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Welcome to The Boardroom Path, the essential podcast for aspiring and newly appointed Non-Executive Directors navigating the journey from executive leadership to the boardroom. Hosted by Ralph Grayson, partner at Sainty Hird & Partners, each episode offers insightful conversations with industry leaders, seasoned board directors, and governance experts. Our guests share practical strategies, valuable perspectives, and actionable advice on how to effectively transition into board roles, maximise your impact, and build a rewarding NED career.
[00:00:03] Ralph Grayson: Welcome to The Boardroom Path by Sainty Hird & Partners. I'm your host, Ralph Grayson, a partner in the board practice.
In this series, we'll offer practical steps and useful perspectives for aspiring and newly appointed NEDs. Throughout its 30 year history, Sainty Hird has recruited senior board members across the City, Industry, the Public Sector and NGOs.
We're now also evaluating those boards, as well as coaching and mentoring those seeking to transition from an executive career into the boardroom. So we'll be speaking to some leading figures in the board advisory and NED world. Specifically, we'll seek their counsel about how and where to spend time and energy to make an effective transition into the boardroom.
The goal is to equip recent and aspiring NEDs with tips, tactics and strategies to be most effective and build a successful career as a board director. In the process, we aim to help you to think more about who you are, how you operate and how you can make this work in the boardroom.
I'm delighted to introduce my guest today, Murray Steele. Murray has delivered NED development programmes for over 12, 000 board members, both in the UK and internationally.
His work is underpinned by over 30 years of chair and NED experience. He has personally held over 20 chair and NED positions, covering virtually every type of organisation. Currently, he is chair of Octopus Apollo VCT, PLC, the UK's second largest VCT, which is a FTSE listed company, investing in UK unquoted tech SMEs, and also Surface Generation, an advanced manufacturing technology company.
Murray has been involved in organising development programmes for NEDs, Since 1997, when he established Cranfield School of Management's seminar for NEDs. Subsequently, he has developed NED programmes for the European Bank for Reconstruction, the British Private Equity and Venture Capital Association, and since 2011, he has co led the Financial Times NED Diploma and Effective NED programme, as well as numerous company specific NED development and board effective programmes.
Murray, welcome.
[00:02:39] Murray Steele: Thank you, Ralph.
[00:02:40] Ralph Grayson: You have fantastic experience and extensive knowledge of company law, corporate governance, the dynamics of an effective board, and the role of an effective NED. Perhaps we can start with some background to how this experience and perspective all came about, and I'll let you introduce yourself.
[00:02:59] Murray Steele: Thank you very much, Ralph. This came about, I would say, almost serendipitously. I can't claim to look back and say I planned all of this right from the beginning. I guess a form of iterative reactions, reacting to opportunities mainly, would be the best way of describing it. In 1995, I was a Senior Lecturer at Cranfield School of Management, and I'd already been running, executive development programmes for executive directors for about eight years.
When I was approached by a Cranfield alumnus to say, on behalf of a large institutional investor, would you be interested in running development programmes for non executive directors? At the time, I was non executive chair of a very small hotel company, so I had some experience of the role, but that literally was about it.
So I did, I agreed because I found this area fascinating, it really, um, triggered my interest. So with the help of this, gentleman, who came, I have to say, from the same industry as yourself, Ralph, he and I did a number of interviews with a lot of, experienced non executive directors. The conclusion we came to was that, the reality was that nobody really understood the role.
Now bear in mind this was 1995. We'd only just had the Cadbury report. So, really the understanding of the role of non exec was in its infancy. Simultaneously to that, I was approached by, another alumnus who worked for a very large private equity and venture capital company to say they would be interested in becoming involved.
And the result of this, I established Cranfield's non executive director seminar in 1997. Not long after that, in parallel with this, my own non executive career began to take off. So I ended up in a position of training people as non execs and also gaining experience in it. And I'll come back to that in a moment.
I retired from Cranfield in 2009, and within six months had a conversation, with a lovely person from the Financial Times who said they were setting up non executive director development, and they were looking for someone to to lead this and we both had one of those looks on our faces when we realised that the person she was looking for was me and I realised that I was the person that she was looking for.
So I got into the Financial Times and we started the Financial Times programmes in 2011. Around the time I think I peaked, at the number of non execs I had, which was too many. I had about seven non execs, of listed, unlisted, family, charities, chamber of commerce, youa very broad perspective.
And that's what got me to a situation with the Financial Times now, where I have experience, but I also have access to what I'd call practical research. And one of the beliefs, which I said I'd come back to, is that if you're going to work in the area of executive development for non executives, it's not enough to just say, as many academics do, my research shows. You have to be able to have real hard nosed experience of the many different situations that non execs can find themselves in.
Also, if you haven't got the experience, it's very difficult to supplement any learning points that you're trying to make, with anecdotes, with war stories, which based on experience I've found really is part of the value add in the development process.
[00:06:21] Ralph Grayson: That's a fantastic backstory and a very unusual mixture of academic and practical experience. How do you try and blend that to offer advice to new and aspiring NEDs?
[00:06:33] Murray Steele: I try very hard to give people not absolutes because I think if there is one truism in being a non executive director, when somebody asks me, what would you do in this situation? Invariably, my answer is, well, it depends. Because one of the great skills of being a non executive director is recognising the context that you are in and then reacting to that, normally in a behavioural sense, I would say, appropriately. And appropriately is a wonderful word because appropriately, for me, it can mean something different to you, for example, Ralph, or someone else that may be a non executive director.
I did a non executive director programme last week, and I did warn the participants, you're going to ask me about specific situations. I will happily give you an answer about what I might do in that situation, but please don't take it as a generality of what you should do in all situations that look like that.
[00:07:34] Ralph Grayson: When I attended the FT NED Development Programme, I loved the practical, academic and case study nature of the programme. Perhaps you can spend a little more time discussing the purpose of the course and what you think students can hope to take away from it.
[00:07:54] Murray Steele: Well, I think the purpose of the course derives from the reason it was started and we're very fortunate that my co presenter, Alison Gill, was one of the investigating team of one of the reasons why we had the financial crash and also another investigating team into boards and non execs in the private equity sector.
And the overwhelming conclusion that these panels came to was that board behavior was the critical element in the financial crash. Essentially, boards were not being challenged sufficiently by their non execs. If you look at an excellent book called Making It Happen, which is a tale of the rise and fall of Royal Bank of Scotland.
In there is one of the most amazing revelations about boards I think I've ever seen. And in it, Tom McKillop, the Chair of Royal Bank of Scotland, a very fine industrialist, had been CEO of AstraZeneca, reveals that prior to board meetings, he would call the non executives of Royal Bank of Scotland, whom I think I could safely say at the time would be classed as the corporate great and the good of the UK business landscape.
And tell them the amazing words. Please don't ask Fred questions. He doesn't like it. Fred, of course, being Fred Goodwin, nicknamed Fred the Shred, the CEO of Royal Bank of Scotland. So if you have a board, which at the time was running the biggest bank in the world and the Chair is actually saying to the non execs, please don't challenge the executive.
Is it any wonder that banks got into the difficulties that they did? And that really informed the Financial Times and created the purpose for the programme, which was to frankly have a much better calibre of non execs than we'd had up until that point. And it also led us towards the emphasis that we have, still have, and will always have.
And I do think differentiates us, as far as I can gather from doing market research from many other programmes, this emphasis on behaviour, in the boardroom.
[00:10:09] Ralph Grayson: It's a great context and a super segway into how much I was struck on the emphasis that the course places on personal behavior and it's one of the key reasons we begin our own NED training at Sainty Hird with a psychometric assessment. Can you draw out this theme Murray on personal behaviour and boardroom behaviour a little further?
[00:10:29] Murray Steele: One of the things that we emphasise a lot is the importance of self awareness. Now, I set up the Cranfield School of Management Leadership Programmes way back in a long time ago, and one of the things that I realised, both from practical experience and from reading both academic and popular literature was the importance of self awareness about just every aspect of life. But it's particularly important in the field of leadership and being non executive has a very interesting brand of leadership in it because the clue is in the name.
You are non executive, whereas self awareness as an executive may lead you to different behaviours. Self awareness as a non executive should lead you to a set of different behaviours. So we place a great deal of emphasis on understanding yourself. Some of the concepts we build around that are an understanding of your biases.
One of my favorite quotations is, you are a product of your own history. And so we get to where we are. through, as far back as parents, probably your, inspirational role models, whether it's school or university or early days in organisations, even further up through organisations, and this helps to shape us. But I think the key thing is, have you got the self awareness to sit round a board as a non executive, which gets us into other interesting issues, like what is the transition from executive to non executive like, because they're not the same.
And one of the challenges that I find non executives had, and this may be a bit tangential, is that you'll be hired as a non executive on the basis of your executive experience. But then when you start to invoke that executive experience in the boardroom, You have to do that very delicately, otherwise you upset the executives. And that really comes back to my argument for a greater degree of understanding of self awareness. So biases would be one area to look at.
Another one is emotional intelligence. So how well do I understand myself? How well do I read the social norms around me? Let's call it the boardroom dynamics.
Being an effective non executive, as I've said earlier, is understanding the context. A huge part of that context is the boardroom dynamic. The behaviours that other board members have. Are there any alliances in the board? So, for example, if you as a non exec ask a very challenging question of the CEO, which may be upsetting to the CEO, is it just the CEO you're upsetting, or is that individual allied very strongly with the chair or the CFO?
Maybe it's not one person you're upsetting, maybe it's three. And those are some of the boardroom dynamics that you have to be aware of. Emotional intelligence also means that you have to understand your behaviour, it's a social impact.
Which gets us into areas like if you're going to challenge executives in particular, I would argue the how you challenge them is as important as the what.
A content of the challenge, needs to be framed in perhaps, we're talking tone, modularity of the challenge, body language, referencing, sarcasm, Humour, et cetera, et cetera. And all of that comes together into, hopefully you develop good relationships, with other board members which help to develop relationships on the board.
[00:13:58] Ralph Grayson: One of the key things that, we're taught about thinking about leaving the executive career and moving into the boardroom is the need to leave the ego at the door. Sensing when to lean in, when to lean out.
McKinsey and Harvard Business School have both published a lot of work that most boardrooms are in some way dysfunctional. And it's something I've found a real enigma. I'm sure all board members enter the boardroom to be good citizens and are well intentioned. So what goes wrong?
[00:14:36] Murray Steele: I think there's a couple of reasons why things go wrong. I'm sure all new non execs join the board to be good boardroom citizens. But I'm concerned that quite a lot of them may not necessarily understand what that means. So their interpretation of a good boardroom citizen may be different from, for example, mine or others.
The classic we have of that is, and these are phrases that we have developed from running the Financial Times Programme now sixty-five times with about 3, 000 people attending, and one of the concepts we've developed is what we've called the Alpha Executive. And that's the situation where someone who is an executive displays alpha tendencies. Which usually can be summed up as, I may have my faults, but being wrong has never been one of them. Or an extremist, if I want your opinion, I'll give it to you. And they believe that being a non executive means they just carry on with alpha executive behaviour. And then we get into a second concept which we call crossing the line, and it's one of the great challenges for people transitioning from executive to non executive.
The clue's in the name. You're a non executive. You're not there to run the business, okay? You're there to make sure that the business is properly run, but you can't do that yourself. Which for alpha executives can be intensely frustrating. So, crossing the line means an alpha executive turns up at a board as a non executive and behaves as though they were an executive.
As you can imagine, this in fairly rapid order, leads to dysfunctionality with the executives because executives don't like being told by non executives how to run the business. It's a kind of partnership, it's like a marriage. The two should work together. The role of the non executive is to challenge but also support the executives.
Sadly I would say, I have had some experience where too many non executives, probably deriving from their executive background, forget the support bit of the challenge. They are trying to catch out the executives on the basis of their own kind of executive experience.
And that's why I think you end up with a lot of dysfunctional boards. The second reason I say we have a lot of dysfunctional boards comes to me to the, an absolutely critical role in the board.
And that is the role of the chair. If you've got a dysfunctional board, frankly the first person I would look at is the chair.
What is the chair doing to lead the board? The definition of an effective chair is someone who leads the board. Now, leading the board is a pretty wide definition. And we can break that down into a number of areas like an understanding of each individual board member, their personalities, their biases, what drives them, what they like, what they don't like.
Do they have trigger words that mean you might have to scrape them off the ceiling if you say something` inadvertently, which they consider to be inappropriate. The chair is really there to make the board work. So the chair's role is facilitating, kind of leading, setting the agenda, ensuring that everybody has their fair share of air time so that the boards aren't just dominated by the executives.
And this is where the alpha executive really does struggle.You mentioned ego Ralph, if I do another spectrum that I use a lot, which is speaking versus listening. If you look at a board, a typical board, then you will find that by definition, innately, structurally, the executives will speak more than the non executives.
You know, the executives probably have to deliver financial performance results. They have to give updates on projects, any other issues, and let's face it, the executives are there full time, it's their job to manage the organisation. So the executives inherently will speak more than the non executives.
Therefore that limits the time the non executives speak. And then it means also the non executive role, by definition structurally, is a listening role. One of the great challenges over my years of doing executive development is this balance between speaking and listening. One of the great benefits for executives becoming non executives is that, one of the skills they really have no choice but to learn, if they're going to stay effective non executives is the ability to listen and that should then feed back into their executive roles. So basically, I think the dysfunctionality comes from people not understanding the role. Two, the kind of alpha executive types who feel the need to speak a great deal. Three, a weak chair who doesn't make sure that the board dynamics are right, who doesn't say to people you haven't spoken for a while, who doesn't say to people you're actually talking too much.
Now you know, they may not necessarily say you're talking too much in the context of the board meeting, but good chairs have a regular one to ones with board members and that's the perfect opportunity to point out, to give feedback. One of the major elements of a chair's role is to give feedback to the board members.
[00:19:54] Ralph Grayson: The art of active listening as they talk about. And I think that's great perspective.
And it leads me into, one of the slides I remember from the FT course is what was titled "The Zone of Uncomfortable Debate". It's a key theme that I think goes through,the whole programme over the six or so painful months I went through.
What does that actually mean to you, Murray? And how should first time NEDs, who perhaps haven't seen this in action, factor this into their thinking and their boardroom behaviour?
[00:20:26] Murray Steele: The Zone of Uncomfortable Debate is one of my favourite concepts, Ralph. Boards tend to operate in two zones of debate. Not surprising, the first one is the Zone of Comfortable Debate, otherwise you wouldn't have the second one, which is the Zone of Uncomfortable Debate, and based on not only personal experience, but also experience of describing the concept to not only the Financial Times Programme, but others.
Typically, when we discuss this, we end up with the conclusion that boards would spend, on average, about 97 percent of their time in comfortable debate, as opposed to uncomfortable debate. Mainly because people like to live in the comfortable. I don't think many board members get up in the morning and say, I'm going to a board meeting today and it's going to be uncomfortable and I'm really looking forward to it.
We much prefer to avoid conflict and discomfort if we possibly can. However, there comes a time not on every board, but I suspect every board in reality, where you have to have those difficult conversations and that's, when you get into the zone of uncomfortable debate. I took the phrase from, change management literature many years ago, where, the argument was that as an organisation, if you did not go through a zone of uncomfortable debate, which normally came from a crisis, it was unlikely you were going to get lasting, meaningful change at the organisation level.
I think the same concept applies exactly to boards. The issue is who initiates the zone of uncomfortable debate? How is it handled? It can be intensely political. I mean, I have seen situations on boards where someone has rather cavalierly triggered a board into the zone of uncomfortable debate and the personal consequences are quite severe.
Some of the people that this individual upset by pushing the board into the zone of uncomfortable debatenever forgave that person for so doing. One of the things, again, it comes back to a point I made earlier about the importance of personal behaviour, is one of the wonderful quotations we heard and it's public so I think I can say it, which was that the court of the Bank of England, its non executive directors in the run up to the crisis were described as nothing more than cheerleaders for the executive of the Bank of England.
I. e. every suggestion that the executives made, the non execs went rah, rah, rah, great idea, just do it. There was no challenge. Everything was in the zone of comfortable debate. Therefore, you know, that led the executives, I guess, to come up with all sorts of ideas, which they knew were never going to be rigorously vetted.
So I think boards need to get into the zone of uncomfortable debate, but it has to be appropriate. Back to that word again. And that's a very difficult word to define. I can't give you metrics or tangibles around that. Probably the person ideally placed to do zone of uncomfortable debate would be the chair.
In many cases I find it's the non executives who challenge the mindsets of the executives, particularly if the company is heading towards difficulties. That's where I would see the non execs as critical in, throwing challenge into the mix that gets boards into discussing those uncomfortable things which they prefer to avoid.
However, as a non executive, I would strongly recommend that you don't want to get a reputation as somebody who is always putting the board into the zone of uncomfortable debate, perhaps on the basis of you enjoy it, which very few people do in reality, but, it's got to be done in a serious sense of purpose.
This is for the benefit of the board. This is for the benefit of the organisation, not just, Hey, I feel like I'm having a bit of fun today. Let's just, throw some fun on the table.
[00:24:23] Ralph Grayson: How to be the critical friend, right?
[00:24:24] Murray Steele: Precisely.
[00:24:26] Ralph Grayson: That raises the really interesting area around, that transition from executive to non executive. What I find myself coming back to mostly when I'm talking to aspiring NEDs who are perhaps leaving senior managerial positions, is that this is the first time as a candidate they're going to be interviewed by a peer group. How do they project that understanding and how do they factor that into showing what good corporate governance really looks like?
[00:24:57] Murray Steele: I think to really make an impact is the quality of the challenge and support. I have to keep coming back to the balance of challenge and support that the non exec provides to the board. Yeah, and that would principally mean the executive. Is the challenge constructive? Over the years, I've struggled with this personally, both as an educator and as an experienced non executive, both non executive and chair.
And one of the things I've tried, and people say to me, how can I do good challenge Murray? And I think a key factor here is, if you make it constructive. I've seen a lot of non execs, very clever people, with great executive careers who invoke their intelligence and their experience to frame challenge in the basis of their ego, frankly.
And the challenge is, if you look at it, you think this challenge is designed more to tell the executives, frankly, how smart you are. You're probably smarter than the executive. You know, you've got more experience than them. You've been more successful. You've been in this industry for longer than them. You really know what you're talking about. And if they were smart, they'd be wise just to listen to you. Now, that may well be the case, but that takes me back to my point about how they do that. But I think there are ways and means of challenging to get executives to challenge their own assumptions, their own mindsets, without telling them.
It's a fundamental basis of coaching. If you, look at the principle of coaching. Is someone going to take on board a change in their behavior if they're told to change their behavior or if they self realise? If through a process of challenge, discussion, coaching, questioning, they suddenly go, ah, maybe not suddenly, but they realise, ah, it's probably better if I change my behavior like this.
So someone realising for themselves that a change is a good idea, is much more likely to be effective over the long term than being told or directed by someone that they need to make this change. I think in the early days, and I almost felt full of this myself once, where I, not having any experience of being a non exec, was asked a very directed question in my first board meeting of the very largest corporation I've ever sat on.
And I thought it was safe to be honest and respond directly, and then realise what I'd done and thought, oh, this is going to be my first and last board meeting. To the extent that at lunchtime I actually went out after lunch and called my partner and said, I think I'll be home pretty soon. I think I've really screwed this up.
To my great fortune at the end of the first board, at the end of this first board meeting, the chair said, can we have some feedback on your non exec please? And the person who'd asked me this very challenging question said, he'll do for me. He didn't shirk the question. Now, I think I was incredibly fortunate, and I've not used that approach in any other boards where I've been the new person on the board.
It's fine going through the recruitment phase. It's fine being interviewed by the board. It's fine meeting the board, but in reality, I don't think you will really understand the board until you've seen them operate in their own,scenario in their own context and that might take you three, four, five, even six board meetings.
[00:28:28] Murray Steele: I can remember a board I was on actually for a long time, private company, quite large and about two years in where I thought I was really beginning to understand everyone. I used a word a normal kind of word of business, and the chair almost blew his gaskets. He said, don't ever use that word in my presence again.
We will never be like that. And I had no idea that he would react so emotionally to this single word. And, surprise, surprise. I never used that word again. I found a different way of conveying the message that was contained in that word. Because for whatever reason, which I've not to try and get to the bottom of this particular word really did trigger some, unusual but fairly dramatic emotions.
So, I think knowing the people, knowing the other members of the board, which takes time and you will add to it, it's like any other kind of relationship development thing, you will get better at it with time. You practice it almost innately. But really, really understanding the behaviour of the other board members is, you know, is essential.
I think you can accelerate that in the early days by, I would always spend, time one-to-one with your board members, early on, ring up the CFO and say, I've been reading the accounts, got a bit of a problem.
I'm reasonably financial literate, but could you give me some help with the pension, for example. Can we meet for a cup of coffee or even lunch or whatever? Or I'll come to your office. Yeah, I don't want to encroach on you too much, but if you could give me an hour. Maybe two hours.
Could you help me understand this? And that kinda develops the relationships that you really need to have. And, I would pick the kinda key people start with them. As a non-exec, you really want to be very, understanding of the chair.
Then the CEO probably, and there would be some of the other non-execs that are around for a long time. If they're a good board, then basically they should be more than happy to give you that time because you've been invited onto the board to add something to that board. I would argue very strongly you're going to add more to that board if you understand the board collectively and individually, the board dynamics and the individual personalities.
You're going to add more than if you don't understand it.
[00:30:42] Ralph Grayson: One of the things I was thinking of though is on our own development programme here for aspiring NEDs. No matter how senior the people are, and in fact, probably the more senior they've been as an executive, the more people fall prey to imposter syndrome. I just wonder what you think the best thing for aspiring NEDs, who perhaps had very successful and senior executive careers, to really demonstrate to the NOMS committee, the chair, whoever it may be, that they can make a meaningful contribution to the boardroom.
[00:31:18] Murray Steele: If I could actually just take a step back from there, one of the things I often suggest to people, and I'm going through a round of these discussions now with people who are doing one of our Financial Times programmes, is if you've got a glittering executive career and you want to translate that into a portfolio career, find the time to get yourself a non executive or non executive type position in something which is as far removed as possible from your executive position.
Now, I normally suggest things like school governor, charity trustee, pension trustee. Somewhere where it's almost impossible for you to behave as you would do in your executive day job. You would be the total creator of dysfunctionality if you behaved in this, school governor or charity trustee position.
Go somewhere where you can't behave like that. You, where you have to really consider your behaviour, where you have to step back, look at the personalities around the boardroom table, look at the collective board dynamic, look at the purpose of the organisation. And for some people that doesn't work.
I was a charity trustee for six years. And I suppose in the end, what kind of got me to stand down was that.I think I made a good contribution to the charity. I was always kind of struggling with what was the real purpose of this particular charity. And in the end I thought, it's easier for me to go than keep struggling with this.
But I did find it, because at the same time I had, corporate Ned roles, I did find a very interesting forum. Which was complementary to my corporate roles in terms of considering my behaviour and understanding the behaviour of people around me, most of whom did not come from a corporate background at all.
So there was I as the kind of you know a pretty ultimate corporate animal. I had non execs. I was a lecturer at a major business school. I loved business. I believed in the, you know, what business created in terms of value and wealth. To me, it was almost like the meaning of life.
To be banished into a charity with people who'd never worked in business. In fact, some people who'd never worked at all, and some people who'd never worked in the charity sector, and it was kind of revelatory to me of how do I get these people to see how I see things, how I get them to change, how I get them to think. Now, doesn't mean to I was right and they were wrong, and there were a number of occasions where I had to kind of,hold my breath and not say something because, what I was going to say, what I thought it was logical, it was not the right time to do that. I had to wait you know, until the right moment came. But I think that was a big learning experience for me.
But how they can add value is, I think, A, always be constructive. B, and B's pretty much up there with A. Always make sure that it is interpreted that you are acting in the best interest of the company if it's a corporate situation. There is a temptation, and I kind of hinted at this in the previous answer, we all like to win an argument. So, don't get into an argument with somebody, particularly if you're non executive and executive, and want to win the argument.
This is where self awareness is priceless. If you've got effective self awareness a voice in your head should kick in that says, are you acting in the best sense of the company here? Or do you just want to win the argument? Do you just want to show that you're smarter than the executive because you can beat that individual in an argument?
Very rarely, in my experience, as a non exec, beating an executive in an argument, been productive. You have to find other ways of doing that. Back to my kind of principle of being constructive. The challenge should always be constructive. It's difficult to do that because we are human beings and at times you will see people doing silly things in your experience and that should be called out.
I don't disagree with that but try and find ways of doing it which are constructive. If you over time build up this kind of bank of credibility as someone who's going to be constructive, that will make it easier come the day when you maybe have to make a challenge which is likely to nudge the board into the zone of uncomfortable debate.
You'll have got that credibility of being constructive, which will probably lessen the likelihood of kind of personal repercussions. You have built up the credibility bank with other members of the board, so there's less likely to be repercussions if you then ask a really challenging question, which potentially nudges the board into the zone of uncomfortable debate.
[00:35:53] Ralph Grayson: I think a lot of that's to do with the fundamental change of mindset. And what I mean by that is when we have executives come on our development programme and, we talk about why do you want to be a board member? What's your rationale? What are you going to take out of the executive suite and into the boardroom?
They come armed with their CV and I did this and I achieved that, and here's what happened. And I say, no, no. Rip up the CV. Forget the CV. Tell me what you solve for, and why is a board going to want you as a member of that team? What perspective do you give that isn't there, in the rest of that board team, and addresses the context of where that board is and that company is at that moment in time.
And I think one of the great things about the way people are thinking about boards at the moment is, a board member is not a generic role, it's contextual. And secondly, people are thinking about the different skill sets that we need in the 21st century, cyber, DEI, ESG, whatever it may be. We come back often to this core skills, experience and knowledge in the boardroom, but what does that mean for how our listeners should best think how to position themselves for a first time board role?
[00:37:13] Murray Steele: Our experience at the Financial Times is that, if you're a FTSE 100 executive, when you retire, you will probably have no lack of attention from the recruitment industry, from your industry Ralph. If you're outside that, then you will most likely be recruited to a non exec based on your experience and your achievements in an industry which you are known for. So for example, I had a lovely gentleman who came in one of our programmes and he was a very senior risk director at a major investment bank retired wanted to go plural and was pretty much snapped up by people who wanted a risk person on their board.
This was not long after the financial crash when suddenly, risk was the word that was on everyone's lips, and every board wanted somebody with experience of, identifying and managing risk. And, I remember the conversation vividly because he said, am I really going to add value here or do they just want me to tick a box?
And we discussed it and in the end we agreed that it would be sensible for him to develop his career to that. Now that's an example where somebody brings some very specific skills to a board and one of the things we talked about was you're going to sit on the board and almost be the risk person.
So that's a very specific example. And I think I've noticed over the years, and I have one or two very close friends who have displayed this, where I think what you do is a non executive outside the FTSE 100 and probably the FTSE 250 now as well, you'll be selected for those skills and achievements you have in your industry.
That will get you your first and maybe second position. But then people develop almost like a generic set of non executive skills, which means once they've done that and displayed an effective non executive director, then, they can, go into almost any role I would argue. I used to believe that any non exec could go into anything.
I'm not so sure now because I think there are some areas where you may need to have a high degree of specialist knowledge on that particular board. But a good generalist non exec, I believe, can still add particular value. I have a good friend, I won't, name the individual, who started off in automotive, and now has ended up chairing some retail businesses, pretty far removed.
And that individual has developed a sensational set of skills as a non executive. You would probably know who it is, but I don't want to reveal who it is without that person's permission. And so, I think you can develop those sets of skills, and I think it comes back to what I said earlier.
It's do you add value to the board? And adding value, it's an interesting concept. But I think it comes back to, a couple of things, most of which I've touched on before. But I think another one which is, which I do find occasionally lacking, which astounds me, is how well does the non executive understand the organisation.
How well does it understand the business? How well does it understand the business model? The source of profits? The challenges? The customer experience? You name it, How well does that person understand the business?
And I suppose actually one thing I haven't mentioned, which underpins this as well, is the importance of doing this on the basis of evidence.
If I observe in my own kind of non exec journey, which is now quite lengthy, I would, I think, observe of myself that I have become an evidence junkie as time has gone on, and I hopefully do it constructively. But probably one of the questions that I'm most regularly ask executives is, what is your evidence for that? Can you please provide me with evidence for that?
In a way which is hopefully not threatening, but supportive, that if they do provide the evidence, then it might help challenge their mindsets, and it help might, add value to the board and hence the company.
[00:41:18] Ralph Grayson: Certainly it's something that I find myself talking to people who aspire to this boardroom seat, a lot is in the context of the CV, it's show, don't tell, right? It's all about what's the evidence about where you made an influence i. e. influence not managed, what was the context, and what did you solve for as a member of a team?
Let's just move on from the strategic to the tactical in that respect. Where do people start? How do they find a progression that's going to build a good portfolio career that suits them in terms of those, skill spikes, in terms of that nebulous fit. One thing as a headhunter, you hate doing NED searches to have to reject lots of people, because they say, sorry, you were great.
But the fit wasn't quite right, or I'm afraid the other candidate just had the better fit. How does the candidate go about demonstrating that?
[00:42:16] Murray Steele: I think you get into almost like meaning of life type questions there, Ralph. What does fit mean? Why do we end up with the partners in life that we end up with? It's a really nebulous kind of concept. And yeah, I can remember one board that I sat on. This is a long time ago, and so today it would be virtually abhorrent, but it took me quite a long time to get them to admit that having perhaps someone of a different gender on the board might be a good idea.
When I look back on it now and think of the context that we're in now for board diversity and ethnicity, etc, etc, etc, I look back at this time, which was early 2000s and I think of those conversations, I think, my goodness, it's unbelievable.
I've got appointments where I've thought, that didn't go well, I'm not going to make this, I don't fit with these guys, I'm not sure they fit with me. And then lo and behold they said, we'd like you to join the board because we think you're challenging. And then I've had other ones where I've thought, I've come out of the interview and thought, I'm a shoo in.
I can remember one in particular where, the chair of the company and the chair of the nominations committee, you know, we spent hours talking about gossip in the industry and five minutes talking about how I'd make a good non exec. And I thought, yeah, they must have decided beforehand.
I'm in here, and then got the call that I wasn't a good fit, which was a bit odd. I sometimes worry, and it's a bit tangential that maybe in the past fit was a convenient excuse, because they may have had a candidate lined up already, and yeah, they all knew that particular candidate and wanted that candidate to take the role.
And then, yeah, you may have ticked all the boxes in terms of what I'd call the tangible aspects of the role, and fit is essentially an intangible aspect of a role. And therefore that was used as a reason not to. Whatever the person involved in the process, whether it's someone from your industry or whatever, whatever they see, they know the client, they should coach the individual or the individuals, to get them in the best possible preparation to go through this process, and, in some respects, I'd be tempted, and this happened in my, the last appointment I made, when we got to the final decision, we actually looked at the recruitment consultant, and the recruitment consultant read our body language rather well.
She didn't quite say, if I were you, I would appoint X. But in some respects, she did in a constructive way. And I thought it was very interesting because she had observed all of the interviews. She had provided all the candidates. She had learned about us and we actually went off spec for that particular one.
We had a very clear spec and there was one part of the spec that we obviated to take this person because they were such a perfect fit and the headhunter, I think, knew it right from the beginning and more or less went, I think it should be this particular person here and the headhunter had been proven right.
But it is very difficult. How do you third party at a distance understand, the board members, you do your due diligence on them, on the chair, what their interests are, trying to understand them as much as possible. This is where I would hope that the professional, i. e. the recruitment consultant would guide you. and also when it gets towards the end of the process and you're already in front of the chair.the chair should be willing to ask questions about the board and other board members. But it is a very difficult thing, and this is where I think it gets, I think it gets quite hit and miss, alright?
People used to give me tripe. Things like, you know,I wouldn't want to hire a non executive I wouldn't want to invite for dinner.
[00:45:51] Murray Steele: And I thought, that's an interesting kind of concept. And I thought about it, and I thought back on the people that I've worked with, and some of them I have invited for dinner, and some of them I've thought, you make a damn good non exec, but I'd never invite you for dinner, right? I think you just have to do as much preparation as you possibly can. In some respects, if you want that job, then you have to do it. My wife used to recruit into the NHS extensively, and I'll remember when she was going through CVs.
And it was quite interesting because the NHS used to have an angle on this, which was in the application form, there was a page which is just at the top of it, please explain how your values and beliefs align with the values and beliefs of the NHS. And you can see the people who really wanted the job.
They'd taken their time, they'd filled this in, they'd done it in great detail. And you can see the others who just put on it, please refer to my CV. Which as you can imagine, once my wife read that, the CV just was discarded. If they couldn't take the trouble to express an answer to that particular question, it's a kind of surrogate, I think, Ralph for what you're talking about, but it's a measure of, if you want something and you think you can make a contribution, you have to put yourself out for it.
I think your non executive CV probably needs to be tailored a great deal more to the job specification. Maybe you can have a generic executive CV, which you can pass over, but I think the non executive one and the covering letter in particular, you have to be tailored.
That's just, it's a measure of, you know, if you want this you have to do your work and your preparation on it.
[00:47:30] Ralph Grayson: I'm nodding furiously here. I'm agreeing on so many different levels. firstly, I think that the importance that is put on what the work that is done outside of the board meeting, right? So back to your point, would I want to sit next to this person at a dinner party? What I constantly tell candidates either as a part of a search or as part of the development programme is it's not just the technical skill that you bring to the board matrix. It's also the dinner beforehand.
Does somebody want to sit next to you? Do they want to spend time with you? Are they aligned in vision and purpose and those technical phrases we can do? But actually, is it, do I want to be a member of a seven person board sitting with you quite a lot of the time of the day, and getting into sensitive areas of quite heated, at times, constructive debate.
Second thing I think which is great about the evolution of corporate governance more recently is the role of the board appraisal. And actually being part of the corporate governance code now that at least every three years, there should be an external appraisal of the board does cause the board to look at itself and say, not only where are our skill gaps, but also how do we fit together as a team and how does that team fit become more transparent?
So I think that's a really useful part of the process that. that people need to think about more if they're thinking about this role. And secondly, they need to demonstrate, because again, it doesn't matter whether you're a graduate recruit, or you're the most seasoned, experienced and high profile ex CEO, if you haven't done your homework, and you don't demonstrate that to the chair or the NOMS committee, they're going to say,how are you going to add value?
[00:49:13] Murray Steele: It's interesting. You're right about board evaluation, I agree. It's slowly taking effect. When board evaluation was first proposed as part of a governance code, I think only two out of the FTSE 100 actually had the board evaluation. One of them was 3i, which clearly still exists, and one of them was,Halifax Building Society, which clearly doesn't exist.
So maybe I'm not arguing for board evaluation as being a perfect thing. But I always reflected on this when I was arguing the case for non exec doing some training for the role. If you joined an organisation, let's say straight from university, you would do a graduate programme. You would then move into management and you would have an annual appraisal and you might have some development to move you for the next role.
Maybe they'd send you to somewhere like Harvard or INSEAD or London Business School or Cranfield even when you got to a certain particular level. And then you got to the boardroom and that all stopped. Because you'd made it to the boardroom. And we found this in other countries as well, it was exactly the same.
And that's hopefully where board evaluation, came in. And it was almost like once you'd made it to the board, you didn't need to have any kind of skill development because you'd made it to the board, and that has changed, I think, but I still suspect I'm still quite amazed when I ask people who sit on fairly large boards some basic questions about the role and I get either the wrong answer or I don't get an answer at all.
[00:50:33] Ralph Grayson: So time's run on. There've been 101 things that we could have touched on and hopefully areas that we'll focus on more with other guests in the future. But let's say now our listener has said, yep, I can do this. Yes, I want to do this. What should the listener take away from our discussion and how should they follow up if they think the FTNED programme is a course that they should follow?
[00:51:00] Murray Steele: I'll take the last part, because that's the easiest part. If they want to follow up with the NED programme, call a man called Sam Jenkins at the Financial Times. Sam runs our admissions activity.
My experience of the recruitment fraternity is that it's better to have some form of non executive activity on your CV than a blank space. As I said earlier, if that means having, a school governor or a Parent Teacher Association or the Golf Club or something where you go on to the board or the governing body or the organisation, you go on to that in a non executive capacity with a view to adding value and helping that manage the organisation better. Do some practice, do it. I would always say, but of course I'm biased, you do some training. The biggest thing we find is a pretty peculiarly British thing that, if you're looking for a non executive role for many people that will come through networking.
And one of the things we find quite astonishing is that people who don't, , make sure that other people know they're looking for a non-executive. Now I can quote you dozens of anecdotes where people think I'll get a non-executive directorship by telepathy. People will know I'm looking for a non-executive directorship.
They won't. But the British are very bad at asking what they want for what they want at telling people what they want.
Yeah, I can give a great example of, somebody who now sits on a pretty, pretty senior board, where they actually, rang his wife, because they thought she would be the ideal candidate. And, he picked up the phone and said, no, I know she'd be conflicted, but I'd be quite interested. Anyway,more seriously, I would reinforce what Murray says here, that the vast majority of NED roles don't go through a search firm.
[00:52:44] Ralph Grayson: Don't go through a formal process. You can argue whether that's a good or bad thing. In the world of corporate governance, certainly transparency is becoming a much bigger issue. We could debate another time the value of having a certificate, which I came out of FT programme. Perhaps I should also point out, for the avoidance of doubt, Murray, you might just want to jump in on this.
There is a two day course, there's a six month course, so there is a try it before you buy.
[00:53:13] Murray Steele: The six month programme, we would say, is the kind of a Rolls Royce. It's unique. It has five modules. The core module is the first one, which is all about board behaviour, which really does distinguish us, differentiate us from other programmes. Also, it is a Level 7 Educational Qualification, which is the equivalent of Masters in the United Kingdom.
And it is rigorously assessed. It is not a pay your money, show up and get your certificate. After the behavioural workshop, most of the rest of it is done online. The two day effective NED programme is, a quick run through all the basic aspects of being a non executive director. So it's legal responsibilities, corporate governance, audit committee, Board dynamics, characteristics of effective boards, characteristics of effective non executive directors, and how to remove directors, and it's fairly intensive, two days. But it will give the basics, but the diploma is the Rolls Royce blue chip, and I would say it's probably a unique programme in the world today.
[00:54:16] Ralph Grayson: Certainly one I enjoyed, I feel much more qualified to comment on than I did this time last year when I was starting out on it. Other board programmes and platforms are available and we'll be examining some of those as this series unfolds. But Murray, thank you so much for your wisdom, your perspective, and your huge experience.
I hope our listeners have found that valuable as they think about their steps towards the boardroom, and I thank you very much for your time and your passion.
[00:54:50] Murray Steele: Thanks for the opportunity, Ralph.
[00:54:51] Ralph Grayson: I hope that you've enjoyed listening to this podcast and have found it helpful when thinking about how to approach your own path to the boardroom. If you would like to push this a little bit further, Sainty Hird runs a bespoke one to one programme designed specifically to this end. For more information, please visit our website, saintyhird.com, follow us on LinkedIn, and subscribe to the Boardroom Path to receive new episodes. Thank you for listening.