Headline Verdana Bold Build your own board potential What it means to be a board April 2018

Transcription

1 Headline Verdana Bold Build your own board potential What it means to be a board April 2018

2 Introduction The need for boards to demonstrate that they are effective has never been higher Business landscape Various codes Failures lack of trust The performance of any Board is a function of the character of the individuals that comprise the Board. No structural remedy can overcome poor judgment or apathy. Context Daily and Dalton (2003) Evolving role of the board Increased scrutiny Governance reform 2

3 The evolving role of the board Traditional Board Typically focuses on the following: Setting strategy Risk management Legal and regulatory compliance Overseeing performance Spends a significant amount of time monitoring past performance and reviewing quarterly reports, budgets, audit and compliance. Emerging best practice Considers matters that are critical to the future success and strategic direction of the business, such as: Continuous focus on strategy Culture and reward Innovation Talent and capabilities Succession planning New risk responsibilities Backward looking Focus on fiduciary duties Forward looking Emphasis on impact 3

4 Directors duties under the Companies Act 2014 There is no legal distinction between executive and non-executive directors. As a consequence, NEDs have the same legal duties, responsibilities and potential liabilities as their executive counterparts. Act in good faith and in the interest of the Company Act honestly and responsibly Not benefit from or use the company s property, information or opportunities, unless permitted Not agree to restrict the director s power to exercise an independent judgment Act in accordance with the constitution and as allowed by law Avoid conflicts Exercise care, skill and diligence 4

5 The role of Non-Executive Directors Essentially the non-executive director's (NED) role is to provide a creative contribution to the board by providing independent oversight and constructive challenge to the executive directors. - Institute of Directors Key functions NEDs are appointed to bring: Independence Impartiality Wide experience Special knowledge Personal qualities The key responsibilities of NEDs include: Providing strategic direction Monitoring performance Determining remuneration Audit Responsibilities Providing networks and connections Shaping culture and talent Taking into account stakeholder views 5

6 Discharging non-executive responsibilities in practice Participate in committees Attend scheduled Board meetings Site visits Challenges Key challenges NEDs face in discharging their duties include: Assigned a strategic initiative NED activities Self-testing / deep dives Time commitment Number of directorships Straying into exec territory Meetings with management & shareholders Request an Internal Audit 1 st, 2 nd & 3 rd order challenge Seek external advice Understanding the business and key risks Keeping up to date with regulatory changes Greater accountability 6

7 Skills and experience required The perceived professional and social capital directors can bring to the Board is usually considered when looking at the skills and experience of the Board - what is often absent is behavioural attributes Professional capital Social capital Functional and technical skills Sector experience Governance knowledge Professional connections Relationships Networking skills Behavioural capital Diversity Communication, listening, emotional intelligence etc. Understanding of Board culture 7

8 What makes a good Board member? Good Board members Focus on the bigger picture Bring different perspectives to the table Show strong command of issues relevant to the business Take collective ownership for decisions Are disciplined, committed and dedicated Exercise independent and objective judgement Challenge constructively, probing and bringing secondary challenge Show openness, tact and the ability to listen Offer support to management 8

9 Practical tips Things to look out for Ensure that you have a comprehensive and tailored induction Partner with an executive director Visit operations and talk with senior and middle managers in these areas and talk with non-managerial members of the workforce Make sufficient time available to discharge your responsibilities effectively Devote time to developing and refreshing your knowledge and skills, including softer skills Insist on receiving high-quality information sufficiently in advance Seek clarification or amplification where they consider the information provided is inadequate or lacks clarity 9

10 Board impact can be described as the effect of the governance structure and processes, and contribution from Board members, which helps shape different and more positive outcomes 10

11 Further information Contact details Colm McDonnell Partner Risk Advisory +353 (0) davkinsella@deloitte.ie Melissa Scully Senior Manager Centre for Corporate Governance +353 (0) mscully@deloitte.ie Centre for Corporate Governance Our Centre for Corporate Governance is designed to provide boards and senior management with a single point of access to current developments, Deloitte perspectives, learning materials and other useful information related to corporate governance. See our website for further details - rnance-risk-andcompliance/solutions/center-corporategovernance.html 11

12 Deloitte, a partnership established under the laws of Ireland, is the Ireland member firm of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ( DTTL ), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. Please see About Deloitte to learn more about our global network of member firms. At Deloitte, we make an impact that matters for our clients, our people, our profession, and in the wider society by delivering the solutions and insights they need to address their most complex business challenges. As the largest global professional services and consulting network, with approximately 263,900 professionals in more than 150 countries, we bring world-class capabilities and high-quality services to our clients. In Ireland, Deloitte has nearly 3,000 people providing audit, tax, consulting, and corporate finance services to public and private clients spanning multiple industries. Our people have the leadership capabilities, experience and insight to collaborate with clients so they can move forward with confidence. This communication contains general information only, and none of Deloitte, Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively, the Deloitte Network ) is, by means of this communication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this communication.