Code of Practice

Introduction

1.1. The Board Effectiveness Guild (the BE Guild) has been formed by a small group of independent board evaluators who share a similar philosophy towards board evaluation and who seek to work together to develop best practice standards in board evaluation. The shared values underpinning the work of the BE Guild members are crucial to this approach and, therefore, this Code of Practice sets down those values and what they mean in practice for every member of the BE Guild.

Our shared values

2.1. We believe that any board effectiveness review should be a useful and value-adding exercise for any board to undertake. We also believe that any review should take an appropriate corporate governance standard as its benchmark. For UK Main Market listed companies, the relevant standard will be the UK Corporate Governance Code (the Code). For AIM-listed companies, the relevant standard may be the Code or the QCA Corporate Governance Code[1]. In order to achieve this outcome, we see our role as being one that seeks to get to the heart of any issues that prevent our clients’ boards from doing their job effectively. Based on that analysis, we will seek to develop responses which overcome those issues. Five qualities underpin our approach: open-mindedness, inquisitiveness, flexibility, rigour and empathy. Open-mindedness and inquisitiveness help us unearth the key issues that our client boards need to address. Flexibility and rigorous process help ensure that we understand those issues well and can present insightful analysis and pragmatic solutions. Empathy helps us to understand the context of the client and its board and develop recommendations that are appropriate but without compromising governance standards.

2.2. We place a lot of value on our integrity, not least because we want our approach and analysis to be respected. Therefore we are committed to:

  • being firmly independent in our approach to and relationships with clients;
  • being courteous and respectful in our dealings with individuals contacted during the course of assignments;
  • adopting the highest standards of integrity in performing our duties;
  • thoroughness in discerning and understanding the issues that we explore in our work; and
  • sensitivity and discretion in all our dealings with clients and boards.

2.3. We will work collaboratively with other members of the BE Guild, particularly where such collaboration may enhance the quality and output of the particular review.

2.4. We will not accept hospitality, gifts, discounts or commission as an inducement from clients for any reason during the course of an assignment.

2.5. Where appropriate we will agree any restrictions in relation to the provision of services that we will provide with the client as soon as possible prior to the commencement of the engagement.

2.6. We will not provide any other services to a client during the course of an engagement, or subsequently accept any work from them which might create a perception of a conflict of interest.

Our approach to client relationships

3.1. We will work closely with clients to understand their objectives and seek to ensure that the evaluation achieves those objectives. We will aim to be as flexible as possible in our approach and methodology to meet the client’s objectives but without compromising quality.

3.2. We will only accept work that we are qualified to perform given our respective capabilities, competences and experience.

3.3. All assignments will be clearly scoped out, costed and supported with a written letter of engagement which sets out the scope of the project, the details concerning the process to be followed, timelines and deliverables and the basis for remuneration.

3.4. BE Guild members will hold all information concerning the affairs of the client in strictest confidence. We will not disclose information received from clients and interviewees during the course of an assignment to third parties without the client’s consent (with the exceptions of the discovery of unlawful practices or where information is demanded by regulators). Interview notes produced during the course of an assignment will be destroyed as soon as possible after the final report on the evaluation exercise has been agreed with the client.

3.5. In order to ensure that we retain integrity in our relationships with clients, we will not undertake more than two consecutive externally facilitated interview-based board evaluation exercises for any one client, unless the circumstances justify any such continuation and/or the level of mutual dependency is not material.

3.6. Each member of the BE Guild will be responsible for leading the delivery of services to their respective clients. Other than in exceptional circumstances which will be disclosed to clients and agreed in advance, BE Guild members will not sub-contract work to third parties. Given the shared values and service standard expectations of BE Guild members, it is anticipated, whenever additional assistance is required by a BE Guild during an assignment, fellow BE Guild members will be called on to provide such assistance in the first instance.

Our approach to evaluation projects

 4.1. We will ensure that the terms of engagement for each board evaluation, including information referred to in section 3.3 above, are clearly and unequivocally agreed in writing with the client before the evaluation commences. We will aim to explain clearly what access we will require to individuals and resources, the topics we will cover and how we will report their findings, in order to help the client manage the process and reduce the risk of misunderstandings at any stage.

4.2. For each engagement, we will use our knowledge and experience to recommend a scope and methodology that we consider appropriate in the client’s circumstances, guided by an objective view of the client’s best interests.

4.3. We are comfortable working with different board effectiveness review techniques and will work with clients to determine the most appropriate method for the scope of an evaluation project. However, given our focus on open-mindedness, inquisitiveness, flexibility, rigour and empathy, external interviews are the preferred method of evaluation because they offer more scope for these qualities to be demonstrated within the board evaluation process than any other method.

4.4. We acknowledge that we may become privy to differences of view, attitude and approach that should be respected. We will not attribute or allow opinions to be attributable with the reports that we prepare. At the outset, we will agree with the chair or relevant sponsor how sensitive information should be brought to the chairman’s, or boards, attention in a way that ensures matters are aired, but without compromising the individual(s) concerned.

4.5. We will take all necessary steps to ensure that any interviews – whether face-to-face, over the phone, or by any other means – are conducted in confidential circumstances, and that the outputs of the interviews are adequately protected.

4.6. There should be clarity in the agreement between the client and the consultants on the right of the consultant to monitor and edit any public reporting of an assignment by a client. .

Accountability

5.1. The reputation of the BE Guild will be dependent on the integrity and quality of services provided by each member. Therefore each member of the BE Guild will be answerable to the other members of the BE Guild for the quality of the services that they provide to their respective clients. Each member of the BE Guild may use another member of the BE Guild to act as an “honest broker” in the event that a client is not happy with the quality of the services provided by that member.

5.2. Where possible, members of the BE Guild will seek to undertake a review of any independent board evaluations undertaken with clients with a view to identify what went well and identify where lessons might be learned which would benefit future evaluation exercises.

[1] Other relevant codes could also include The Wates Corporate Governance Principles, The AIC Code of Corporate Governance and The Supervisory Statement – SS5/16 Corporate governance: Board Responsibilities, published by the PRA.

Dated: 2 March 2020