Dr Tracy Long CBE is an entrepreneur. She was a founding director of Avalon Productions and Classic FM and is currently a Board member of Carnegie Hall and Windsor Leadership. Previous Board roles have included the DCMS (Department of Culture, Media and Sport), BSkyB Joint Ventures, Botts & Co. Private Equity, Central European Media Enterprises, Van Tulleken Company, Nesta (National Endowment of Science, Technology & the Arts), Lowland Investment Company plc, London Symphony Orchestra, The King’s Consort, Noel Gay Organization, Royal Academy of Music, and Royal Society of British Sculptors (treasurer).
Through Boardroom Review, founded in 2004, Tracy has conducted over 350 board effectiveness reviews for listed companies, private entities and public institutions in the UK, USA, Europe and Asia, providing independent advice on the effectiveness and performance of boards, committees and individuals. Meet an expert in corporate governance.
To what extent are UK boards an example of good governance?
The governance of British listed companies are generally recognized as being at the forefront and is influencing other global models for a number of reasons.
The first of these is the clear division of roles within the board, which facilitates the balance of support and constructive challenge and limits the dominance of individual power. The independence of non-executive directors, and their ability to test executive assumptions, has always been at the heart of British governance. Within this framework, the Chair, the relatively new role of the Senior Independent Director and the Committee Chairs have very specific and complementary roles, enabling them to take into account the expectations of different shareholders and stakeholders.
The second specificity concerns the size of boards (8 to 10), often much smaller than in other countries, which facilitates round table debate and interaction between directors.
Finally, the length of non-executive terms on British boards are shorter than the international average (6 to 9 years, compared with an average of over 10 years in Continental Europe and the US). This favours the renewal of profiles and helps maintain the acuity of viewpoints and the updating of skills. Although there are exceptions, directors tend to make their most significant contribution in the first six years of their tenure.
British boards are often seen as a model, but there is still room for improvement. For example, European Boards have always been more consultative with the wider stakeholder landscape, including their employees. We were also slower in recognizing the benefits of balancing domain knowledge with diversity of thought. While some countries such as France, Belgium and Norway have chosen to legislate to improve non-executive diversity, I believe that in the UK, we need a greater commitment to the diversity of the senior executive pipeline, talent development and better succession planning.
We can also learn a lot from other sectors, such as private equity funds or family-run businesses, particularly in terms of their laser-like focus on execution, skills, incentives and communication channels with management.
An update on Brexit: has it had an impact on the attractiveness of UK boards to international directors?
Brexit has not necessarily had an impact on the ability of UK boards to attract quality independent directors; the reputation of UK Boards and the relative stability of the FTSE remains a major attraction.
For executives, however, the stark contrast between UK and US remuneration structures is problematic.
And on a global scale, what are the major challenges facing boards of directors today?
We are gradually seeing a harmonization of good governance around the world. Directors everywhere are spending more time on strategy and purpose, risk management, performance, leadership development and succession planning. There is also a growing commitment to have a dialogue with a wider stakeholder landscape and to self-reflect on the performance of the Board itself and the quality of relationships and dynamics.
However, directors are faced with increasingly complex and time-consuming risks: long term strategy in a rapidly changing world, cyber and data protection, regulatory scrutiny, the many and varied ESG topics…it is interesting to see that the Board’s engagement with risk has been influenced by certain sectors and models, for example the adoption of the three lines of defence taken from financial services and the lessons learned from natural resources.
It is also worth noting that in the context of increasingly diverse and multi-generational boards of directors, levels of maturity and experience will vary and there may be less consensus on how to approach and prepare for the future.
These challenges demand collaborative leadership, a highly aligned sense of purpose and an appreciation that there will never be enough time!
