Male, stale and frail

Male, stale and frail - catchy, isn't it? A new stick to beat boards with, more boringly known as board refreshment - which sounds to me like the drinks orders at the dinners they regularly enjoy (and I'll get back to the role of dinners in corporate governance one day).

But while catchily alliterative, it's an insulting little phrase. How does the OED define frail?

Liable to break or be broken; easily crushed or destroyed; weak, subject to infirmities; wanting in power, easily overcome; morally weak; unable to resist temptation; habitually falling into transgression.

Nice. Let's all take a pop at older men.

As the FT article linked to above says: 

"Demands for board refreshment usually explode into the open after a scandal, or when a company’s performance sours, or if there is an egregious example of executive pay." 

Yes, boards must be held to account but at that point it's clearly too late. But too much corporate governance commentary takes the position, explicitly or implicitly, that many boards are not doing a proper job and that it's being left to activist investors to put things right. 

Corporate governance regulation is policy made on the hoof. The academic literature is now huge and in many ways unhelpful for underpinning policy because the results reported tend to be equivocal. But the core principle of non executive director independence has been around for long enough to be tested and, as far as I'm aware, there is still no convincing evidence that independent NEDs can effectively perform the oversight function expected of them. 

They try - my goodness, they try. I've recently been interviewing company secretaries and their accounts of what NEDs do make it very clear that, in many large UK companies, this ostensibly part-time role is hugely demanding. I'm astonished that people are still keen to take it on (and there's another question for research: what motivates NEDs?)

Another insight from company secretaries: increasing regulatory requirements magnify the challenge for boards in managing their time between compliance requirements and the need to focus on strategy. This is nothing new: the Hampel report stated that "the emphasis on accountability has tended to obscure a board’s first responsibility - to enhance the prosperity of the business over time." But there is a danger that compliance means an ongoing preoccupation with board composition seeking to satisfy a range of quantifiable expectations about gender, age and ethnicity, none of which has been shown to affect performance directly. Boards should surely be focusing on how to appoint people with the skills, knowledge and experience (which may reside in individuals of any gender, age or ethnicity) that will combine to make the board effective - a combination which will change over time and should be addressed through the regular process of evaluation.

The FT article helpfully provides a link to this view with which I heartily concur.