01 October 2019
Company secretaries are often the most experienced boardroom participants. However, they seldom become board directors in their own capacity
There is a vast untapped source of boardroom talent and for most public sector and private sector company boards it’s literally sitting amongst them: company secretaries are often the most experienced boardroom participants and yet rarely do they become board directors in their own right.
This insight struck me whilst attending a roundtable discussion hosted by The Chartered Governance Institute with company secretaries from a host of leading FTSE 100 and FTSE 250 organisations. The quality of the people and clarity of the thinking around the table was extraordinary. They simply oozed the experience and scars that only those who have sat in boardrooms navigating a kaleidoscopic range of scenarios over decades have. Each had served as apprentices and the right arms to both great chairs and terrible ones, learning from them all: their understanding of the dynamics in the boardroom, what a good board looks like, how to get the board performing at a high level, how to best navigate a range of situations and the most common mistakes boards make was remarkable.
The company secretary job description says it all, with responsibilities including advising the board on all governance matters, minuting meetings, setting the agenda for director and shareholder meetings, advising directors on their obligations and ensuring their company’s board is effective.
And that’s just for starters. I do not need to list all the additional duties that company secretaries routinely take on as part of their job, such as company pensions and share schemes which make them well positioned to add value to a remuneration committee.
Then there is the informal role that company secretaries play on the board, routinely acting as confidant and sounding board. Often the longest-serving member around the board table possessing the most company knowledge, board members invariably seek out a good company secretary first when they have a difference of opinion regarding board matters or a personal problem. Company secretaries are the ones who manage and juggle the often differing views of the CEO, chair, board members and shareholders.
Besides the experience company secretaries undoubtedly offer, the academic training involved to become a secretary is a broad, business-based curriculum, not just the details of compliance. As one leading company secretary pointed out to me recently, the eleven three-hour exams over a three-year period they took as a qualified solicitor to qualify as a chartered secretary was more than what they did for their MBA.
A joint report carried out in 2017 by The Institute and Henley Business School into tension between board members, concluded that: “For a board to work in the best interests of the organisation, personal differences and opinions need to be effectively managed by the chairman and the company secretary”.
While the stereotype of the company secretary role positions it as an administrative and bureaucratic one, that clearly does not reflect the character of many of those undertaking the role who are clearly strategic, financially astute and commercial thinkers.Some have come from a background as a corporate lawyer, but even those who haven’t are just as likely to be involved with corporate deals. Indeed, the UK Corporate Governance Code actually defines the role of the company secretary as the lynchpin of the company. It states: “All directors should have access to the advice of the company secretary, who is responsible for advising the board on all governance matters”.
Research carried out by Henley Business School in 2014, entitled The Company Secretary: BuildingTrust Through Governance, finds that the role of company secretary “is much more than dealing with administration. Top performers deliver strategic leadership. The company secretary is the third member of the top team and as such is a vital, independent bridge linking the board and the executive… The skills and attributes of the best company secretaries are closest to those of the chairman: humanity, humility, high intelligence, negotiation and resilience”.
The facts speak for themselves, company secretaries possess a unique skill-set that more than meets the role requirements of many non-executive director, trustee and often executive roles, so why do they seldom make the switch? Is it because they are not interested? Is it because companies are overlooking them? Or are chairs actively working against them?
Based on the data we have on Nurole’s board level hiring platform, which aims to inspire brilliant people and has successfully helped thousands of boards, ranging from non-profits and startups to investor backed and publicly listed behemoths find non-executive directors and chairs for their boards, we are starting to see more company secretaries putting themselves forward for board roles with growing success: we have had approximately eight hundred applications from company secretaries, so it’s certainly not a question of interest.
When the company secretary role is done really well it is often invisible so board members are usually unaware or perhaps blind to the contribution the company secretary makes to the board when it comes to key decision making, and so seemingly are executive search agencies and headhunters; when roles become available, company secretaries are not on the radar of recruiters looking to fill board seats. All of these factors reinforce the ill-conceived idea that company secretaries would not make great board members in their own right.
There are some chairs who do not want a lawyer – and by extension a company secretary – on the board, either because they feel they already have the company secretary there, or because they feel a lawyer will be more risk-averse (or less compliant) than the average candidate. In a recent Nurole interview Dorothy Henderson makes a compelling case for why boards should have legal expertise but this hypothesis that there may be some bias against those with legal backgrounds appears to be supported by Nurole’s data: the average number of applications for board roles made by each successful candidate for those with company secretary backgrounds stands around five, slightly higher than our broader member pool which is between two and three. In a competitive environment where they are going up against the very best candidates globally it is nonetheless encouraging that they are succeeding and suggests company secretaries can compete for these roles if they persist and can find a way to get themselves in front of nomination committees.
Slowly, spurred on by a global drive to increase the diversity of board members and a growing body of evidence that shows the commercial, as well as the moral benefits of this, the traditional and outdated view of what makes an ideal board member is changing.
In McKinsey and Company’s report, Delivering Through Diversity, it states: “using 2014 diversity data, we found that companies in the top quartile for gender diversity on their executive teams were 15% more likely to experienceabove-average profitability than companies in the fourth quartile.
“In our expanded 2017 data set this number rose to 21% and continued to be statistically significant. For ethnic and cultural diversity, the 2014 finding was a 35% likelihood of outperformance, comparable to the 2017 finding of a 33% likelihood of outperformance on EBIT margin”.
This is not about diversity for diversity’s sake, but illustrates the power of cognitive diversity. When you have a diverse group around the table, the ideas and frames of reference under consideration increase enormously. For decades, boards have relied on board members to recommend colleagues and friends that they deem suitable for vacant board seats or they have turned to headhunters who resort to their little black contact books. I find it hard not to believe that this has hindered company secretaries from making the transition to the main board and has been an impediment to the cognitive diversity that most good boards now actively seek.
We set up the Nurole talent platform five years ago to challenge this outdated idea of what makes a model board candidate and to turn that tiny traditional executive recruitment talent pool into a huge sea of diverse pre-vetted talent drawn from all sectors and career paths.
Nurole’s platform flips the traditional search process on its head, allowing candidates to put themselves forward for roles, rather than waiting for a tap on the shoulder. Working in conjunction with our member recommendations, the Nurole platform bypasses the cognitive bias of the intermediary in the initial outreach to prospective candidates. This avoids candidates being pigeon-holed by the perceptions of the recruiter about what sort of candidate might be suitable. Time and again we see organisations hiring candidates that the recruiter leading the process would have initially assumed to be wrong. Recently, we launched an initiative to help Britain’s best military leaders find non-executive director board roles. Unlike the US, UK boards have failed to recognise the wealth of strategic, leadership, risk management and other expertise offered by this talent pool. It seems the same is true of the company secretary talent pool and we want to help change that.
While it is not unheard of for company secretaries to cross the board at the same organisation, it is probably easier to take on a first non-executive director role on a new board. And, providing you are not applying to join the board of a competitor, you should be able to stay on as company secretary with your existing employer, should you so wish. Amanda Mellor the Group Company Secretary at Standard Chartered plc is a good example: she has an independent director role at Volution Group plc, serves as a member of Council at Leeds University and previously served on the board of Kier Group plc.
Whether company secretaries find out about board roles via the Nurole platform or another method, how they present themselves is key to successfully switching chairs at the boardroom table. Much of the advice for company secretaries looking to take on a board role is the same advice we give to other candidates on how to build a non-executive director portfolio career. Company secretaries are well schooled in reviewing board candidate profiles, good and bad, and have likely sat in on interviews so know what tends to succeed and what does not. However, being on the other side of the desk is a challenge that they are less familiar with. The key to securing a seat at the table is to be very clear about the skills and experience that you have gained during your time as a company secretary and to show how these transfer to the board role you are applying for. Learning how to communicate this effectively is something that takes practice. We have started compiling examples of successful non-executive director and other board role applications to shine a light on this hidden art which those looking for their first independent director role may find helpful.
For the reasons described above, company secretaries are still not perceived as obvious candidates for boardroom roles, so securing that first board role may take time and will probably involve a tough process, but once it has been done, you will find it much easier to secure subsequent board roles. But then you haven’t got this far without a strong measure of grit in your character. If more company secretaries start to take that leap, it will become easier for those coming after them to do so. Let this be a rallying call.
It’s time for Cinderella to turn up to the ball.