The Institute of Chartered Secretaries and Administrators (ICSA), has launched ‘Improving board effectiveness’, a consultation document on its update of the Higgs Guidance.
As part of its recent review of the Combined Code (due to be renamed the UK Corporate Governance Code), the Financial Reporting Council (FRC) commissioned ICSA to undertake a review of Higgs and consider whether additional guidance should be given on a number of issues relating to board effectiveness.
Boards should spend more time determining the culture, vision and values to their organisation and encouraging appropriate boardroom behaviours, according to ICSA.
ICSA has identified the key components of what makes for a better board:
More emphasis on the role of the Chair as critical to the building of the effective board
Boards spending more time determining the culture, vision and values appropriate to their organisation
Encouragement of appropriate boardroom behaviours, such as the avoidance of a ‘groupthink’ culture
Re-evaluation of the role, responsibilities and contribution of all board members, including executive directors
More time spent improving and developing directors’ skills and benchmarking their performance
Board composition and diversity as major factors in delivering a high-performance board
Advice for directors on how to ‘stay out of trouble, and jail’
Seamus Gillen, Policy Director at ICSA, commented: ‘One of the principal lessons from the financial crisis, highlighted in both Sir David Walker’s report on banking governance and the FRC’s review of the Code, is that effective boards are one of the main drivers of good corporate governance. ICSA’s final guidance will help directors understand how good governance is a key factor in delivering ongoing business sustainability and success.’
The first stage of consultation ends on 16 April 2010. ICSA will issue a further consultation draft in June and submit the completed guidance to the FRC in October.
Download the ICSA consultation document here.