Welcome to

Top Level Board

Performance
Presented by
Leslie Spiers MA MBA DMS CertEd
Boardroom Dynamics Limited
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 Corporate Problems

What’s this got to do with companies

outside
the FTSE 350?

More regulation?
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 Corporate Governance as
Business Improvement
Internal Improvements
• Systems
• Roles
• Processes

External Improvements
• Compliance
• Reputation
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 The Role of the Board in SME’s

2007 Research into SME’s

• Boards were often a legal formality

• Boards appear to contribute little of significance to
business development
• Boards dealt with operational matters as opposed
to strategic issues
• Boards dealt with short term goals (survival)

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Strategic versus Operational
Planning

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Board Structures and Processes

• Lack of formal committees

• Few non-executive directors
• Lack of risk management systems
• Less advice from auditors as threshold
for independent audit increases

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 Governance and Business
Improvement

• Risk reduction through identification and management

• Wider experience in decision-making

• Stakeholder engagement through identification and

management

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 Further Considerations

• Reputation management

• Greening of business (the business case

for social responsibility and integrity)

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Corporate governance is about changing
organisational cultures rather than
regulations

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 What is a Company?

• It is a separate Legal Entity

• It is recognised as a legal “person”
• It has personality & can act as a person
• It has long life potential
• It can claim under Human Rights Act

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 What is the purpose of a Company?

• Designed to make profits to distribute

• To limit liability of investors
• Companies Ltd by Guarantee can use
surplus to the benefit of the company

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 What are the features of a Company?

• It is separate from individuals in it

• It creates a separate person
• It has its own life and responsibilities
• It has members who subscribe capital
• It is set up by shareholders to protect themselves
• It is registered with Companies House
• It has Regulations and officers to run its affairs

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 Directors’ legal
requirements
Now codified in Companies Act 2006
Act within your powers
1. Promote the success of the company for members
2. Exercise independent judgment
3. Exercise reasonable care, skill and diligence
4. A general duty to avoid conflict of interest
5. Duty not to accept benefits from 3rd parties
6. Duty to declare an interest in proposed transactions

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 Factors not to be
• ignored
“Enlightened shareholder Interest” – future and potential

• Likely long term consequences of a decision

• Interests of employees

• Need to foster relationships with suppliers & customers

• Impact of the business in the community & environment

• Maintaining high standards of business conduct

• Need to act fairly between members

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 The Company and its Directors

• Co has a decapitated head – the Board

• Board is the “Thinking Mind
• Rail Track, Herald of Free Enterprise, Lyme
Regis

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 Other Interested Parties
The ‘external’ parties

The ‘internal’ parties

EU Government
Commission
Consumerists

Environment- Employees
alist Internal Organisation And
Lenders Management
Of
Money Trade
Subsidiary Unions
The Boards
Media
Business
Partners Good
The Customers Practice
Financial
World Suppliers

Trade
Associations
Local Communities

Source:- Sheridan and Kendall, 1995

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 What is the Board for ?
"The job of the Board is all to do with
creating momentum, movement,
improvement and direction.

If the Board is not taking the

company purposefully into the future,
who is?"
Sir John Harvey-Jones
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 The Board's Key Purpose
Seek to ensure the company's prosperity
by collectively directing its affairs
and meeting the legitimate interests
of its shareholders and relevant
stakeholders

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 The Board's Main Functions
• Policy Formulation

• Accountabilty

• Strategy and Leadership

• Supervision of Management

• Providing Clarity – no mixed messages

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 Responsibilities of the
Accountability Board Policy Formulation
To the company Stating Purpose
To Owners
EXTERN Creating Vision and
To regulators and Values
AL legislators
To Stakeholders Developing corporate
climate
Ensuring Directorial Audit
Monitoring the external
environment

Governance Review Strategy Review

Cycle The Board Cycle

Supervising Strategic Thinking

Management
Market Positioning
Performance
INTERN Management Setting corporate direction
AL
Budgetary Control Reviewing resources
Review of key business Setting implementation
results processes
Organisational
SHORT TERM capability LONG TERM
Operations Review
Cycle
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 Accountability

To ensure that the Company complies

with laws & regulations and that
management & employees comply with
carrying out the Board's decisions

Very onerous duties

- different from management
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 Governance
• The Board is the 'Mind & Will' of the Company

• In law - all directors are jointly responsible

• All directors are equal (technically)

• Executive powers are vested in the Board

• Board is always responsible for the Company's affairs

• Directors’ duties are owed to the Company

• Board must have regard for the shareholders and other

interested parties

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 Strategy
• Board needs to set tone, standards, values
• Board needs to agree common vision
• A Board Charter clarifies ToR
• Directors accept & utilise their differences
• Reward contribution towards achieving the
overall vision
• Selecting the MD/CEO - personifies the Board's
leadership

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Direction and Management

Direction
Formulation of strategy
Acquisition & allocation of overall resources
Setting policies
Establishing direction
Emphasises the mission - the shared vision

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Direction and Management

Management:
Running the business
Shorter term operational matters
Financial, production, market management

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 Power & Responsibility
R
E
S
SHAREHOLDERS P
P O
O N
S
W BOARD I
E B
I
R L
MANAGEMENT I
T
Y

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Board Composition & Organisation
"A Board may be composed of brilliant
individuals and yet be ineffective.
It can only fulfill its true potential as a
Board if it is properly selected,
organized and led."
Good Practice for Directors - Standards for the Board

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 Board Meetings
• Directors powers are collective
• Need a quorum to convene a board meeting
• No director must be excluded
• Right to inspect accounts and minutes
• Time based and controlled agenda
• Board Pack
• Board minutes must be kept

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 In Summary
Top Performing Board's…
❖ Establish clarity of Mission, Vision and Values
to lead the broad direction of the company

❖ Decide upon the Strategies and Structure

to ensure the company's survival & prosperity

❖ Delegate to Management and involve staff

❖ to effect implementation of strategy, policies & plans

❖ Exercise responsibility to shareholders and other

interested parties
to promote & meet their legitimate interests

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