Professor Andrew Kakabadse

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LEADERSHIP AND TRUSTEE BOARDS

• Professor Andrew Kakabadse
• Deputy Director
• Cranfield School of Management

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Leadership

• Quality of interactions amongst members of
  executive can enhance or damage the organisation

3
Visioning
4
Dialogue
5
Communication
6
Boardroom Dynamics/NEDs

• Selection criteria for NEDs unclear
• Chairman/CEO relationship critical
• Few penetrating insights concerning company
  (NEDs)
• Shareholders/Analysts ? CEO/FD
• NEDs viewed as irrelevant
• Approach to governance/corporate reputation
  varies
• CEOs view - shareholders dominate strategy

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Why Diversity?

• Are top team members clear as to issues facing
  them/their organisation?
• What does VALUE mean?
• Philosophy for cohesion/corporate glue to company?

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Pension Fund Trustees (UK)Background

• Pension Funds organised as Trusts
• Trustees clear responsibility to schemes
  beneficiaries
• Act as Prudent Men
• Conduct business of Trust, same care as,
  ordinary men of business
• Trustees have regard to special knowledge or
  experience, reasonable to expect, in that kind of
  business/profession

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Pension Fund TrusteesIssues

• Transparency - particularly relations between
  trustee, fund manager and brokers
• Increasing Legal Complexities - can trustees
  cope?
• High Transaction costs of small investments
• Invisible brokerage costs
• Trustee board capabilities
• Selection - fund/investment manager
• - investment consultants

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Pension fund TrusteesMyners

• Issues
• Trustees too dependent on few investment
  consultants
• Investment policy too conservative/homogeneous
• Fund managers cluster around inappropriate
  indices
• Investment policy driven by short termism
• Governance of pension fund assets needs
  examination
• Trustees should be more professional/better
  trained/better rewarded

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Profile

• Corporate
• Age
• 50 - 54
• 40 - 44
• Company Nominated
• Experience as Trustee
• 3 - 5 years
• Time in Trustee Group
• 3 - 5 years
• 1 Trustee Group
• Finance Qualified
• 1-2 Days Training

• Independent
• Age
• 55 - 59
• 65
• Invited
• Experience as Trustee
• 6 - 10 years
• Time in Trustee Group
• 6 - 10 years
• More than one
• General Management/ Life
  Qualified
• 2-4 Days Training

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Expertise
77.4
How investment objectives
link to liabilities
74.3
61.3
The risk measures
appropriate to the fund
64.7
71.0
Investment language'
70.6
58.7
Asset liability modelling
61.8
80.6
Performance measurement
reports
76.5
0
10
20
30
40
50
60
70
80
90
Percentage Stating 'Good'
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Responsibilities
87.1
The Trustee Group
83.9
61.3
The Investment Committee
61.3
38.7
The Trustees' Executives
29.0
0
10
20
30
40
50
60
70
80
90
100
Percentage stating 'Yes'
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Trustees Role
6.24
Enjoy the role and its challenges
5.63
3.43
Should become remunerated
and more professional
3.12
5.73
Clearly defined and have the
freedom to perform
5.79
1
2
3
4
5
6
7
Mean Scores
16
Competencies and Capabilities
4.01
Keeping up-to-date with issues
4.12
5.95
Having and gaining appropriate
management skills
5.54
5.72
Adding valuable experience
5.57
5.03
Ability to influence decisions
4.36
1
2
3
4
5
6
7
Mean Scores
17
Relationships and Communication
6.02
Cohesive spirit
5.74
4.08
Group of tolerant and suitable
individuals
4.24
5.81
Effective communication
5.58
3.67
Too much jargon and paperwork
3.70
1
2
3
4
5
6
7
Mean Scores
18
Decision Making
5.32
Effective use of time in meetings
5.08
6.21
Supportive culture
5.63
4.86
Operationally and strategically driven
4.64
3.50
Is a risk-taker for key decisions
3.35
5.22
Represents key stakeholders
4.63
Decision making performance heavily influenced by
others in the
3.44
3.15
group
Decision making performance heavily influenced by
management
2.95
2.77
concerns
1
2
3
4
5
6
7
Mean Scores
19
Future Industry Issues
4.34
Measuring performance is
important
4.23
4.17
Strengthening the expertise of
the group
4.16
5.34
Effective fund performance
5.31
5.34
Different ways operating
5.01
1
2
3
4
5
6
7
Mean Scores
20
Assessing your Effectiveness?
90
80.0
80
71.4
70
60
50
Percentage
40
28.6
30
20.0
20
10
0
Regular review at set intervals
Ad hoc
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Learning