The secretary general’s perspective: governance culture and board dynamics - Part three

The Board : meeting physically or on screen ?

Most (non-executive) board members do not know each other prior to joining the board and in any case have few reasons to meet outside the board meetings. Therefore, the most should be made of the occasions when they meet effectively.

The company secretary must play a proactive, facilitating, and executive role in this regard: he/she must propose, implement, organise, and participate in order to facilitate social interactions.

Screen meetings aren't optimal for creating real trust. Post-Covid, chairs and company secretaries had to rethink the balance between the convenience of remote (screen) meetings and the social aspect of in-person meetings. Most of the company secretaries have explicitly rethought these aspects from scratch and now work with an annual work plan with a number of physical meetings throughout the year, scheduled well in advance (sometimes 1-2 years), also in different geographical locations, in combination with more ad hoc hybrid or full remote meetings.  

 The goal is to make the most of board members' limited days by hosting events during in-person board meetings to encourage social interaction between board members and management.  This can consist of:

• Dinners before or after the board, which can also be attended by the management who does not attend the (full) board meeting.

• Separate meetings with members of the management.

• Site visits; presentations; meeting other staff, such as the subsidiaries’ CEOs and management.

 An annual off-site, with a cultural or leisure event, is part of the "standard" package of most annual Board work plans. It must clearly be an annual demarcation point for the board. It is an important moment for the dynamics, where directors really get the chance to get to know each other better. It is therefore necessary to avoid overloading the agenda and leaving sufficient time for directors to interact freely with each other. It is also useful to "zoom out" during this off-site, to discuss long-term strategy, geopolitical or other relevant evolutions. Inviting external speakers and other guests can be helpful to contribute to the discussion.

The Board : Organisation of meetings – smart seating

Meetings are human interactions. Just like in classrooms or professional open spaces, who sits next to whom is a relevant factor to the overall dynamics of the group.

• Ideally, the chair sits centrally, so that he/she can see (most) directors. The secretary of the company should (in my opinion) sit next to the chair.

• How do you position the CEO in relation to the chair? Ideally, they should have eye contact and the CEO should also be seated centrally.

• Do you apply free seating for the other directors and management who are present, or do you provide a seating plan? A seating plan has certain advantages:

• 'poisonous pairs', which sit side by side, can be avoided;

• Sometimes a director needs specific attention; this director can be placed next to the chair or CEO;

• Variation from meeting to meeting can be applied to encourage social interaction;

• A 'front' of management must be avoided. If they attend the full meeting, they ideally sit among the non-executive.

• And finally, don't confuse the board table meeting plan with the dinner meeting plan, 'toxic' combinations at the board table can be the perfect dinner companions.

The chair must establish the annual work plan and meeting agenda, in collaboration with the CEO and support of the company secretary, taking into account the "flow" of the meetings, points of interest, etc. One practice applied at some companies is to have all reporting on backwards-looking items before a break or lunch, and all forward-looking and strategic defining items after the break or lunch. This benefits the dynamics.

In the board meeting, the chair must behave as the 'primus inter pares', as the director of the orchestra, as the bass player who leads a jazz band, not as the soloist. He must cherish different perspectives, make the discussion possible and as such not necessarily strive for harmony. He must ensure that everyone can contribute and ultimately ensure that the decisions are made.  The secretary of the company must be the silent advisor, the 'prompter', the timekeeper and the one who keeps an eye on what is happening around the table, including the body language of the directors. 

Outside of the meeting, the chair must maintain good working relationships with all directors and top management. This requires a significant time investment and a mix of possible approaches, such as one-on-one calls, quick phone calls and scheduled catch-up calls, periodic letters to all directors, attending management committee meetings, visiting directors and shareholders, etc.

The company secretary may recommend actions to the chair based on observations at Board meetings and interactions with NEDs and management.

Promoting trust between management and non-executive directors

Sufficient mutual trust between management and NEDs will stimulate positive governance dynamics.

At the same time, bilateral or trilateral discussions should not replace or disrupt the functioning of the board or lead to unjustified information and documentation asymmetry.

Below are a few examples of initiatives that can help support a positive dynamic between non-executive directors and management.

• One initiative is to establish a general framework for the interaction between the NEDs and management, and even more broadly between the NEDs and the company, in addition to the legal mandate of a directorship. Such a framework can be about information flows between meetings, contacts that NEDs want to have in the organisation, what NEDs can expect from the company, declarations about values, agreements about costs and expenses, etc.

• Getting to know each other better on a personal level can be done through a mutual mentorship program, bringing NEDs and management together. This is mutually beneficial as it creates a 'safe space' to exchange. But there is also a risk. The risk is that board topics are discussed in advance and that some NEDs receive more and different board information than others. A clear framework with guidelines and follow-up is beneficial in this respect.

• Training programs, both collectively for the full board of directors and individually, for example in the context of the introduction of directors, or in subgroups, for example for committee members, provide a less formal opportunity between management and non-executive directors to discuss and exchange.

• Committee chairs also have a role to play in fostering a good culture. It can be helpful to organise a one-day or half-day committee off-site, bringing together the committee members, relevant executives, and company secretaries.

Welcoming the non-executive directors – the "butler service"

Last but not least, non-executives must feel at home in the company they serve. They are often seen as guests, passers-by, visitors. This is incorrect. It should be made clear in the company that they are part of the company in the first place. It could therefore be a welcome way to have a permanent badge, a company email address (also for IT security reasons), a company device (PC), an office they can use if they want to (even outside the context of a board meeting) and a contact person in the company secretariat team to contact for practical matters.

The Company's Secretariat can also better link them to the company by offering or providing a regular flow of information about the company, such as press releases, newspaper clippings, regular updates on the main developments, etc.

Of course, NEDs normally only come to the building occasionally. But welcoming the NEDs in a professional and engaging manner, including with regard to practical logistics such as travel and accommodation, dinner and lunch options, also contributes to their 'well-being' and ultimately to the dynamics of governance. This is an important role of the company secretariat.

Finally, it is important that a company secretary, deputy company secretary, and members of the company secretariat personally establish good direct working relationships with NEDs and management, independent of the chair or CEO.

One way in which company secretaries can also contribute to good board dynamics and thus to a positive, healthy board culture is by asking directors for their ideas on improving aspects of the organisation and structure of the board of directors. Most NEDs have a portfolio of directorships and are therefore on different boards, with a different culture. It's always good to listen to best practices.