Governing Values: an agenda for Boards

Governing values
Presentation to the City Values Forum:
Integrity Matters conference
Oonagh Harpur and Tony Manwaring
Tomorrow’s Company
To date:
 Interviewed 28 chairmen, non-executives, CEOs,
company secretaries and general counsels
 Interviewed 11 additional experts and advisors
 Received additional input from the Tomorrow’s
Company Good Governance Forum, the City Values
Forum and the Tomorrow’s Value lecture series
The Good Governance Forum
The ‘Board Mandate’
A mandate captures the ‘essence’ of the
‘character’ and distinctiveness of the company.
It is about what the company stands for and how
it wishes to be known to all its stakeholders.
Boardroom conversations
The importance of conversations in the
boardroom as the ‘magic dust’ that underpins
board effectiveness.
The boardroom and risk
The changing risk landscape and how boards
can make themselves more risk resilient.
The role of the chairman
Guidance for chairman on leading a modern
The context
 Libor manipulation (2012)
 Mis-selling Payment Protection Insurance (2011-2012)
 Mis-selling High Risk Investments (2011)
 Mis-selling Rate Swaps (2012)
Why governing values matters
Reputation risk
Reputation risk is the risk of damage to Barclays brand arising from
any association, action or inaction which is perceived by
stakeholders to be inappropriate or unethical.
Such damage reduces, directly or indirectly, the attractiveness of
Barclays to stakeholders and may lead to negative publicity; loss of
revenue; litigation; regulatory or legislative action; loss of existing
and potential client business; reduced workforce morale; and
difficulties in recruiting talent. Sustained reputational damage could
have a materially negative impact on our licence to operate and
destroy significant shareholder value.
Barclays plc. Annual report 2012, p.188
 A model for governing values
 The board agenda
 Tool-kits
 Next steps
A model for governing values
A model for governing values
A model for governing values
Board agenda
Set purpose, values and value propositions for
each key relationship.
Agree corporate strategy to deliver purpose, values
and value creation.
Ensure an aligned organisational capability
including culture.
Agree decision making framework for decisions at all
Make sure it happens: each level, hands off
expectations on values as well as commercial targets
and sets and reinforces through incentives and
Board leadership including communication of all the
above to all stakeholders.
1. Purpose, values and value propositions
“…the real impact , and acid test , of a
company’s culture is its impact on and
alignment with the external stakeholders with
whom it interacts and forms relationships. To
work well and create the most value, these
relationships need to be based on mutual
values, trust and openness.”
2. Corporate strategy
“We have said that our aim is to provide the
best investment and retirement solutions in the
market, in the most flexible manner, with
unparalleled service to our customers at great
value … strategically that means that we need to
review our product set to ensure that it is fit for
this purpose. The result is that in the last 12
months we have ended up closing somewhere
in the region of 90% of our products. ”
3. Aligned organisational capability
“ I don’t believe that you can teach people to
want to help others. Our recruitment process is
about finding people who want to give good
service, and then teaching people the skills to
deliver them… It is about the culture first and
foremost, and then about the technical skills.”
4. Decision making framework
“It always comes down to judgements and
people. People need to rely on their own
judgements and not rely on more processes to
take you out of the firing line.”
5. Make sure it happens
“We should not be naive. We have over 420,000
employees and not all of them will be behaving
well. You need to have a system that detects
them. When this happens it assures me that our
system is working well.”
6. Leadership
“Boards have to decide for themselves what is
right. We do have debates, increasingly, that I
have never seen in boards before, about the
relationship of our business to the communities
in which we operate in and aspects such as our
responsibilities to the exchequer. That is a very
positive development.”
Tool-kit 1: Agenda for boards
Questions for boards to ask of
themselves e.g.
Purpose, values and value
Have there been major changes in our
business, for our customers or other key
relationships or social changes such that we
need to revisit?
Corporate strategy
How well are we achieving our commercial
goals consistent with our purpose, values and
value propositions?
Aligned organisational capability
How well is our talent strategy meeting of
organisational capability needs?
Decision making framework
How do our people who face the customers or
suppliers everyday make decisions?
Make sure it happens
What are the KPIs we agreed to measure the
culture and values telling us?
Who leads on culture and values at the
board? In the executive team?
Tool-kit 2: Mapping the journey
Level 1
Level 2
Level 3
Purpose, values and
value propositions
Corporate strategy
Aligned organisational
Decision making
Make sure it happens
Tool-kit 2: Mapping the journey
Level 1
Level 2
Level 3
CSR and environment
programmes are the
responsibility of the CEO and
levels below
Chair & CEO live and breathe values,
lead communication internally and
externally. Talk about the importance
of culture and values constantly with
employees and stakeholders.
Chairman and CEO explicitly
support the CSR and
environment programmes
One NED is responsible for values
& culture and/ or a board subcommittee has organisation culture/
values/ reputation/ non-financial
risks as part of its terms of
reference, who make regular
reports to the board on alignment,
values and compliance
Board members are selected, in
part for their high moral
Chairman & CEO are seen to lead
the organization on values-driven
ethical behaviour
Comprehensive stakeholder
analysis is under-weight
Board members role model the
values and culture
A confidential “Speak Up” process
exists and summary reports
produced for the board
Member of the executive management
team accountable for developing a
strategically aligned values driven
culture and heads a virtual cross
functional team
Members of the board and the
executive management team
demonstrate their personal
commitment to the values and visit
company sites holding town halls etc.
to test and report on culture and
Boardroom culture open and selfcritical. It is a safe space for concerns
to be raised and discussed.
The significance of culture and values
are discussed at the board in relation
to all strategic decisions
Next steps
 Confidential dialogues with chairmen and other
senior figures to refine the tool-kits
 Launch in the Autumn
Governing values

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