Governance of Search

April 2018 Overture

adult-audience-blur-976863

Introduction

Companies quite rightly care about Search outcomes. Shareholders and regulators increasingly also care about the governance of Search. Against a backdrop of public disquiet regarding corporate governance – Carillion, Wells Fargo, Institute of Directors (UK), Oxfam and Volkswagen – the process of Board and senior appointments is understandably also subject to scrutiny. In this edition of Overture Fidelio sets out the three reasons why the Governance of Search matters:

1) Independence

At Board level there are explicit requirements and definitions of what constitutes independence. A robust and objective Search process supports this. It demonstrates that a Search has been conducted at arm’s length from the Chairman, and that a consistent process has been adopted for Board Members. It also demonstrates that the decision-making and selection process draw upon a Committee rather than simply the Chairman.

Equally, at Executive level there are times when it is important for regulators and stakeholders to know that a senior hire can provide challenge and independent leadership. Once again, the Search and selection process underpins the company’s willingness to go into the market and to extend the Search beyond the immediate network of the CEO, and the ‘usual suspects’ for a role.

Fidelio has seen, in particular in the Financial Services sector, the workings of the Search process being made available to regulators to demonstrate that a new appointment is being made as the result of a thorough, open and professional Search.

2) Expertise and Experience

Increasingly, Fidelio is seeing shareholders interrogating Chairmen much more rigorously about the expertise at the Boardroom table.

Clearly shareholders need to know that the Board is equipped to deal with the complexity and disruption facing the business; a well-managed, clearly documented Search can provide comfort. It demonstrates that a rigorous, analytical process has taken place to identify what skills are needed at the top table, be it the Board or Executive Committee, and how those skills and that expertise aligns with the business objectives.

There is an additional benefit to public companies in observing the Governance of Search. It sends a clear message to activist investors that the Board is aligned and can support the goals of the business, thereby depriving the activist of a chink that is often used, in particular in the US, to gain a seat and influence on the Board.

3) Diversity

And last, but not least, for senior roles the Governance of Search underpins diversity.

Structuring the Search and selection process in a fair and transparent way safeguards diverse outcomes.

Fidelio endorses a Search process that begins with “what” the role will be required to deliver, and what the successful candidate will need to achieve. From this flows the target landscape, i.e. where the skills, experience and characteristics may be found. These two important steps should precede honing in on “who” is a suitable candidate for the role.

By following these steps rigorously and objectively stakeholders can ensure a fairer Search process, one less prone to unconscious bias and that will lead to more diverse outcomes in terms of gender, ethnicity as well as breadth and diversity of experience.

Conclusion

Over recent months Fidelio has seen an sharp focus on well governed Search processes, which are well structured and start by addressing the question “what does this role need to deliver and how does it align with the business objectives?” The Governance of Search provides comfort to shareholders and stakeholders, including regulators, that the company is serious about achieving independence and challenge within its leadership team.

It also demonstrates the Board is intent upon securing the expertise and experience that is needed around the Boardroom table to navigate complexity and change, and is committed to the diverse outcomes that best secure the future of the business.

 

To learn more about Fidelio’s Board and Executive Search practice please contact us.

 

More from Overture

We explore the relationship between Board composition, calibre of leadership, good governance and valuation

Contact us

+44 (0) 20 7759 2200

Get in touch

Contact Fidelio Partners

To find out more about Fidelio’s Search and Development capability, please contact us

Fidelio Partners

Social Media

Contact Fidelio

For information on Search, Development, Evaluation or "A Seat at the Table", please contact us.
FIDELIO

Fidelio Partners