The UK Corporate Secretary’s Role in Director Induction (Onboarding)

The UK Corporate Governance Code states that the company secretary has a specific responsibility in facilitating the induction (onboarding) programme for new directors under the direction of the chairman. The company secretary is thus responsible for creating a programme that will bring a new director up to speed. The company secretary can mentor the new director in regard to the firm’s mission and operations, its corporate governance issues and the market in which it operates. But mentorship sessions should also be arranged with other board members, management and eventually the external auditor, so that the board member can become effective with the shortest delay possible.

Induction (Onboarding) for the Company Secretary

Under the terms of the UK Code, all directors should receive induction (onboarding) on joining the board, and to function effectively, all directors need appropriate knowledge of the company and access to its operations and staff. This is the result of the 2003 Higgs Review of UK corporate governance which first proposed that induction (onboarding) is a critical requirement.

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The Code goes on to state that the chairman should ensure that new directors receive a full, formal and tailored induction on joining the board. As part of this, directors should avail themselves of opportunities to meet major shareholders.

The Code allocates a specific role to the company secretary in induction (onboarding). It states that the company secretary’s responsibilities include facilitating the induction (onboarding) programme under the direction of the chairman. This is part of the company secretary’s mandate for providing directors with guidance on what their responsibilities are under the rules and regulations to which they are subject and on how those responsibilities should be discharged.

The UK Institute of Chartered Secretaries and Administrators (ICSA) provides specific guidance for company secretaries for induction (onboarding). The company secretary can add value by fulfilling, or enabling the fulfilment of, these best practice governance requirements on behalf of the chairman, ICSA points out in its guidance.

Role in Working with New Directors

It is part of the company secretary’s mandate to have a thorough understanding of the company’s mission and operations: The secretary must understand how their organisation makes money and creates value; the secretary must also understand what their organisation needs, now and in the future, to continue to make money and create value. The secretary should completely master what constitutes the company’s competitive advantage, and should be able to follow the evolution of the market in which the company operates.

This knowledge and understanding makes the company secretary well-placed to manage the induction (onboarding) process. The company secretary will understand how the new board member fits into the operations of the board, but also what perspective the director will have on management, strategy and operations. The company secretary will be able to orient a non-executive director who comes from a completely different sector, providing the basic training and arranging for mentoring from management and the board itself.

Company secretaries will find that preparing customised induction (onboarding) programmes is a complex task. The induction programme may extend over a period of time, and may involve a combination of presentations, seminars, face-to-face meetings (including with shareholders and other major stakeholders), and other activities. Part of the mandate of the company secretary under the Code is to keep the board up-to-date on governance and compliance requirements. Part of the induction process should clearly involve an introduction and update for the new director into the specific governance issues that involve the firm.

Then, consideration should be given to visiting important business locations and meeting senior and middle management to develop a meaningful ‘line of sight’ into the business, and particularly those areas that carry significant risk. Orientation should also be arranged with the Risk Committee, if there is one, as well as with the audit committee, and with any other board committees with which the new director may be involved.

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From a more personal point of view, the company secretary should engage with the new director and then help him or her to build a network among the existing board members. Once the company secretary has a clear picture of the new director’s needs, then a schedule should be worked out with the director for the induction (onboarding) programme.

It is important that this new director should agree to the schedule, as the time commitment for the programme is significant. The company secretary should avoid overloading the director with new information by phasing the timing of delivery. The material used should also be varied: Reading materials, meetings, presentations, site visits and training courses should alternate with mentorship sessions. Clearly, those sessions with management, advisers, shareholders and other relevant stakeholders should be spread out over a reasonable period of time.

If possible, the company secretary should consider pairing the director with one of the current directors on the board to assist with the assimilation of information. Such a pairing would also encourage the new director to meet privately with other board members, so that he or she may be integrated into the regular network.

Finally, the company secretary should regularly check on the progress in integration of the new board member. As the director undoubtedly will have other responsibilities outside the firm, it is helpful to see how he or she is getting on in the learning process, and if there are issues that the company secretary can help to resolve. The company secretary should keep checking with the director until the integration is completed.

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