Anthony Hilton: A resolution for UK Plc and people who can help

There really is no excuse. Near the beginning of this decade, the trade body for insurance buyers and risk managers, known as Airmic, commissioned a report called Roads to Ruin, which analysed the causes of the major corporate disasters in the first 10 years of this century. It followed this up with a second report, Roads to Resilience, which highlighted the boardroom behaviours common to companies which kept out of trouble.

The idea was that boards would heed the lessons of the good, but clearly there are still too many which are not paying attention — or perhaps just finding it too difficult to keep up in this fast-moving world.

The five golden rules of resilience make for interesting reading: good, properly interpreted intelligence; sufficient diversity to avoid group-think; fluid and effective internal communications so information gets where it is needed; rapid crisis response; and regular searching reviews even when things are going well — all qualities far more common in the military than in business. Add to this that the Army believes in leadership and the leaders’ role in making a huge and continuing effort to develop and get the best out of its people at every level, and you have two reasons why our armed forces command more respect and have a better reputation for competence than almost any company.

Some businesses have quietly picked up on this — Deloitte and Barclays in particular seem exceptionally keen on hiring ex-Army officers to groom for senior management roles.

General Sir Richard Shirreff, who retired in 2014 as one of this country’s most senior military leaders, has set up what is already a much sought-after consultancy, Strategia Worldwide. Its purpose is to help companies protect value by understanding risk and designing strategy to manage it comprehensively by deploying multi-disciplinary teams drawn from different sectors and applying a rigorous strategic planning process grounded in military campaign planning.

This is fine as far as it goes but you do wonder if it will work if boards don’t do a whole lot more to embrace diversity, so that they really are open to new ideas.

Tom Peters — the American management guru who wrote In Search of Excellence — recently produced a blueprint for what he thinks would be the ideal 10-strong, modern board. There should be no more than three people over 60, he said, no more than three MBAs, at least three women, two people under 30, a brace of entrepreneurial types, a design guru, an IT superstar, and one person of stature who seems weird, probably a rapper or an artist.

Anthony Fitzsimmons of Reputability — a consultancy specialising in governance and risk — who was one of the authors of the first of the aforementioned Airmic reports, discusses the blueprint in a blog on his website and adds a couple of his own ideas for psychologists, given their understanding of how people behave, and lawyers, academics or journalists to provide the challenge.

He then compares this ideal with the actual profile of non-executive directors to be found in the FTSE 100 and the leading regulatory bodies.

Age data was incomplete but where it was available it showed only 7% were under 50 and 55% were over 60.

There are now more women following the recent pressure but still almost no ethnic minorities. Only 1% of the non-executive directors are psychologists; only 2% have HR experience; only 7% are lawyers or academics and the latter tend to be chemists at pharma companies; only 9% know about IT and data and they are clustered in media and telecoms.

What there was in abundance — accounting for 94% — were people who have been directors elsewhere or people who had what is known as C-suite experience, meaning they had “chief” in their title at some point in their working life. Many chairmen, when asked, will say privately that they do not think their boards are equipped to deal with the modern world and are simply wrong-footed by its pace and complexity. But they then say they don’t now what to do about it.

So there is a resolution for next year: they need to get a grip on diversity and there are several people named in this article pointing them in the direction of travel.