iNEDs in the time of COVID
Don’t stand, don’t stand so, don’t stand so close to me
The Police, 1980
By Graeme Proudfoot
An apology to begin with — I started writing this piece in late February and with a bit of volatility in the air thought it might be interesting to look at the art of being an iNED during more challenging times. I was a couple of hundred words in when events rather overtook me. That original piece is now on ice and will be re-tooled along the lines of being a iNED when times are more (if not completely) normal. Instead, and having experienced the same sort of lockdown as I imagine the vast majority of independent directors (the furthest I’ve made it from home was to the council recycling centre and that was only in the last week or so after it reopened) I thought I would look at what we can learn from watching the daily press conferences from 10 Downing Street that might help us in our roles as iNEDs?
First of all, the agenda of the people asking the questions shapes the whole interaction. So, where their highest goal is to extract an admission, an apology or (best of all) a scalp, then truth-seeking is likely to take a back seat to waffle, misdirection and obfuscation. If you have no interest in understanding how some unfortunate situation with your fund or your manager came to be, then just ask whose fault it is. More on this below in the context of learning lessons.
Presenting and, especially, handling questions well is a skill in itself — not necessarily one that is perfectly correlated with being good at the job. My first Chairman in the asset management business used to conduct his weekly management meetings like hostile cross-examinations, going round each person in turn, barking questions at them and berating them for not being able to come up with some sort of acceptable answer on the spot. I remember some participants (who were actually very good at the day job) spending every Monday in a state of spiralling anxiety — the meeting was at 5pm on a Monday — which did them and the organisation no good at all. I should also confess that a very sarcastic criminal law tutor was still recent enough in my own experience that I could tap into the mindset required for glib but speedy responses. As a result, I generally skated through unbattered, and with a probably unearned reputation for being on the ball. One other thought that recollection has prompted — if the first question is always ‘have you actioned X from the last set of minutes’ then it is reasonable to expect a positive answer or at least a good excuse!
Dealing with a group (who might be a team, or may not normally work together) adds a fresh level of interest to proceedings and can lead to some curious insights. Do the difficult questions always end up at the same door whomever you ask? That might tell you who to go to first in future. Is there a division of labour going on, or a hierarchy of responsibility making itself felt? Does the presence of one player appear to be constraining the responses of others? Is that topic- or person-specific? Unlike at the daily press conferences, Boards have the ability to ask for 1 on 1 briefings from subject matter experts and should use them regularly — knowing the experts will make you a more effective director, increase the depth of your understanding and (back to the team dynamics point) help you to spot when you’re hearing a coded message or seeing unexplained discomfort.
One of the inevitable questions at 5pm as the cameras turn to Downing Street is ‘who’s going to be on parade?’ Likely followed by the inevitable disappointment if it is one of the lesser players (think of your least favourite minister at this point). This same dynamic works in Board meetings — the CEO being front and centre always adds to the sense of occasion, but there are secondary factors that then go to work: If the CEO is simultaneously in front of her subordinates then she is playing to multiple audiences who have differing needs and in respect of whom a successful meeting may look quite different.
Leadership often requires the projection of certainty and purpose, whereas the Board’s best contribution may be to challenge and encourage changes to plans. It takes skill not all CEOs possess to have both agendas served and leave both audiences satisfied.
It may also be sensible to have the opportunity to talk candidly with the CEO without others orbiting and listening in. A challenge CEOs have is that pretty much everyone they talk to has an agenda of their own to push, corporate and/or personal (including us as iNEDs) so expecting instant openness is perhaps a tall ask!
On the subject of disappointment about the CEO not being the main performer, one thing we have learned in recent weeks is that we don’t necessarily know in advance who’s words we are going to end up hanging on the most (take a bow, Chris Whitty — who also illustrates that not being the smoothest performer isn’t necessarily a problem!). Equally, when the cast of characters at a Board meeting cycles, keep an open mind as to who may become key voices you want to hear from regularly in the future; and in the obverse of the point about CEOs, remember your presenter may also be playing to different audiences with differing views of what a good meeting looks like.
Finally, a thought about post-event reviews. We know that some organisations (in the aviation and oil industries in particular) are good at learning lessons to improve standards and rarely repeat serious mistakes. Other fields (government is the obvious example) are less good both for structural and cultural reasons. Investment falls somewhere between these poles and it is worth a moment’s thought as to what pushes in one direction or the other.
Culture is obviously key — organisations that want to learn, improve and adapt tend to orientate their investigations to that end. Organisations more concerned with responsibility for the past and the avoidance of blame in the present tend to be less good at producing clear expositions of cause and effect and identifying opportunities to do things better.
Oddly enough, they repeat more errors. So, a Board asking ‘who’s fault was X?’ will often get the answer that it’s too hard to pin down’. Asking ‘can you give me a guarantee it won’t happen again?’ will similarly get waffle (or vague promises of care and attention) in response. Conversely asking ‘what specific steps can we take that will make this less likely?’ is I submit going to get a more concrete (and actionable) reply. Easy advice to give, of course, but very hard to follow in practice because the blame game has a visceral attraction we are reminded about daily.
And one last thought: if your questions are sufficiently long and complex, not only will the important bits buried in them be ignored — the questioner will undermine their own authority at the same time (no prizes for guessing the inspiration for that comment…)
Now an independent director, and board chair of an investment trust, Graeme spent the great majority of his executive career at a large asset management firm initially as a lawyer, then as a businessman becoming involved in all types of investment vehicle including as director and chairman of open and closed ended funds and ETFs in the UK, Europe and the USA.
Graeme can be contacted at firstname.lastname@example.org