Lessons from Co-op Bank: how much should the chair know?

Almost as shocking as the allegation that the chair of the Co-operative Bank buys cocaine was his performance in front of the select committee that revealed he didn’t know much about his bank, or indeed, banking. Or was it?

‘The chief executive and directors ran the show, the non-exec directors were for show and the chair’s job was to keep the show on the road’

There has always been a tradition in both the business sector and the voluntary sector of appointing people for their standing in the community rather than their expertise.

The government has itself been introducing people with commercial backgrounds and business experience into NHS boards to “strengthen” them, while the chief executive and directors provide the professional expertise.

Chairs who don’t interfere

A large housing association I worked for was a typical example. The chief executive approached people of good standing to be on the board, the full board met twice a year to approve the budget and that was it. The chief executive and the chair were careful to recruit board members who would take an interest – but who would not interfere.

In other words, the chief executive and directors ran the show, the non-exec directors were for show and the chair’s job was to keep the show on the road (and non-exec members in line).

‘Board members are responsible not just for the budget but also for quality of care’

The chair got the status and the chief executive had the power in this set-up. It appears this model is still in existence in the City.

Whether it’s a housing association or NHS trust, reductions in government funding mean organisations have to look to review their activities. Boards are required to be dynamic, more prepared to take risks and find new ways to fund developments.

Board members are responsible not just for the budget but also for quality of care. They need the experience, skills and confidence to challenge executive decisions. But does strengthening the board inevitably weaken the position of the chief executive and senior management team?

Once you have a board that is up for a challenge, you may find that they don’t think the chief executive and senior managers are.