At 4.30 am on Friday 24th June it was declared that the Leave vote had won the UK Referendum on EU Membership. The result ricocheted around world capitals and markets. Sterling plunged and the FTSE plummeted. By 8.30 am the Prime Minister had resigned. Over the following weekend a vote of confidence was called in the leader of the opposition and most of the shadow opposition cabinet resigned. The business community was stunned and is now facing unprecedented constitutional, political and market chaos in one of the world’s largest economies and major financial centres.
As a Board Development and Executive Search consultancy with a track record of operating cross-border, cross-sector and cross-function, Fidelio is actively supporting clients to ensure that leadership teams have the skills they need at the top table. This Overture identifies skills, attributes and experience that Boards and business leaders will need to weather the days, weeks and months of turmoil ahead.
Complexity, Ambiguity and Uncertainty on the Board Agenda
The only certainty is uncertainty for the business community in the UK and indeed Europe. Business looks to a stable legal and regulatory framework; the BREXIT vote has raised multiple short, medium and long term questions for UK business. With no possibility of clear answers for months and years to come,companies must learn to operate effectively in the BREXIT fog.
Chairmen and CEOs will need to be able to assess complex but imperfect information; quickly determining next steps against a rapidly changing backdrop. Clarity of thinking and good judgement will be critical for business leaders, all the more so in the absence of leadership from the political class.
We have been struck in recent months by the importance that Chairmen are placing upon the formal and informal evaluation process. Whether conducting Board observations or more formal external evaluations, Fidelio has seen a shift from box-ticking to Board effectiveness.
As we enter turbulent times it will be Boards who work well together, communicate effectively and bring a range of perspectives that will be best placed to make good decisions. Wise Chairmen are working hard to achieve this.
It is clear many companies are putting investment decisions on hold and the IoD survey of 24th to 26th June estimated that 64% of companies believed the result is negative for their business. Nonetheless, the Board needs to ensure that the plethora of BREXIT task forces does not overwhelm employees. Change is inevitable and Boards will need to access the skills and expertise to drive change, very possibly on a transitional basis.
If you can keep your head when all about you are losing theirs…
Rudyard Kipling, If
Bringing External Perspective Into the Boardroom
One of the themes which hit the Remain camp hard was the trashing of experts. Whether it was the Governor of the Bank of England, the Head of the IMF, the Chancellor of the Exchequer or FTSE 100 CEOs, the Leave campaign was effective in undermining their credibility. Leaving aside the dangerous implications of eroding public confidence in institutions and experts, business cannot afford to be so cavalier in dispensing with the opinions and insights of leading global experts.
Fidelio’s approach to Board development is characterised by bringing external perspectives into the Boardroom and creating a safe-space and “Chatham House” rules environment for the Board to explore critical challenges and risk.
In the run up to the Referendum Fidelio has seen Boards taking geo-political risk formally on to the risk register. Correspondingly Fidelio’s preparation of Board Development modules has recently encompassed geo-political themes, including regional risk such as EU fragmentation but also super-regional themes, in particular the rise of populism. Here Fidelio partners with experts including from the senior ranks of NATO or counter-terrorism.
Indeed participants in Fidelio’s September 2016 “A Seat at the Table” Programme for senior female executives will have the opportunity to explore geo-political risk with Richard Shirreff, former Deputy Supreme Allied Commander of NATO. Specifically we look at how the Board can best factor geo-political risk into its thinking and decision making; we also explore very real challenges for business including the rise of populism and political instability.
Thinking Cross-Border
For UK businesses it’s currently all too easy to obsess about revolving doors in Whitehall. But for businesses large and small the EU very obviously has to be taken into account. At Fidelio’s first Board breakfast on the Referendum in June 2015, “Can the EU Survive 10 More Years?”, a number of our guests recognised how important it would be for Boards and Executive teams to have international expertise in order to deal with the complexity of issues such as BREXIT.
Since inception Fidelio has successfully delivered Search assignments cross-border and we will continue to do so. Business needs to buck the political trend of isolationism and our Executive Search long and short lists are distinctive for the wealth of international talent that they include.
Contributing to Stability
Business is also an actor in the Referendum plot that is rapidly unfurling. While companies may feel at the mercy of events beyond their control, business also has a role to play in contributing to stability. At the time of writing the pound has fallen sharply and trading in a number of companies has been temporarily suspended – so contributing to stability is no small order but it is imperative.
Since the 2008 Financial Crisis we have seen an increase in former diplomats being brought into senior public and corporate affairs roles within leading corporates. Fidelio has also worked with strategic consultancies to further build their public affairs capability both in the UK and Brussels. Given the complex waters ahead companies will want to ensure that they have access to wise heads that can begin to unpick the complexity and contribute to mapping a way forward.
In this context how companies communicate with their stakeholders and shareholders can clearly promote stability or encourage volatility. As is customary in times of challenge we see greater value being placed on strong communication skills. Boards and the Executive Committee will be repeatedly confronted by Communication decisions: when to advise the market and stakeholders of the implications of Brexit on jobs and investment; how to communicate with employees during periods of turbulence; when saying less is the best course of action; and when to rely upon industry bodies.
Against this backdrop companies continue to upgrade their communications capability and we do not expect the focus on public affairs, digital capability and internal engagement/employee communications to diminish.
Business will also be reviewing why it was so difficult for corporates to convey to the British public the very real risks of Brexit. At Fidelio’s “Stakeholder Engagement Breakfast – “BREXIT” in September 2015 with FTSE 100 Communication Directors, several participants flagged the difficulty that business was having connecting with the broader public. There was a concern that Boards were underestimating the importance of emotion in popular decision-making, even on economic and financial issues. Boards have traditionally been much better placed to connect with the head than the heart.
Without a doubt, business also needs to listen more carefully to public opinion and Fidelio continues to argue that the ability to interpret and understand public sentiment will be an increasingly important skill in the Boardroom.
The Opportunity
Despite the gloomy backdrop business opportunities will arise. Professional services firms, for example, will be very busy as companies re-organise or consider re-organisation. The dislocation in asset prices will create opportunities for investors and not just the day traders. For those with a long-term outlook, capability and commitment, it is a good time to be attracting senior executive talent.
Britain is ready to confront what the future holds for us from a position of strength.
George Osborne, Chancellor of the Exchequer, 27th June 2016
Conclusion
Fidelio in no way underestimates the challenges facing business post the UK’s EU Referendum. There is, however, a growing voice confirming that Britain is determined to remain open for business and to continue to be outward looking and international. We will play our role ensuring that Boards and leadership teams are prepared for complexity and that they have access to the skills and experience needed. This clearly includes a strong grasp of political and public affairs; effective communication skills and an international outlook.
Fidelio High Notes – June 2016
- Fidelio supports Chairmen and CEOs in building and developing highly effective Boards and Executive teams, strongly placed to navigate complexity and change. Fidelio achieves this through Development and Search.
- Fidelio’s Board practice supports Boards through Evaluation to become more effective in achieving their goals and navigating complexity.
- Fidelio’s Executive Search Practice sees the requirement for professionals with strong Public Affairs skills remaining strong at Executive Committee and direct report level and also in an advisory capacity.
- Volatile markets demonstrate the importance of IR; Fidelio’s IR Search practice sees corporates focus on strengthening IR capabilities.
- Fidelio will host the third “A Seat at the Table” Programme for senior female executives at Leeds Castle, Kent on 13th/14th September 2016. It is designed to ensure women succeed to the Top Table and at the Top Table, including external Board roles.
- Fidelio hosts a Board Breakfast on “A Seat at the Table for the Communications Director?“, with the discussion led by Matthew Kirk, Group External Affairs, Vodafone, on 28th June 2016.
- Fidelio will host a Board Breakfast on “Corporate Governance is Dead, Long Live Corporate Governance” with Professor Bob Garratt, visiting Professor, Cass Business School on 12th July 2016.
For further information on Board Development and Executive Search, or Fidelio’s “A Seat at the Table” Programme please contact Gillian Karran-Cumberlege, alternatively call +44 (0) 207 759 2200.