How effective is board recruitment and retention?

‘Napoleon was asked whether he preferred courageous generals or brilliant generals. Neither, he replied; he preferred lucky generals.’

John Adams, In Defence of Bad Luck

Sir Ken Morrison once said he would rather have a couple of extra checkout operators than a non-executive in the boardroom of Morrisons supermarkets. ITV chairman Michael Grade once likened them to bidets: ‘You're not sure what they're for, but they add a touch of class.’

Now, a major shareholder group has produced evidence that non-executive directors are more than ‘the decorations on the Christmas tree’, as the late Tiny Rowland of Lonrho famously described them:

‘The Association of British Insurers' research found that the share prices of companies that repeatedly committed serious breaches of the City's Combined Code on Corporate Governance underperformed their sector, particularly when their boards were populated only by executive rather than non-executive directors.’

Jill Treanor, The Guardian, February 2007

Perhaps it is just as well that Napoleon met his Waterloo otherwise boards would trust to past luck rather than exercising judgement about the future. In the business world non-executive board members are now seen as crucial to success. How do your board members measure up? And do they reflect the community? Look at what the Chief Executive of Siemens has to say:

‘The management board are all white males. Our top 600 managers are predominantly white German males. We are too one-dimensional.

'It’s not a question of quotas… But I would like to see a much more diverse board. I would like to see a big Chinese running China and a big Indian running India.’

Financial Times, June 2008

Of course Siemens must have a dynamic and well-qualified board just like you do – but they are working hard to improve its diversity. As one long-standing housing association board member remarked ‘we are running a multi-million pound business and that comes first – it’s not a parliament’.

  • Does the board reflect the customer base? Are men and women, people with disabilities, and ethnic groups represented on the board in the same proportions as they occur amongst tenants and leaseholders? What are you doing to improve the match? What steps are being taken to involve younger people?
  • What is being done to make sure the board knows about the views of groups that are not currently represented on the board?
  • How were the skills and attributes needed for the chair decided on? Is there a tailored programme of support for a new chair? Is support/advice offered to those members who might be interested in this role?
  • Have you considered the pros and cons of paying board members? Has payment improved the pool of applicants and the performance of the board in terms of attendance and preparation for meetings? Does your organisation struggle to attract high calibre new board members and/or see insufficient commitment from existing members because it decided not to pay?
  • How do you know?
  • Is there a succession plan to bring in new board members when current members leave? Is the succession plan working? Are the current board of a higher calibre and more representative than the board of, say, two years ago?
  • Is a balance struck between maintaining expertise and introducing fresh blood? Are there limits on how long a board member can remain? The Housing Corporation requires associations to comply with the NHF Code of Governance, Competence and Accountability, which sets a limit of nine years: is this adhered to? Are retirements staged or could large chunks of the board leave at one time?
  • Is there a thorough induction programme for new board members? What role do the chair and other board members play in this? How do you brief new members on social housing in general and the particular circumstances of your organisation? Do you expect them to visit some of your sites? How do you know the induction programme is effective?
  • Does the organisation have sufficient influence over the recruitment of new members? Are some board members nominated by the council? Does this work well?

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