Professors Andrew and Nada Kakabadse found company secretaries play a vital role in making boards more effective.
New research by Henley Business School reveals that company secretaries make a significant contribution to board performance, share the same qualities as good chairmen and enable effective decision-making. A sometimes undervalued and often misunderstood role, it is essential to organisational success in the public sector.
The highlights of the research are as follows:
Top performers deliver strategic leadership
The company secretary is the third member of the top team and is a vital, independent link between the board and executive
Company secretaries align the interests of different parties around a boardroom table, facilitate dialogue, assimilate relevant information, and enable effective decision-making
The skills and attributes of the best company secretaries are closest to those of the chairman – humanity, humility, high intelligence, negotiation and resilience.
The research, ‘The Company Secretary: Building trust through governance,’ was led by Professors Andrew and Nada Kakabadse, who engaged with over 200 company secretaries, chairmen, NEDs and CEOs from public-sector, private and not-for-profit boards and governing bodies in the UK, the Republic of Ireland, and internationally-based organisations.
Undertaken in collaboration with ICSA, it scrutinises the unique role of the company secretary, exploring what they do and the qualities they need to perform the role effectively.
Since the financial crisis, public mistrust of institutions has seen governance explode in importance, with all types of organisations – public, private and not-for-profit – seeking to embed good governance as part of good practice. This, coupled with increasing demand for services and cuts in public spending, means that company secretaries have more to do than ever, in bigger and more significant roles as the guardians and leaders of good governance.
The increasingly strategic nature of the role is crucial when applied to the public sector where tax payers’ money must be spent efficiently, effectively and economically. Company secretaries are able to understand the background and wider implications of decision-making that will ultimately have an effect on the public, move between the detail and the broader, long-term implications, and guide or advise board members accordingly.
“The research shines a light on the enabling role of chartered secretaries. The space they occupy at the heart of an organisation’s governance means they are ideally placed to facilitate dialogue, help align interests of different parties and enable effective decision-making. This requires skills that go beyond administrative competence,” says Richard Carr, Chief Executive at Central Bedfordshire Council.
There are few other roles in senior management that are as flexible in their scope or require such a breadth of skills. In larger organisations the range of work is varied, but in smaller organisations a company secretary can be a veritable jack of all trades.
Board members often lack awareness of the ways in which the company secretary supports an organisation in its decision-making, and boards may miss out on making full use of the skills, knowledge and experience at their disposal.
As Ann Alderton, Director, Tredaran Consulting Ltd, a company specialising in NHS corporate governance points out: “A study that casts the spotlight on the role of the company secretary has been long overdue and goes a long way to address the lack of awareness and understanding of the role. Some boards are failing to exploit the potential benefits for governance and board effectiveness. If the role is defined too narrowly as just a board support service, directors will lose out on the insight, intelligence and navigation skills of the company secretary. Too wide a focus and the board risks losing out on the focus, objectivity and independence the role can bring.”
Other key findings include:
It is vital that company secretaries have direct and informal access to board members
There is a conflict of interest in the combined ‘Head of Legal’ and ‘Company Secretary’ role. The roles should be separate, as they can be incompatible
Company secretaries, often the longest-serving members present at board meetings, are a vital repository of company history and culture, and a guarantor of continuity
Company secretaries are embedded in the process of making boards more effective – they contribute by observing boards in action and advising on skills gaps that need filling
The breadth of the role means that it must retain independence to rebalance power as required and demonstrate accountability
A company secretary’s direct reporting line should be to the chairman, but a good working relationship between chairman, CEO and company secretary is crucial and there should be equal esteem.
ICSA Chief Executive Simon Osborne feels that: “The research reveals the crucial role played by company secretaries in maintaining the complex and occasionally strained relationships between chief executives, chairmen and their boards. It highlights the crucial management, organisational and strategic function of the company secretary, and illustrates why the next generation of these often hidden, yet vital professionals urgently need improved recognition, training and mentoring.
“We believe, and this is borne out by the research, that ICSA-qualified company secretaries deliver a more rounded governance and board member service than those who have come to the role via other professional routes. As the guardians of governance, their value to organisational success is now more vital than ever.”
Andrew Kakabadse, Professor of Governance and Leadership at Henley, supports this view: “While the NED has been the focus of much attention in the post-financial crisis period, it is now time for the company secretary role to come to the fore. Company secretaries are the only ones with access to all relevant information, know the culture of an organisation inside out, and are attuned to the reality of what is happening on the board and in the organisation. They have only one agenda – what is best for the company and the board.”