be preferable. I also think that being able
to see what it’s really like to be a non-executive director in
another organisation would help you back in the company
secretarial job you’re doing, to understand how you can
better support the non-executives on that board. You can
then see things from both perspectives.
Peter Swabey: I can think of maybe one or two company
secretaries who I’ve known who have been non-executive
directors of other companies and for me that’s a waste.
I think many have the necessary skills. That goes back to
the thing we were talking about earlier, how boards and
chairmen identify what the required background qualities of
the non-executive director are and how they communicate
those to the people who are searching for candidates. It
seems to me that the outlook now seems to be excessively
blinkered. We talked earlier on about the perception that a
non-executive director must have experience on a company
board. That’s not always going to be necessary. It just needs
maybe to be that little bit more inclusive, but I think it’s still
struggling to do that.
Susan Henderson: But it gets back to Kerry’s personality
argument, that you perhaps don’t want to be asking for
financial experience, board experience. You’re wanting to
ask for, you know, openness of mind, independence of
mind, ability to challenge and be inquisitive.
Julie Bamford: And you do need that mix, don’t you? You ‘Diversity is wider than
need somebody who is all over the detail and somebody
else who is ‘big picture’ and thinks strategically. Everybody
should be looking at it from a different point of view, so
just gender.’
Peter Swabey
you don’t miss anything. That’s the whole point of diversity
and to avoid groupthink. If everybody’s thinking about it
differently, all the issues should be covered. Caroline Evans: That’s where there’s a disconnect in my
industry. I’m a contingency recruiter. I recruit up to the top
of the line route. There should be a greater relationship
Making the change between the sort of executive search firms that Peter runs
and the contingency recruiters that are bringing people up
Janet Cooper: So how do we make that change to be the ranks. I’d welcome that, because I think recruiters have
more inclusive? means of identifying future potential.
Caroline Evans: I think there has to be something done Susan Henderson: But perhaps company secretaries can
on the mechanics of professional development within play a role, because typically they’d be company secretary
corporate culture so that it’s more inclusively relevant or to the nominations committee and probably be involved in
more inclusively accessible. But I also think that somebody non-executive directors searches, which are usually quite
needs to pick up the baton, take the risk and run with it. confidential. You know if you have a sales manager or
Maybe quotas, or the diminishing pool of non-executives, or an assistant company secretary that’s required, everybody
the issues around how big your executive board needs to be knows that that job’s up. But a non-executive search is
will drive that. probably carried on quite quietly for some time. So it’s
kept very close to the chest, without HR being involved.
Robert Armour: I think part of it has to come back to the The company secretary, however, probably is involved
relationship between search firms and the chairmen. The and even though the chairman would be speaking to the
discussion on how wide you’re going to go has to be at headhunters, usually on the day-to-day logistics of setting up
the point of setting that job description. I think the search meetings, it’s the company secretary that can be involved. So
firms have got to try and encourage the chairmen or the maybe we should be putting our oar in and asking: ‘Is this a
nominations committee to take a slightly riskier approach. diverse shortlist?’
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19. In association with
Kerry Porritt: I do think there is something around the to go and talk to somebody else who can. But if the board
procedure for how you come up with what you’re looking headhunters and contingency recruiters build mutually
for. Because at the moment, all the Code is saying is, report supportive relationships or the boards themselves spread the
on what the process is. It’s not saying best practice would net wider, that would be a positive step.
be to go through these sorts of routes to get to what
you are looking for. A change is needed to force chairs to Janet Cooper: When you’re reporting on the new
recognise that a chat with other board members about what governance requirement for greater diversity, will you be
sort of person is required is not enough. I’m by no means saying, we’re instructing head-hunters to help us fill these
advocating a cottage industry in this approach, but maybe vacancies and we’ve requested they consider diversity?
you need a mandate on the support they get in putting that
process together, having a look at what qualities they need Lorraine Young: I think it depends if it’s happening
as well as the skills and experience. everywhere. Eight years ago when the Higgs report came
out it gave more focus to the nominations committee,
Susan Henderson: Again that’s something that the which previously people may or may not have had, that was
company secretary can help with probably better than an HR supposed to change it all. But it hasn’t actually, has it? It
person who is familiar with executive appointments. doesn’t matter if it’s the chair speaking to the headhunter.
Does it make it any better if there’s a nominations committee?
Lorraine Young: It’s quite a tough call to challenge the It hasn’t changed anything and I’m not sure it’s working.
chairman, isn’t it? But if you’re a good company secretary,
you’ve already got that relationship of trust and so if you’re Robert Armour: The wording on a company’s approach is
challenging them you can do it in a way that’s acceptable, going to be fairly generic. Almost inevitably we’re going to
which is perhaps much harder for the search firms. It’s a write a paragraph in the report that refers back to the codes
harder call for them because it could affect their business. and says we instructed recruiters having due regard to the
They’re not wanting to go along and upset the chairman, skills and requirements and balance of the board, including
who they’ve maybe worked with for so many years, by diversity. That will be given far more emphasis if there’s a
saying, actually you shouldn’t be doing this; you should be quota requirement as we go forward. But you’re not going
looking at the other people. to learn a great deal from that wording.
Susan Henderson: But if the company secretary drops it Janet Cooper: So we’re saying that this requirement that’s
in on conversations with the headhunter it might give the gone into the UK Corporate Governance Code is actually
headhunter a little bit more confidence perhaps to add one not going to make that much difference.
or two different choices to the shortlist.
Peter Swabey: I think it depends on how it’s managed.
Robert Armour: Does the appointment criteria tend to One of the issues that we mentioned earlier is around
be agreed between the chairman and the headhunter, or investors in the market looking for a ‘big hitter’ of some
HR, the company secretary and the headhunters or by the sort being appointed as a non-executive and that being
nominations committee? Because in some ways, if you favoured over somebody who is less well-known but who
could get the nominations committee to sit down with the might well bring more diversity to the board. Maybe there
headhunter and say, look, let’s have a discussion, you’re is some merit in the market allowing companies to take
much more likely to get a diverse mix than if it’s simply an more risk in terms of who they appoint as non-executive
instruction to the recruitment advisor of ‘we’ve thought directors, rather than going back to the traditional ‘safe
about it, here’s the brief, do as you’re told’. pair of hands’. Kerry commented earlier that when you’re
looking for a non-executive, you’re typically looking for
Julie Bamford: To have a proper conversation with the a three year appointment. Well now, under the Code it’s
whole nominations committee, HR and the headhunter is annual elections for directors. There is a practical issue
definitely the best approach. there, because I can see that for some companies it’s going
to take directors more than a year to actually get their feet
Susan Henderson: That’s what we’ve done. under the table and really understand the business. But
equally if you normally know in the first three to six months
Julie Bamford: And through the board evaluation process, whether somebody is going to be a useful director on the
looking at recruitment to see how it’s being done. That’s board or not, perhaps appointments should be for one
also a good way for the company secretary to talk to the year, after which the chairman and the board can take a
nominations committee or the chairman about it. view on whether so and so is actually adding value or not.
If not, then they can be discreetly persuaded not to offer
Caroline Evans: I think the board headhunters are really themselves for re-election at the annual general meeting.
going to be protective of their territory. That’s the only
issue there. They’re not going to want the nominations Kerry Porritt: Yes, companies are not static; they’re
committee saying, well if you can’t find them we’re going dynamic. They’re either growing, they’re acquiring, they’re
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