Tuesday, 24 January 2012

Reform our boardrooms

Hot on the heels of the various speeches by our political leaders on responsible capitalism, we now have Vince Cable's plans on top pay etc.

I have blogged before on the unacceptable face of boardroom pay as evidenced by the  arrogance of top bankers. But if they are to get big bonuses again , then let them donate those to charity. And make that public. As Clare Tickell said to Stephen Hester of RBS it is a big shame that top earners in the UK do not have a culture of major giving and publicising this as they do in the US.

But more importantly, as Vince Cable says , we need a "change of culture " in our boardrooms.

And one way to do this would be to make boards more diverse. As I argued when I was on the Tyson review of corporate governance back in  2000 having more third sector leaders on our Boards would inject a strong voice for an ethical and sustainable business approach.  And as our leaders are themselves more diverse in gender and race terms this would also help address the heavy pre dominance of older rich white males on boards.

So I would encourage Vince to look at a much stronger push towards diverse boards. He is proposing 2 people on boards who have not been on boards before. This in itself will achieve little unless he says more in terms of other sectors and diverse backgrounds.

It's what Tyson argued but frankly her report had bugger all effect as companies sailed on regardless.

I wrote a rather splendid pamphlet on this whole issue back in 2004 " And why not" is still topical. And correct.

As the boundaries between our sectors get more flexible and blurred and the third sector works more closely with commerce then the case for board reform gets stronger.

But let's also be clear our own governance arrangements are not always transparent or accountable. I know from the stories of my own CEOs that trustee boards can be of variable quality. And not always diverse! However I suspect there are significantly more businessmen on our boards than vice versa!


Dan Filson said...

"He is proposing 2 people on boards who have not been on boards before." He certainly said so, but it seemed more of an aside which he hoped the press would pick up than part of the formal announcement. The problem is that putting director remuneration firmly in the hands of the shareholders presumes they will do the decent thing and exercise restraint, but with the banks there is no sign shareholders did not go along with the rise.

Trustees can indeed be very variable, but I get seriously worried when they self-perpetuate by co-opting each other. Too many see their role as a continuation of their political stances outside and too many seem to suspend all judgement when it comes to their political colleagues. Should we have Offtrustees?

Sir Stephen Bubb said...

Love the idea of Offtrustees! I'll happily chair that!