This three-part article addresses the first quadrant of Board Governance – that of Board Structure.

11 C's Model Cross

Board structure is a lens view on the physical; the things we can typically tick off on a compliance list of requirements. This is a foundation starting point in considering the effectiveness of a Board.

This, as with the other “quadrants” does not stand in isolation when determining, as we will do in these multi-part, four quadrat series, the effectiveness components identified in this governance model.

In Part One of Three on Structure, we discussed “Configuration” identified in the 11 C’s Model.

In Part Two on Structure, we shall consider Genius’ addition to the 11 C’s, the 12th C – “Composition”.

In this, the Third Part on Structure we shall address the many other Structural influences that we see impacting Board effectiveness and in the context of all Structure influences, how businesses approach being “Compliant”.

1. Other Structure Considerations

There are many other considerations to support from a structure point of view, an effective Board.

  1. The Chairman and the CEO are not the same person – Provision 9 of the Code
  2. Compensation of Non-Executive Directors should be such that it does not influence independence
  3. Relevant experience of the members of the Audit and Remuneration Committees
  4. Annual reviews of the Board’s effectiveness, externally every three years in terms of Provision 21 of the Code
  5. Management Information and Board Papers
    • Should be fit for purpose for the business
    • Provided in time to be read and absorbed
    • Should be of a quality and standard to support detailed deep dive requirements for a Committee and strategic conversation for a Board
  6. Is the Agenda prioritised and focused on the future covering all matters required within the annual calendar?
  7. Times and duration of meetings
    • Are the Committee meetings held at the same time as the Board meeting?
    • Is there a social opportunity around the Board meeting?
    • Are the meetings the right length for the agenda?
  8. Location and Room
    • Are different locations considered?
    • Are locations easily accessible
    • Is the room conducive to an effective meeting?
      • Table size and layout
      • Room layout
      • Refreshment access or breaks
      • Temperature
      • Technology
  9. Director access to locations
  10. Company Secretary taking minutes or supported by recording or minute taker to allow Company Secretary contribution
  11. Director Appointment letters
  12. Terms of Reference of the Committees
  13. Influence of the Articles of Association

2. Compliant

A Board needs to define what it needs to be compliant to and if not required, what best practice it should consider being a good compliance framework.

There are a few key leads on compliance and therefore governance of the Board; the key lead for this responsibility is in the hands of the Chairman.

The Chairman’s attitude to compliance and governance is a key to the Board’s effectiveness and the Board’s tone from the top. The ethics and moral compass of the Chairman will be the most important influence on the way the business is run and the engagement and ethics of the employees and their attitude to stakeholders, particularly the customer. This tone set by the Board is delivered by the executive and management.

It is important for the Board to understand and respect the impact on stakeholder behaviour if the Board is non-compliant. This can range from investors being influenced on buying or selling shares, to attracting the right talent and the business embracing the ESG elements of communities and the planet.

3. Conclusion

In these three mini-articles on Board Structure we have addressed “Configuration”, “Composition” and “Compliant”.

These governance influences are the easiest to “see”, they are visible and can readily be answered with factual binary type answers. It Is clear how many Directors there are, or how many Board Committees exist.

However, these may appear simpler to comply, their influences on Board behaviour and Board dynamics can quite nuanced.

In the McKinsey study on gender diversity impact on performance, they determined for example that the true value of female influence only really made a difference and the voices truly heard, when there were at least three women on the Board.

Chairman are encouraged to consider Boards up to nine Directors and four of more Committees to ensure appropriate coverage of the Board’s responsibilities.

We work with Boards to help the Chairmen of the Committees to bring value to the Board, to feedback effectively on their Committee activities such that challenge, support and ownership are effective, keeping the Board strategic.

In conclusion, the effectiveness of the Committees is the most important outcome of considering Structure. If the Committees are effective, many of the other Structure components will fall into place.

Next Articles

The next few articles will be addressing the other three quadrants of the 11 C’s Model and their respective influences of Demographics, Attributes and Dynamics and their impact on the overall effectiveness of a Board.