Louise Chaplin, Partner and Head of Eton Bridge Partners’ Board Practice, was joined by Jim Dewar, Independent Non-Executive Director and Audit Committee Chair, and Louis Cooper, Chief Executive, NEDA to discuss agility in the Boardroom at our recent webinar.
You can listen to the full webinar recording here.
Businesses are now faced with how to transition from the intense Covid-19 era into the new world order in 2021. The last year has seen a step-change in Boardroom structures and activities, new investment in systems integration, as well as businesses pivoting into new sectors and markets.
The panel explored the challenges and opportunities that board members face as businesses quickly adapt to traditional business models and operations. The discussion also encompassed how boards can demonstrate their purpose and effectiveness, whilst embracing internal and external stakeholder engagement around each of the critical ‘E (Environmental), S (Social), and G (Governance)’ components.
Leading the panel was Jim Dewar, who has nearly 40 years of international business, finance, accounting, and commercial experience, and currently serves as an Independent Non-Executive Director (“NED”) and Audit Committee Chair for Lamprell Plc (listed in London, head-quartered in Dubai) and Cheiron Petroleum Corporation headquartered in Cairo.
Jim was joined by Louis Cooper, CEO of NEDA who has a diverse and rich blend of experience and a successful track record of working with NEDs and Boards at leading international PLCs. He also has experience advising major charities, public sector organisations and government departments.
Louise explored, with both Jim and Louis, the 8 key priorities that boards face.
The financial health of any business is of primary concern for all boards. Jim Dewar commented: “We first saw the implications of Covid-19 from a board perspective when the FRC wrote to public companies who were planning to release financial results at the end of March 2020. The FRC strongly encouraged businesses to take the time to carefully assess the impact of Covid-19 on the business and the ability of the directors to sign off on the going concern position (15 months look ahead from the time of the issue of the financial statements) and the viability statement (3 years look ahead). In order to do this the Lamprell board looked into cash flows in a significant level of detail and ran downside scenarios for the board and the auditors to consider”.
2. Investing in the right skills for your board
The second area which was brought into focus by boards was training and development and sanity checking that each board had the right skills and knowledge available as it began to pivot.
“What we saw quite quickly was an increased focus on risk. We have seen a lot more time spent understanding the risks that organisations now face, especially around supply chains and the ‘extended enterprise’, where the international business perspective has come under close attention. There was also an adoption of a ‘people-first’ assessment as boards supported their managers and employees from a health and safety point of view. Boards adapted and refocused on doing the right things, whilst having to make decisions quickly.” Louis Cooper
Once a business starts to pivot, it’s important it knows where it is pivoting to, how and with whom. Jim Dewar offered some interesting insights on this area: “Since being on the Lamprell board the business has been slowly moving to pick up more renewables business, with 40% of our bid pipeline focused on renewables. In January 2021 we re-organised our business into three business units: renewables, digital, and oil and gas. The focus of the re-organisation was to get greater alignment with customers, which in turn has made us think about the composition and skillset of the board.”
3. Digital strategy
Digital activities are now an important part of Lamprell’s future and a new joint venture with a UAE company has recently been announced. However, when the company started its digital journey, its focus on digital was more about cost-saving opportunities.
“Initially we thought about digital to help us create cost savings and create things like robotic welders, eye recognition technology to allow people in and out of our yards, but increasingly we are looking at this creating new revenue streams.” Jim Dewar
Going forward both Jim and Louis agreed that boards need to have the skills and capabilities to better understand and challenge their digital strategy. Various studies and surveys on board composition indicate there is more to do in this area, indeed NEDA has been asking the question – “Do we need the digital NED on the board or more of a collective response as a ‘digital board’?”
4. Employee health and wellbeing
Covid-19 has brought other issues to the boards’ attention. For example, at Lamprell, over 5,000 people are working in a yard environment who cannot work from home or self-isolate. After a proportion of staff caught Covid-19, the board decided that they needed to protect the health of their staff and procured a vaccine and now 90% of Lamprell’s staff have already had the first shot of a vaccine.
“This approach very much accords with a director’s main duty under S.172 of the Companies Act to actively consider the perspectives of the company’s key stakeholder groups – especially the workforce. Health and general wellbeing have been considered as central issues during the pandemic, which includes how and where staff need to work, especially the dividing-line between work and home life”. Louis Cooper
5. The risks that matter
The management of risk is a dynamic process and should be more than just a cursory review of a risk register listing. Boards, in particular, need to take the lead on areas such as the company’s risk culture, its risk appetite, and its response to the critical risk areas. Risk deep-dives are often used by boards to bring risk owners into the boardroom to explain and explore individual risks in more detail. Going forward the owner of each risk will be challenged to analyse, assess, and stress-test control activities in a post Coronavirus context.
“One of our biggest risks was suppliers not being able to fulfil obligations to us and we’ve been doing a lot of risk analysis on potential suppliers throughout 2020. In all my years of being a board member, I don’t remember a change of focus and a need for the board to be as agile, and it continues as we are certainly not through this from a board perspective.” Jim Dewar
6. Creative thinking & succession planning
Diversity of thought in the boardroom has gained a lot of momentum over the last year. The Chair of the board acts as the gatekeeper to board appointments and in the past has been criticised for building a board in their own-likeness and hence take a safe option of only recruiting like-minded individuals. However, having various skill sets on a board who can offer creative thinking should be key. Another area which has come into focus is succession planning and the importance of spending time thinking about what an ‘Effective Board’ looks like and making sure the right team players are on it.
“Now is a good time to consider how your succession plans are drawn up, as most tend to be in the head of the Chair rather than in a formalised plan that is shared at board-level. If succession planning is taken seriously, we should see a real push on all forms of diversity playing out at boardroom level.” Louis Cooper
“On the two boards I currently sit on we have some very talented women offering great insight, but I still feel we can do a lot more on board diversity, in the broadest sense.” Jim Dewar
7. Multi-generation input on boards
Organisations should be working on their board talent programme which should involve getting younger people into the board from a NED development perspective. It can be particularly helpful to share insight from a younger generation, especially on digital opportunities, ways of working and potential new revenue streams .
In terms of the impact, some of ‘E’, ‘S’ & ‘G’ requirements have been challenging for many boards when they’ve also had Covid-19 to cope with.
“In Lamprell we’ve established a subcommittee to be able to cope with the ‘E’, ‘S’ & ‘G’ reporting under the nominations and governance committee and the objective this year is to be very clear on what targets we will be benchmarking against in our next Annual Report. The other big area which we’ve looked at over the last few months is the effectiveness of the Audit Committee. The Deloitte Academy has developed a helpful audit checklist for the Chair and members of the audit committee to evaluate. It’s a very good tool and it clearly demonstrated that we are beginning the journey on ‘E’, ‘S’ & ‘G’ and we will be focused on this over the next year.” Jim Dewar
Finally, the conversation centred on having leaders in place who have the right skills to navigate companies out of a pandemic. It is important to have a debate at board-level about the attributes that are most beneficial. Louis commented: “Leaders need to have a clear vision and have the right team around them to be able to deliver the way forward. They need to be strong leaders who will have to make some tough decisions in relation to the right business model, the people needed, the most efficient and cost-effective operational processes.”
“What we’ve found with the pandemic is that greater utilisation of technology will impact the number of people needed to work and where they will be located. Good communication and clear messages from the top are critical”. Jim Dewar
Finally, Louis provided a brief summary of NEDA’s latest activities and the training, education, advice and support provided to NEDs throughout their career lifecycle. As businesses pivot and boards become more agile, there is a real opportunity for a wider network of executives to offer their experience at board-level.
Having the right expertise around the boardroom table, drawn from diverse backgrounds, with the ability to seize digital opportunities may be the difference between a successful pivot or a business that struggles to evolve post Covid-19.
Keep in touch
We’d love to stay in touch, please register to receive topical insights and exclusive event invitations.