Sunday, December 05, 2010

LAPFF Conference 2010: Sir John Parker, The role of the Chairman in the New Environment

Caption is from The Independent who described Sir John Parker as a British superhero Clark Kent! He is the Chairman (not Chair?) of FT100 National Grid and former Chairman of Anglo American. Ian Greenwood introduced him with the comment “if the light go out during his speech we know who is to blame”.

Sir Parker believes “always leave things better in any new company”.

Health and safety is his number 1 agenda item (together with Environment). Employees come to work each day and should go home safely to their family and those who use our products should do so safety.

Non-Executive directors must prepare for meetings. Nothing makes him more angry than those who do not. Non-Executives should challenge courageously but support when necessary. They must find out more about the company. Not be arrogant. Those who are arrogant at their 2nd or 3rd only meeting push the seeds of their destruction. They need to be effective and independent minded. Stop the company taking unnecessary risks.

What relationship should a Chair have with a Chief Executive Officer (CEO)? He once took one of his new CEOs out in his 40 foot yacht. This CEO had no experience of sailing. It was rough weather and he told him that he was now going down below to get a cup of tea and that he would let him get on with it. He will only interfere if he asks for help or if he as Chair judges it absolutely necessary.

The only time he will actively intervene is to “turn around” a company in trouble. But there is nothing worse than a Chair who will not let go. Who has a high leadership profile at the expense of the company. Who is too dominate, too dictatorial, too argumentative. A poor listener who ignores the collective wisdom of the board. The Chairman who burns up all the oxygen in the boardroom. Personal conceits are most dangerous. Leave your ego at home. Keep in touch with advisors. Have a good feedback with shareholders. Not only formal but informal. Make it clear that the golden rule for any CEO is “do not surprise me”. It is not nice to watch when the Chair/CEO relationship breaks down. The oversight of executive development is key. The succession planning of the CEO is one of the most important things you do.

(JG: funny enough most of above applies also to the Labour Movement IMO)

Companies have a corporate identity. But you must ensure that the long term interests of the beneficial owners of companies are properly represented on modern day boards. Actively monitor action plans. Remember the Japanese word kaizenDoing things better tomorrow than we did today”.

(JG) I thought this was very interesting but in the following Q&A I didn’t think he answered some questions as fully as some. There was a good question about his comments on the importance of having competent board but why was there such an imbalance in the number of female directors (never mind Chairs or CEO’s). He acknowledged that there were such problems and pointed out that the organisations he has chaired are making progress in this area.

I asked whether in light of recent cuts in the pay of senior executive in the public sector whether the private sector should follow. Bearing in mind that the pay ratio differential from lowest pay to the highest pay in the private sector was so vast? He at first appeared to blame such differentials on remuneration experts “I hope there is none in the audience” but he agreed that more has to be done. Pay had been affected by what had happened in Banking. As a member of the Bank of England committee for 5 years one of the worse jobs he has done was dealing with the consequences of the banking crisis. (I’m not sure what he meant by this? Perhaps though it is my note taking)

In another question regarding risk he explained how his company at the time didn’t plan at all for the Swine fever outbreak. A risk that they simply did not consider beforehand as needing a plan. They couldn’t lay pipelines or enter farms due to restrictions. This turned out to be a huge risk that they did not capture.

A question from another trade union rep praised him as being a breath of fresh air on safety issues but asked how does he ensure that his positive views goes beyond the boardroom? Sir John answered that one way was that his company board individually considers every single “near miss” safety report from all their company operations all over the world.  Which is pretty good.  In in my experience many employers don't even bother to discuss actual accidents at work which result in injury never mind "near misses".  Rock on Superman!

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