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The Company Secretary: Building trust through governance

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Title: The Company Secretary: Building trust through governance


1
The Company Secretary Building trust through
governance
2

While the NED has been the focus of much of the
attention in the post-financial crisis period,
it is now time for the company secretary role
to come to the fore. Andrew Kakabadse,
Professor of Governance Leadership, Henley
Business School Governance focus has increased,
the company secretarys role has increased,
there is more work to do, and that work is more
visible. Company Secretary

3
In October 2013, we asked Andrew Kakabadse,
Professor of Governance Leadership at Henley
Business School to investigate the role of the
company secretary. He and his team interviewed
and ran workshops with over 200 company
secretaries, chairmen, executive and
non-executive directors across the UK and
Ireland, and gathered input from other overseas
territories. This is what he found (All
quotations are from company secretaries who took
part in the research, unless otherwise
identified)
4
Finding 1
The role of the company secretary is much more
than just administrative At its best, it
delivers strategic leadership, adding significant
value as a vital bridge between the executive
management and the board, and facilitating the
delivery of organisational objectives.
5

The amount of governance, and the amount of
challenge and advice that this role now has to
give to the executive team and the chairman and
the non-execs has gone through the
roof. Because of the privileged position of
the role, in that you see virtually everything
that goes on, you have a skill set that gives
you an ability to take on additional roles.

6
Finding 2
Company secretaries are ideally placed to align
the interests of different parties around a
boardroom table, facilitate dialogue, gather and
assimilate relevant information and thereby
enable effective decision-making. They are
often the only people to know first-hand how
holistic decision-making outcomes have been
arrived at.
7

Theres numerous ways company secretaries can
exercise influence it can be quite powerful to
observe and then have a quiet word on the side
company secretaries can add value by precisely
observing dynamics, how people are behaving,
how its affecting their decision-making.
8
Finding 3
The skills and attributes of the best company
secretaries are closest in kind to that of the
chairman these are humanity, humility, high
intelligence, an understanding of agendas,
negotiation and resilience.
9

Its part of your diplomatic skills social
awareness, people skills, tact, trust You can
influence how that happens and help people get to
where they want to get to so you have a
facilitating role. Agenda-setting is
straightforward in that the executive directors
know what they want to say, but you also know
what they dont want to talk about and what needs
to be discussed You can point the chair and
board to getting management to talk.

10
Finding 4
To be successful, it is vital that company
secretaries have both direct and informal access
to board members NEDs, CEOs and chairmen.
11

They add value in terms of being formal, but also
informal, routes for board members to make
general enquiries you can always feel very
free to ring them about anything. Chairman You
have to have a relationship with all of them at
different levels. I deal with conflict,
diplomacy, making sure that people know that you
will keep a confidence and that they can trust
you.


12
Finding 5
Maximising effectiveness requires that the
company secretarys direct reporting line should
be to the chairman, and that there is parity of
esteem and good team-working between the
triumvirate at the top the chairman, the
company secretary and the CEO.
13

The trio of chairman, CEO and company
secretaryif youre lucky enough to have all
three highly effective people, youre likely to
have a good board because theyll make sure that
the people joining the board are high quality and
theyll make sure that the processes of the board
and the relationships are of the standards
required. The key examples Ive seen of where
it just didnt work was where the company
secretary sat very much under the FD the
company secretary had very little built up
relationship with the chairman, never mind the
rest of the board.

14
Finding 6
The role is changing it is increasingly
outward-focused (incorporating investor
engagement and corporate communications), and not
just about internal administration.
15

I think one of the other challenges is dealing
with the size and range of stakeholders that
exist today also nurturing retail shareholders,
institutional shareholders, proxy advisory
bodies, government, regulators Consultation
with shareholders is an enormous part of the job
now I must have done 6070 meetings with
shareholders in the last fourmonths in the
run-up to the AGM.

16
Finding 7
ICSA-qualified company secretaries deliver a more
rounded governance and board member service than
those who have come to the role via other
professional routes.
17

There are a number of core technical skills which
the Institute sets you up with as part of the
qualification route.
18
Finding 8
There is a conflict of interest in the combined
Head of Legal/General Counsel and Company
Secretary role. The roles should be separate as
they can be incompatible.
19

You need somebody focusing on the board and how
it operates, and not being distracted by having
75 of their job maybe dealing with general
counsel work. I think as general counsel you
are heavily involved in the running of the
business and are the chief executives right
hand. I dont think thats compatible with
being the company secretary, where you should
be the chairmans right hand. The role is
too big to be split with other roles.


19
20
Finding 9
Board members often have a lack of awareness of
the ways in which the company secretary supports
an organisation in its decision-making boards
are missing out on making full use of the skills,
knowledge and experience at their disposal.
21

The first challenge is people understanding the
role. Its not a glorified PA, its something
more than that, and trying to convey that is a
challenge. The title is a misnomer. Whose
secretary are you? Well, the companys. Im not
the Finance Directors, Im not the Chief
Executives they dont understand what the role
is. My previous CEO had a much better
understanding of the company secretarys role
the current CEO in many respects underestimates
quite how much I can help him in his role.


21
22
Finding 10
Company secretaries are often the
longest-serving members present at board
meetings, and so are a vital repository of
company history and culture, and a guarantor of
continuity.
23

Company secretaries are a very good depository
of cultural history as well as practical
historytheyre a useful sounding board and can
offer opinion to help shape policies and
processes. I think corporate memory is
valuable, and to have people that have been
through change, good times and bad times, and can
just share their history I think is very
valuable and youre right the tenure of a
company secretary tends to be much longer than a
chief executive, so they have a value.

24
Finding 11
Company secretaries believe that boards are
changing and becoming more effective they
contribute to this process by observing boards in
action and advising on any skills gaps that need
filling.
25

Our collective view was that ten years ago 50 of
NEDs were poor. This has improved boards are
changing and becoming more effective. The board
asked me to sit through the process of hiring a
NED. So I sat through the interviews and I
was asked my views and opinions. Company
secretaries are about making better decisions,
growing a more diverseboard, evaluating how well
we are doing in terms of governance
Chairman


26
Finding 12
The breadth of the company secretarial role
includes a range of additional responsibilities
such as officer of the company, chief of staff
to the chairman, and adviser to the board on
governance. Consequently, the secretariat needs
to retain independence to rebalance power as
required, and demonstrate accountability.
27

Independence is very important, but part of the
skill is managing that independence. You
need to be a diplomat and you need to have thick
skin.

28
Summary
To download the full report, go
to www.icsa.org.uk/research/the-company-secretar
y-report Visit www.icsa.org.uk for a full
overview of our products and services, and how to
become a member. Follow ICSA On Twitter
_at_ICSA_News On LinkedIn
29
Thank you.
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