Building an effective Trustee Board

Situation:

  • Board of 12 trustees including four elected member nominated trustees and an independent
  • Just completed closure negotiations with sponsor that had unsettled the board
  • Board included healthy diversity of views and backgrounds but was failing to harness skills to function effectively – decision-making variously deferred and had a feeling of being rushed through
  • Incomplete collective accountability; board members distracted by other business during meetings
  • Asked by Company to take over the chair and improve effectiveness of Trustee Board

Changes implemented with Robert's influence:

  • Reduced Board size from 12 to 8
  • Introduced Member Nominated Trustee selection in place of election
  • Re-defined sub-committee terms of reference to increase empowerment and clarify main board direct responsibilities
  • Selective changes to advisory team
  • Blackberry/cell phone ban coupled with breaks in meetings for other business

Key success factors identified by Robert:

  • People are key – think about them, respect their feelings and views, seek consensus and don’t assume you know what they think (ask them).
  • Adhere to principles while addressing legitimate concerns. For example "we will address your concern that the Company should not be able to influence the outcome but I am not prepared to drop the principle of MNT selection".
  • Focus on accountability. For example Board approve new investment classes; once approved Investment Committee is responsible for implementation. That way the Board make strategic investment decisions but the IC is empowered to act.
  • Build for the long-term, but don’t get stuck. Decisions to retain or change advisors made based on their contribution relative to the Board’s current needs, not on tenure or history.
  • Careful choice of timing. For example reduced size of Board when several trustees were stepping down anyway.

Outcome:

  • Board clearly accountable for strategy and outcomes
  • Streamlined decision-making
  • Diverse opinions harnessed to add value not generate argument
  • Strong engagement and sense of purpose amongst trustees with close to 100% attendance at and attention to board meetings
  • Improved sponsor satisfaction

This case study was written by Robert Thomas one of LawDeb's pension trustee directors. It is specific to a particular set of circumstances and is not a blueprint. To find out more about Robert's experience visit his profile here.

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