How Boards Should Operate

This blog gives you the latest topical news plus some informal comments on them from ShareSoc’s directors and other contributors. These are the personal comments of the authors and not necessarily the considered views of ShareSoc. The writers may hold shares in the companies mentioned. You can add your own comments on the blog posts, but note that ShareSoc reserves the right to remove or edit comments where they are inappropriate or defamatory.

This article reflects the opinions of its author, Cliff Weight, and not necessarily those of ShareSoc. 

ShareSoc member Barry Gamble’s letter to the FT 

Black Box thinking and bad boards is a theme I return to again and again and which I first highlighted in a blog in March 2018 https://www.sharesoc.org/blog/corporate-governance/black-box-governance-thinking/ . 

Woodford and Link are two other boards which failed woefully. Another case is the Post Office, about which the FT published the following letter from ShareSoc Member Barry Gamble (subscription required to view): 

https://www.ft.com/content/df1279e6-99a3-47c8-ac63-2a29ee485472

Letter: A functioning board needs non-executive directors 

Citing struggles with effective oversight and monitoring, Professor Laura Spira (“Post Office scandal exposes board structure limitations”, Letters, January 18) questions whether the corporate board structure is appropriate for government and public sector entities. Whether in the public or private sector, it is the behaviour of the non executive directors which is critical to a properly functioning board. They should be curious and questioning so the board does not become an echo chamber for the views of the executive directors or for the chair. Good boards should thrive on transparency, scrutiny and challenge. Otherwise they risk becoming too internally focused, unable to question long-held views or a course of action, and overly fixated on protecting their reputation. It may at times be a struggle, but effective oversight and monitoring by the board should be the very essence of the non-executive director role, ensuring boards work properly.

Barry T Gamble Senior Adviser, Non-Executive Directors Association, Banbury, Oxfordshire, UK

Cliff Weight, ShareSoc member and volunteer. 

One comment
  1. Amin Mohammed says:

    In my view, there are two main reasons why non-executive directors fail to behave the way that Barry Gamble believes they should. (In passing I do of course agree with him.)

    The obvious reason is that some non-executive directors don’t want to experience the financial impact of losing their position by upsetting executive management.

    However I believe there is something more fundamental, which impacts both voluntary non-executives (for example charity trustees) and also paid non-executives who are not financially dependent on their fees for the role. That is the natural human tendency to want to be liked, and not thought of as awkward.

    I explained this in a talk I gave to a school in Southport in 2015. See https://www.mohammedamin.com/Finance/Corporate-governance-why-it-fails.html

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