The role of the company secretary in supporting board effectiveness can sometimes be overlooked. They provide a valuable service as a repository of corporate knowledge, regulations and good governance. As a result, they are often indispensable in supporting the effectiveness of the board and particularly in supporting the chairman.
Today, the challenge of the pandemic – one of the biggest crises the world has faced in generations – necessitates that they step up and provide additional value and support to the board. To ensure the board remains effective company secretaries need to broaden their administration remit and become facilitators and enablers of critical board processes.
Four lines of sight
As enablers, company secretaries need to ensure boards continue to focus on having four lines of sight, and help enact effective processes to ensure that each perspective adds value:
- Oversight: Boards must have processes in place to ensure effective oversight and accountability.
- Insight: Effective boards understand the company, the financial engine and competitive edge of the organisation and the external business environment. This insight drives a more objective and enabling assessment of performance and strategy.
- Foresight: The ability to anticipate, to see what is coming and the future forces that will impact the competitiveness and sustainability of the business is critical to effective understanding of risk and development of strategy.
- Hindsight: Effective boards can bring significant company knowledge, the hindsight to remember previous initiatives and reflect on the good, bad and ugly learnings from the past.
Director reviews, succession planning and inductions
Since it’s over a year since the global pandemic was declared today is the right time for reviews of the CEO, board and chairman to take place. To ensure those on the board are fit for the future the company secretary should, working closely with the chair, facilitate 360-degree performance reviews, comprising of qualitative and quantitative research based on interviews and online surveys.
It’s important to start with a review of the CEO – after all their role of leading the organisation into the future is the most important one on the board.
At the end of the review process there must be clarity on the next steps, with clear expectations and deliverables confirmed for the CEO and directors, agreed by all parties. The company secretary should ensure any agreed training is organised and takes place, as well as help with the transition of those no longer right for the role.
Whether the CEO or directors are up to scratch or not, the company secretary needs to work closely with the chairman to help facilitate succession planning. To ensure business continuity it’s critical the right CEO is employed. This could mean looking internally at the depth of talent below the CEO, or possible candidates at other organisations. After the identification of a possible candidate by the board they could be mentored by a director over a number of years, so when the time comes the right candidate can seamlessly join the business. The company secretary can also take charge of the administration side of any mentoring.
The company secretary must be heavily involved in ensuring the successful functioning of the induction process for directors – something that’s more important than ever in the virtual world we currently operate in. To ensure all new appointments to the board make a valuable contribution as early as possible they should look at the induction process as an 18–24-month journey. This means no longer must new joiners be left with a box of reading material and told to get on with it, as was often the case in the past. The company secretary needs to make sure formal governance training is delivered so the new starters learn about liabilities, risks, financial competence, including how to be effective in board meetings. They should be involved in setting up a buddy system with an established director so the new board member can learn about previous decisions, and how things work. Also, the company secretary must arrange a programme of visits and experiences so the incoming director can really get under the skin of the organisation, and the secretaries should undertake ruthless feedback so the induction process can improve over time.
Risk and strategy
The pandemic revealed risk processes at many businesses that were academic, impractical and in some cases simply unworkable. Too many boards were blind to critical business risks. The company secretary needs to aid the board in evaluating future risk. They need to work closely with the board to challenge their understanding of it and therefore their appetite to risk, and ensure they effectively prepare for the future. This approach should help enable the board to spot and turn any future risk to their commercial advantage and secure the long-term survival of their organisation.
With the attention of boards focused on navigating a way through the pandemic, the company secretary must evolve their role to ensure the board continues to carry out critical processes that deliver good governance and effective decision making. This means company secretaries need to broaden their role to become facilitators and enablers in the areas of oversight through to foresight, director reviews, succession planning and inductions, as well as in risk and strategy.
They must also maintain their other key duties in governance and administration. These include governance health checks, drafting policies for the board and implementing them, and handling all the administration around board meetings, amongst others.
For those organisations lacking or requiring the support of a company secretary on a project or ongoing basis we can help by outsourcing company secretarial services. We provide company secretaries who are dedicated to your good governance. They are enablers who maintain compliance and high standards on corporate governance, while going above and beyond to support the overall effectiveness of your board, so you can focus on running your business.