Harvey Nash Life Sciences Practice Dinner
The annual event for Harvey Nash Life Sciences was held at the Sartoria restaurant, in Mayfair. The dinner was attended by chairmen, non-executive directors and senior executives from the life sciences industry. Dr John Brown, Chairman of BTG plc and CXR Biosciences Ltd and Governing Board Member of the Technology Strategy Board, was our guest speaker on what was described by many as a highly enjoyable evening.
The role of the Board is a topic which is often in the press. We asked John to share his views on how the Board can best help the Management Team to develop a company. John based the talk on his experiences as a successful member of the Board and Management Teams of a number of organisations, and the current impact of the 2003 Higgs review. A number of key points emerged during the discussion.
Having at the time of the Higgs review been sceptical of the clear division of responsibilities between the chairman and CEO, John now believes that complete independence is vital to ensure balance of power. The chairman’s function is to lead the Board. Where there is an issue of performance with any of the board members, the chairman should be able to remove a non-executive director. There is no time to take passengers, and replacing ineffective performers should occur more often following Board appraisals.
Non-executive directors should be able to influence the strategy of a company particularly in response to the changing economic environment. The model of being in the stock market with the acceptance of loss-making for three years is gone. Outsourcing is increasingly popular with a possible exit at trade sale to larger pharmaceutical companies. There are fewer companies listing on the stock market and regulatory issues are keeping investors away. Non-executive directors have to help the company keep focussed on these themes.
Although it is good to challenge the business model, it is obviously not helpful for a company to have a new model every month. People with the ability to influence and help implement the long term strategy are necessary to augment the attributes of the founders and entrepreneurs who are often not the best finishers.
Whether or not the CEO and CFO should be the only executives on the Board, was also discussed. The only way for the larger boards to be manageable is if everyone is able to give their opinion. The view being that unlike non-executive directors, executives may not feel completely comfortable doing so.
As that there are fewer women on Boards, it was suggested that women should express their interest in non-executive director roles more strongly to head hunters.
Attracting non-executive directors from the USA could be useful for adding a different perspective. The effectiveness depends on the expertise the Board needs from the non-executive director and whether it is possible to get commitment to attend and fully participate in the Board meetings.
There is also a challenge for Boards due to differences in remuneration of non-executive directors in the UK and the USA. The consensus is that bearing in mind non-executive directors play an increasingly important role in guiding and controlling the company, compensation is low in UK. There is an imbalance compared with executive pay if you look at the daily rate. However, there may be justification in that non-executive directors are not subject to the same daily pressures that executives endure.
Overall the non-executive director has an increasingly important role to play in driving strategy and ensuring the Board has a balanced view.
This interactive evening provided another great opportunity to network with peers in the industry.
November 4, 2009 10:34 AM | Permalink
