Rise of the company secretary
The company secretary occupies a unique position in most organisations. A key point of contact for the chairman, as well as a central member of the senior management team, the company secretary bridges the gap between the boardroom and the executive, with privileged access to both.
Yet the role, and its value, is frequently misunderstood and often overlooked. Late in 2013, the Institute of Chartered Secretaries and Administrators (ICSA) started work with Henley Business School to look into the changing, and at times contradictory, role of the company secretary.
The concept of the company secretary as ‘the keeper of secrets’, or ‘the servant of the board’ has been with us for some time. Deferential and discreet, the company secretary’s principal function was regarded as being to ensure that board meetings ran smoothly, decisions were made and recorded with due process and the minutes were produced on time. The emphasis on administration and procedure over a more proactive approach was underpinned by the additional responsibility for ensuring that all law and regulation was complied with.
This perception has been hard to shake off. As recently as 2012, a FTSE 250 executive director was quoted as saying: ‘Other than form-filling and complying with rules of little substance, I don’t think there is much [of a] role for a company secretary. This is a glorified clerical position.’
The truth is rather different. Because of the pivotal position they occupy, high-performing company secretaries make a significant contribution to the delivery of organisational objectives.
The research suggests that the role is undergoing a transitional phase in response to changing demands of and from boards. The increased focus on corporate governance is pointing to a renewed recognition, and greater visibility, of the company secretary, who has become the primary point of information and influence between the executive management and the board. The company secretary is now required to be more outward-looking, interacting with major shareholders, proxy advisers and regulators, and being increasingly strategic – bringing a wider understanding of business and the economic context in which their organisation works.
Reporting lines are complex. Most company secretaries report to the chairman while retaining close alignment with the CEO and the rest of the executive team. However, many identified themselves as being the third member of the CEO, chair, company secretary triumvirate at the top of the company, reinforcing the independence which is critical to demonstrating the discretion and impartiality that good company secretaries need to build trust among board and executive colleagues.
Managing the board is perceived as being a much bigger job than it was before. Non-executive directors (NEDs) in the UK have increased in number and importance, particularly in financial services post-2007.
Characteristics of high-performing company secretaries
- Be a good follower but also a leader as part of the board.
- Have the standing and confidence needed to be a leading board professional.
- Manage depth and breadth – through technical, commercial and social traits.
- Build ‘majestic’ capability – combine intelligence and practical skills to make innovative judgements.
- Use conversation, interaction and judgment.
According to a company secretary in the banking sector, ‘going back, you had non-execs doing 20-30 days a year; it can be now be a commitment of 80-90 days’. Separate research by Kakabadse and Kakabadse in 2014 suggests that around one-third of top teams are divided on mission, purpose, vision and strategy. NEDs can be out of touch, unclear about their role and contribution, and lack engagement.
Relationships between the executive and the board can also vary, but few are without tension. Nevertheless, effective board dynamics lie at the heart of organisational achievement. A high-performing company secretary, as a member of that top management trio, will contribute to the success of the board by making sure that the processes and relationships work.
The company secretary is the central information point for reporting requirements and governance matters, and with a crucial role in the quality and flow of information to the board, has unique influence in the board’s decision-making process. Close to the chair, yet able to bridge the gap between the board and the executive directors, they are present throughout the range of board and committee meetings, able to push the chair and board to talk about what needs to be discussed – although often without their own voice during the meeting. As board members come and go, the company secretary can be the longest-serving member present at board meetings, bringing vital knowledge and experience of the company’s history and culture.
While technical skills and knowledge continue to be important, the more significant areas of change are perceived in the personal characteristics required of the role. As working relationships have become more complicated, independence and the ability to influence different levels and groups of people to work together are highly sought after. Access to the executive, board, chair and CEO positions the company secretary as intermediary and diplomat, connecting people with each other.
But company secretaries are not merely diplomats. They must also stand up for what they believe is right, even if that makes them a lone voice of dissent. In an environment where 66% of top teams are ‘too inhibited to raise the uncomfortable issue’ (Kakabadse and Kakabadse), in able hands, this formal and informal influencing and nurturing of relationships can facilitate decision-making and improve board effectiveness.
So are good company secretaries born or are they made? Certainly resilience, independence and the ability to gain the trust of colleagues are essential qualities. So too are a thick skin and the ability to live with ambiguity and contradiction. Many company secretaries describe the difficulties of serving more than one master, of being both leader and follower, and having a voice but being unable to speak in certain circumstances.
Nearly all company secretaries identify practical knowledge and the intellectual capacity to master complex issues as prerequisites, coupled with leadership qualities of humanity and humility, and the ability to form good relationships with key directors.
A high-quality company secretary’s contribution to good governance is clear. However it is the special mix of leadership, practical knowledge, breadth and diplomacy which makes them critical in creating effective boards.
Simon Osborne FCIS is a solicitor and chief executive of the Institute of Chartered Secretaries and Administrators
- The Company Secretary: Building trust through governance by Professor Andrew Kakabadse, Professor Nada Korac Kakabadse and Nadeem Khan was published on 2 July and is available at www.icsa.org.uk/cosecreport.