Leadership Behaviour
Leadership Behaviour
This domain examines observable board and senior-management conduct: how the chair runs meetings, whether independent directors actually challenge, how dissent is minuted, and whether tone at the top is demonstrated through mechanisms rather than asserted in a statement.
What the marks hang on
- Separation of the chair and CEO roles, with a clear division of accountability.
- Independence in substance: no family, business, advisory or cross-directorship ties, and tenure monitored against the nine-year threshold used in the MCCG.
- Composition: Large Companies should have at least half independent directors; other listed issuers at least two or one-third, whichever is higher.
- Diversity policy, board evaluation and succession planning owned by the nomination committee.
- A whistleblowing channel independent of management, supported by the Whistleblower Protection Act 2010.
- Overboarding: MCCG guidance caps a director at five directorships in public listed companies.
Worked example
A founder-chairs a board of eight, six of whom are his former executives; there has been no board evaluation for three years and no question has been minuted in the last four meetings. Diagnosis: a structural failure, not a personality clash. Remedy in order: separate chair and CEO; recruit genuinely independent directors so the independent tally reaches at least one-third; appoint a senior independent director to lead evaluation and shareholder engagement; run a board and individual director evaluation feeding into re-election; reconstitute the audit committee as three non-executive members with a majority independent and an independent chair. Note the reasoning sequence - composition, then process, then culture.
Traps
- Equating "non-executive" with "independent".
- Assuming the chair must always be independent; the Code expresses this with different intensity for Large Companies.
- Praising a "harmonious board" - consensus without challenge is a red flag.
- Answering with leadership traits when the question wants mechanisms and evidence.