Personnel Today
  • Home
    • All PT content
    • Advertise
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Equality, diversity and inclusion
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
    • OHW Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • XpertHR
    • Learn more
    • Products
    • Pricing
    • Free trial
    • Subscribe
    • XpertHR USA
  • Webinars
  • OHW+

Personnel Today

Register
Log in
Personnel Today
  • Home
    • All PT content
    • Advertise
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Equality, diversity and inclusion
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
    • OHW Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • XpertHR
    • Learn more
    • Products
    • Pricing
    • Free trial
    • Subscribe
    • XpertHR USA
  • Webinars
  • OHW+

Personnel Today

New director code to put HR in spotlight

by Personnel Today 5 Aug 2003
by Personnel Today 5 Aug 2003

The
new corporate governance code, which is designed to improve the performance of
company boards and the directors that serve on them, presents a huge
opportunity for HR to increase its influence.

This
is the view of Geoff Armstrong, director general of the Chartered Institute of
Personnel and Development, on the final version of the long-awaited code just
published by the Financial Reporting Council.

The
new code is based on the draft revision of the existing code that Derek Higgs
suggested in his government-commissioned report on non-executive directors, published
in January, and recommendations made in Sir Richard Smith’s report on audit committees.

The
code, which will come into effect for reporting years beginning on or after 1
November 2003, requires there to be a more open and rigorous procedure for appointment
of directors and a wider pool of candidates.

It
calls for formal evaluation of the performance of boards, committees and
individual directors, and enhanced induction and professional development of
non-executive directors.

Armstrong
welcomes changes to the draft code that allow companies more flexibility in how
they implement the code, which he believes will improve corporate governance
without undermining entrepreneurial behaviour at board level. "This code
clarifies the roles and responsibilities of executive directors and
non-executive directors in a way that does not set them up in opposing
camps," he said.

However,
Armstrong is confident the code will still have a significant impact and ensure
HR expertise is needed at the highest level. "I believe it will promote
diversity and it needs to do so," he said.

"Selection,
induction and training of directors will be a much more rigorous process
compared to the traditional ‘old boys’ network’. There will be a more prominent
role for HR in identifying the necessary skills and competencies."

Armstrong
hopes the call for directors to be selected from a wider pool of candidates
will present opportunities for senior HR professionals to take up roles as
non-executive directors. He is also optimistic that the increased emphasis on
continuous development and performance review for directors will promote a
closer link between executive pay and performance.

"In
the past, director pay was linked to simple measures of shareholder value and
share price. There needs to be a balanced scorecard of short and long-term
measures that drive the rewards of top managers," he commented.

Armstrong
believes HR has a key role to play here in advising remuneration committees to
ensure executive rewards are tied to performance-based targets linked to an
organisation’s business and HR strategies. He hopes this approach will mean
director pay will become more transparent and help improve trust within
organisations.

"Effective
leaders and senior managers create a huge amount of value and they should be
well rewarded. It is those instances where rewards are not related to results
that undermine the legitimacy of high rewards," he said.

By
Ben Willmott

www.frc.org.uk

HR
factfile

The
Combined Code of Corporate Governance stipulates:

–
New definitions of the role of the board, chairman and non-executive directors

–
More open and rigorous procedures for the appointment of directors and from a
wider pool of candidates

–
Formal evaluation of the performance of boards, committees and individual
directors, enhanced induction and more professional development of
non-executive directors

–
At least half the board in larger listed companies to be independent,
non-executive directors, with a definition of independence of non-executive
directors

–
Separation of the roles of the chairman and chief executive to be reinforced

–
That a chief executive should not go on to become chairman of the same company

–
Closer relationships between the chairman, the senior independent director,
non-executive directors and major shareholders

–
A strengthened role for the audit committee in monitoring the integrity of the
company’s financial reporting, reinforcing the independence of the external
auditor and reviewing the management of financial and other risks

–
As with the existing code, to meet their obligations under the Listing Rules.
Listed companies will have to describe how they apply the code’s main and
supporting principles, and either confirm they comply with the code’s
provisions or provide an explanation to shareholders

–
Companies and institutional investors should enter into a dialogue based on
trust and mutual understanding

–
Companies to give helpful and informative explanations, and institutional
investors should take a considered approach when evaluating them

Avatar
Personnel Today

previous post
Faceless MDs fail to motivate UK workforce
next post
Our Q & A with BA’s Neil Robertson in full

You may also like

Five steps for organisations across the globe to...

8 Jun 2022

The Search for Talent: Six Major Employer Pitfalls

24 May 2022

Grants scheme set up to support women’s health...

16 May 2022

How music can help to ease anxiety at...

9 May 2022

OH will be key to navigating ‘second pandemic’...

14 Apr 2022

OH urged to be aware of abortion consultations...

8 Apr 2022

How coached eCBT is returning the workplace to...

8 Apr 2022

Why now is the time to plug the...

7 Apr 2022

Two-thirds of shift workers feel health affected by...

18 Mar 2022

TUC warns of April Covid risk assessment ‘confusion’

14 Mar 2022
  • NSPCC revamps its learning strategy with child wellbeing at its heart PROMOTED | The NSPCC’s mission is to prevent abuse and neglect...Read more
  • Diversity versus inclusion: Why the difference matters PROMOTED | It’s possible for an environment to be diverse, but not inclusive...Read more
  • Five steps for organisations across the globe to become more skills-driven PROMOTED | The shift in the world of work has been felt across the globe...Read more
  • The future of workforce development PROMOTED | Northumbria University and partners share insight...Read more
  • Strathclyde Business School expands its Degree Apprenticeship offer in England PROMOTED | The University of Strathclyde is expanding its programmes...Read more
  • The Search for Talent: Six Major Employer Pitfalls PROMOTED | The Great Resignation continues unabated...Read more
  • Navigating the widening “Skills Confidence Gap” in 2022, and beyond PROMOTED | Cornerstone OnDemand conducted a global study...Read more
  • Apprenticeships are the solution to your recruitment problems PROMOTED | Apprenticeships have the pulling power...Read more

Personnel Today Jobs
 

Search Jobs

PERSONNEL TODAY

About us
Contact us
Browse all HR topics
Email newsletters
Content feeds
Cookies policy
Privacy policy
Terms and conditions

JOBS

Personnel Today Jobs
Post a job
Why advertise with us?

EVENTS & PRODUCTS

The Personnel Today Awards
The RAD Awards
Employee Benefits
Forum for Expatriate Management
OHW+
Whatmedia

ADVERTISING & PR

Advertising opportunities
Features list 2022

  • Facebook
  • Twitter
  • Instagram
  • Linkedin


© 2011 - 2022 DVV Media International Ltd

Personnel Today
  • Home
    • All PT content
    • Advertise
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Equality, diversity and inclusion
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
    • OHW Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • XpertHR
    • Learn more
    • Products
    • Pricing
    • Free trial
    • Subscribe
    • XpertHR USA
  • Webinars
  • OHW+