On 23 February, ICSA's North West Branch organised an insightful event in Manchester chaired by Branch Treasurer Muriel Thorne about the importance of good governance in the face of adversity. Sharing their personal experiences were crisis experts Claire Davies, Group Secretary at The Co-operative Group and Rob Bellhouse, until recently the company secretary at platinum group metals producer Lonmin PLC.
Claire helped Lloyds Banking Group to navigate the financial crisis and then leapt from the frying pan into the fire to turn governance around at the Co-op following highly critical reports by Sir Christopher Kelly and Lord Myners into the serious governance failings of the Group. There she has had to deal with a whole host of challenges including board resignations and executive exits, business losses, disposals, reputational issues, investigations and Government inquiries, media leaks and intense scrutiny.
According to Claire "The company secretary adds value during a crisis by being able to navigate through icebergs when everyone else is just seeing the top layer. Things always get worse before they get better and it is up to you to judge what lies below the surface and to work out what needs to be dealt with today and what can wait. Company secretaries are in the thick of it; they need to be able to help the board spend its time on the right things whilst not compromising the business as a whole."
Rob Bellhouse experienced similar challenges at Lonmin with the Marikana mining crisis in 2012 that threatened the company's very existence and a five-month-long strike in 2014. Rob talked the audience through his 2012 experience when he dealt with a change of leadership following the serious illness of the long-serving Chief Executive at a time when industrial relations were at crisis point and a human and humanitarian crisis occurred in the glare of global media attention. This led to a judicial commission of inquiry, a financial crisis, a rethinking of the business plan, an opportunistic takeover attempt during a rescue rights issue and a $750m bank debt refinancing.
"It is mostly instinctive; no training can really prepare you," said Rob. "You add value by maintaining good governance, by solving problems in order to keep things moving, by seeing the bigger picture and by doing the right things in the right way for the right reasons. Knowing the characters around your board table is hugely important, as the role of the board, the chairman and the non-executive directors can change dramatically during a crisis. It's crucial that the executives who are managing the crisis are receiving the advice and backing that they need."
It was clear from both speakers that company secretaries have to be able to ask tough questions if they are to add value, using their judgement in unchartered territory. In particular, they need to be able to support boards in making decisions that are demonstrably sound and can withstand public scrutiny.
Claire's top ten tips for staying sane during a crisis
- Relationships are absolutely key – be available and accessible to all board members.
- There may be no right or wrong; try to see things from all angles.
- Be honest and open – even when you're a lone voice. A reputation for doing the right thing will earn respect even if the messages aren't palatable.
- Be focused and ruthless in prioritising – only worry about the 'today issue'. In a crisis there might not be a tomorrow if you don't get through today.
- Know what good looks like. Be innovative. Look for best practice beyond your sector.
- Be determined and resilient; don't take things personally.
- At work, have a great back up team that can share the 'Business As Usual' burden.
- Outside of work, have a great support team.
- Eat well, sleep well and try to stay healthy.
- Be prepared for some mad moments – keep smiling and keep going!
The event took place at the offices of law firm DAC Beachcroft and was organised in conjunction with DAC Beachcroft and the Institute of Directors North West.
Get in touch with ICSA North West Branch to hear about other events in the region.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
