Entering a new year, it’s natural that everyone’s thoughts turn to the prospect of change.
One change I've promised myself is to walk my Great Dane more! I'm also making a 'stop-doing list' - all directors know that time is the most precious thing they have, and we must be prepared to say no, in order to keep control of it.
Much change is also on the cards in the world of corporate governance where the phrase ‘business as usual’ seems distant from the reality we find ourselves in.
Just as we take time to consider what new resolutions we might set our self as we seek self-improvement and the prospect of developing ourselves, so will the UK’s companies face a range of new requirements and rules in 2019.
One of the most significant of these will be the Wates Principles. In short, through these Principles the largest unlisted companies will be impelled to report on their governance practices for the first time. This undoubtedly marks a new chapter in the UK’s corporate story. As these unlisted firms for the first time come under the ambit of a governance code, their practices will endure an unaccustomed scrutiny.
The hope is, however, that the scrutiny will be neither unduly burdensome nor wholly unwelcomed by these companies – just as the new year’s resolutions we set ourselves cannot be so strenuous as to be counterproductive. Given the vast array of corporate structures encompassed by the new rules, as well as the (in most cases) markedly different company-shareholder relationship, the Principles are pitched at a high level. The IoD, alongside the rest of the Wates panel, felt that a degree of industry buy-in was crucial to their success.
Nonetheless, with the high-profile collapses of BHS, Monarch Airlines and others having serious ramifications, ensuring governance practices are strong in listed and unlisted companies alike was felt to be an important goal for UK PLC. Furthermore, it is very much the idea that companies falling under the aegis of the new Principles will view them as a positive means to build trust between business and wider society, and to burnish their corporate credentials, something I suggested in an article last month for the newspaper, City AM.
The Wates Principles are far from the only development in corporate governance of late, however. New requirements emerge regularly, reflecting shifting corporate needs and emerging public concerns.
Perhaps some of the most notable of these revolve around companies’ payment processes. While gender pay reporting hit the headlines in 2018, executive pay ratios are due to come into effect this year, while ethnicity pay reporting is currently in a consultation period. It will be fascinating to see how these requirements build from one another. While the gender pay disparity revealed by several companies gained wide attention for a vital issue, it is crucial that all sides – journalists, policymakers, and of course the firms themselves – are able to delve beneath the headline figures to understand the underlying factors in these areas.
The IoD’s own corporate governance is soon to see a new development too, with a couple of fresh faces scheduled to be appointed to our board in due course. The process, which began with public advertisement for applications, has been a very positive one all round. Holding interviews with several candidates has proven to be an enjoyable and engaging experience.
I am very much looking forward to welcoming the new additions to our board, who will provide more insight to help achieve our ambitions for the future. It’s important that we draw together a range of perspectives – something I discussed in a recent interview with the Mail on Sunday.
Working alongside our Member Council and of course the IoD staff and volunteers, I am very much excited about the difference the IoD can make, as it supports its members to fulfil their potential in the world of business and beyond.