The recent news concerning Paul Flowers’ Chairmanship at Co op Bank has shone a bright light on the make-up of the Boards of Mutual organisations. Many commentators have expressed surprise that a major high street brand name should have “a plasterer, a nurse and a horticulturalist” as non-executive directors on their Board (see for example the FT article last month) and called for regulators to be firmer in setting tests for acceptability of Board members.
But the counter argument is twofold. For one, the banks that did have Boards with a 100% of their NEDs coming from the financial sector didn’t exactly cover themselves in glory in the last 5 years, and secondly many organisations with large budgets and responsibilities for managing significant parts of the fabric of our society have governing Boards with diverse representation and seem to value the contribution that different perspectives can bring. Housing Associations, Foundation Trust Hospitals as well as the remaining Mutual financial services organisations all have Boards that try to balance the perspectives of the different constituencies they serve – with the belief that in doing so they can be well informed about the world in which they operate and come to a common view on how best to manage the short and long term risks in their business.
From a collaborative leadership perspective it is all about getting the right composition in a Board and then building the environment (in formal meetings and elsewhere) in which all Board members can make the contribution that is needed from them. Board development plays a part here too – and this is not just about the NEDs from different backgrounds acquiring the necessary technical knowledge and keeping up to date with regulatory changes, it also means building a Board that functions an effective collaboration and not a cosy club. Boards are not teams but some of the old lessons about strengths in teams coming from the diversity of their foundations apply in Boards too.
The mutual model has 150 years of history in this country and despite the recent difficulties at the Coop I think it has life in it yet.