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RemCo : Changing Faces & Time To Rethink

Posted on April 27, 2013 at 2:45 PM

It comes as little surprise that the role of RemCo (remuneration committee) chair is now viewed as the most challenging of the committee chair roles in the boardrooms of UK plc. Its only equivalent perhaps, is chair of the risk committee at a financial services company. 

Significant research from headhunters Hedley May leads to these conclusions - and others - that may tangentially be of particular interest to those championing the cause of more diversity - and more women -in the boardroom.

Changing Faces At The RemCo, as the research is titled, reveals that the chair role increasingly requires

  • tough independence
  • listening skills
  • high levels of emotional intelligence
  • strong understanding of the business (so unlikely to be a new NED)

Their analysis shows that "the typical RemCo chair is a 60 year old man who has been a CEO". However, it also reveals that "there is a wide range of backgrounds, illustrating that this is a role driven less by experience and more by skillset." in other words, there are bankers, CFOs, COOs, divisional CEOSs, lawyers, HRDs and others in the role - predominantly male at the moment.

"Never before have HRDs had such a powerful opportunity to inflluence the board, nor have they ever occupied such an exposed position" says the report. Their role is apparently about walking "a fine line between being seen as the independent conscience of the company and being supportive of colleagues on the executive team."

The technical knowledge on "reward" held by the best HR directors also places them in high demand for the RemCo chair role - and the role of 'reward director' is increasingly a feeder for the RemCo chair role as well.

But the report also demonstrates the extent to which headhunters inevitably reflect and represent their clients. It documents the need for a "new style of Remco Chair and a more skilled HRD and reward director" but really only to deal with the cumbersome issue of "adapting to a new environment of high levels of scrutiny and transparency."

Indeed. The critical environment we are in is not going to go away in a hurry (with any luck) and institutional shareholders are demonstrating that there is a need for plcs to designate someone to do the legwork of building better relationships with shareholders. 

Hedley May's report has been written principally for its clients. But I think it succesfully demonstrates three interesting points that are more generally valid. 

  • the skills it says are needed are the leadership skills that are increasingly attributed to many women
  • there are traditionally more women in the HR function  who could be given further training by their plcs to step up to new challenges on reward
  • there appears to be a greater need for a 'shareholder engagement' role within the boardroom - perhaps headhunters should be innovative enough to suggest the RemCo chair needs help from another NED with that specific responsibility.

More generally, so often valuable research is done around the boardroom- and a fair amount of it comes my way. 

It may well be human nature for each firm to toot its own horn and flog its own agenda - but all so-called advisers to UK plc should increasingly be held accountable not just for commiserating and telling it 'how it is' but increasingly, offering something like a vision for how it could be. 

For my money, that would indeed be "value added".

Categories: Chairmen, Appointments, Shareholders