Diversity: do it now, do it right

During 2020, Norman Broadbent’s Energy & Utilities Practice again successfully delivered numerous searches at Operational and Group Leadership levels. Without fail, during every briefing session, clients have asked for a focus on diversity as well as meeting the very strict criteria in terms of functional and behavioural competency. Inevitably, this can create a conflict between the desire for diversity and specific competencies or experiences.

Being the only firm of our kind to have a formal partnership with UN Women UK, and one of a handful of companies recognised by the UK Government and the Hampton Alexander Review due to our proven commitment in helping clients address their diversity challenges,  D&I is at the heart of every project we deliver.

When supporting our clients in making senior appointments, the ultimate priority is to hire the best person for the role, regardless of gender or race. Each candidate is assessed against a standard set of behavioural and technical competencies, and a judgement is made based on their skillset, experience, performance, and the assessment outputs. Ideally, this would ensure that the best person for the job is identified and appointed. In some industries, this often results in a non-diverse hire, as the pool of ‘suitable’ candidates (i.e. with the requested competencies) is almost entirely non-diverse.  It has been proven that there is a tangible commercial benefit in having cognitively diverse leadership teams, and deliberately seeking to include diverse candidates with less experience could be considered acceptable with a valid business reason to support this, e.g. if the existing team is very “one-dimensional” and at risk of groupthink. That being said, when a strict set of criteria forms the basis of a search process, this can heavily restrict the talent pool to be approached, and may result in a lack of diversity on a shortlist if the “diverse” talent simply does not exist in that specific, isolated market.

To counter this, there are two key approaches we believe can facilitate diverse hiring. Both, however, require genuine commitment from the hiring organisation to ensure success:

  • Do not overly define your criteria at the start of any search process: Be willing to consider talent from outside of sector and focus on general competency rather than a long list of Job Description “requirements”. This enables the search firm to cast the net wider identifying a broader pool of talent at the start of the search. Do not default back to a situation we see all too often (“we need to hire the person with the most experience”) as this re-directs the search straight back to that defined, traditional talent pool that has always existed in a non-diverse industry sector. There will always be occasions, for example with technical leadership roles, where very specific experience is In these situations, it is important to recognise that whilst diversity should always remain a priority, the percentage chance of achieving diversity may be diluted, in some cases to zero, if the statistically small diverse talent pool is not interested in exploring the opportunity you have to offer upon being approached. This should be monitored and acknowledged during the search process to manage expectations, if there is an agreement that certain key requirements of the role cannot be compromised.
  • Do not wait for a reactive recruitment process to identify diverse talent: Once you are in the midst of a pressurised, high-profile search process, the risk factor of hiring the “wrong” candidate can often overpower the appetite for diversity and new, innovative thinking. Planning ahead, we have helped clients proactively create diverse talent pools across core business functions where we know there will be future demand. By taking your brand to market and positioning potential future opportunities, we can generate the initial interest of diverse talent who might not fit the “square peg, square hole” model but could add significant value to the business, should an opportunity arise, in the future. For example, our clients have found that access to a pool of 20 diverse leaders/executives who have core operational leadership capability, improves the likelihood of “finding a home” for those individuals in the future. Those candidates have specific capability that is relevant to their business and have already expressed an interest in joining that business in the future. This creates a pipeline of ‘warm talent’ who can be approached when the time is right, rather than reactively seeking them out ‘cold’ at point-of-hire.

At Norman Broadbent we are proud of our success in helping different businesses tackle their very current, and very real, D&I challenges. The best long-term approach is to create attractive apprentice and graduate schemes to build a diverse talent pool of future leaders. Whilst good for the future, it does not solve the short-and medium-term issues. By proactively acting now and avoiding the temptation to revert to a traditional process for every hiring decision, there are opportunities to address short-term problems with non-traditional solutions thus laying the foundations for huge long-term gains.

If you would like to discuss this article further, learn more about The Norman Broadbent Group, or discuss specific people or organisational challenges, please do not hesitate to contact Chris Smith via chris.smith@normanbroadbent.com for an initial confidential discussion.

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The North Sea: deal, or no deal?

As 2019 ended, many market commentators forecast that 2020 would be busy in terms of corporate deals and M&A activity in the North Sea. With Big Oil retreating, Private Equity Firms had acquired a number of production assets over prior years, so a number of exits were expected.

The price crash at the beginning of the 2020 coupled with Covid-19, has put the brakes on many deals. But what does the recent reverse takeover of Premier Oil by Chrysaor tell us, and is the attitude of Private Equity firms changing?

IPO exits seems unlikely in the short term, and with many expected floats being paused or shelved, company and investor options have become limited. However, as “Adversity is the mother of invention”, it will be interesting to see how creative companies become, and how PE firms adapt their investment strategies.

As I see it, there are three obvious options: remain invested for longer while consolidating and streamlining operations; find an exit route of some description now; or align the investment model to that of a large infrastructure fund. Following the Premier/Chrysaor deal, PE funds who had not necessarily considered reverse takeovers will certainly be looking carefully at this option. However, there are not many listed companies in the same (precarious) situation that Premier Oil found themselves in …

The announcement of a potentially effective COVID19 vaccine with the resulting increase in demand has got oil analysts excited. Goldman Sachs is forecasting oil will peak at US$65 next year before stabilising in the US$55-60 range by the end of 2021. At this level, well-run and operationally efficient producers will be in reasonable shape. However, if they are run more along the lines of an infrastructure investment, will we start to see big dividends paid to the funds and firms (like HitecVision) that hold investments longer; and will this mean companies need to think longer-term about their assets and how they are run?

To further complicate matters, if you factor in the aging demographic of operational talent in the North Sea and the pace of Energy Transition (possibly accelerated by the Biden victory), the need for businesses to evolve and do things differently is rapidly becoming essential. The Oil & Gas sector has traditionally been a very inward-looking industry; however, lessons can be learnt from other sectors that have adapted to a variety of similar challenges.

With so much to think about, will Leaders within the sector be able to adapt, or will new skills and capabilities need to be developed to capitalise on the market opportunity? It will be incredibly interesting to see how this plays out over the next 12-24 months. With the undoubted twists and turns ahead, Boards, management teams, and operational leaders will need every ounce of resilience and imagination they possess to come out the other side fitter, and more relevant than ever!

If you would like to discuss this article further, learn more about The Norman Broadbent Group, or discuss specific people or organisational challenges, please do not hesitate to contact John Begley via john.begley@normanbroadbent.com for an initial confidential discussion.

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All Change: Getting Transport Future-Fit

The future of mass transportation has never looked so uncertain. By that, I do not mean its long-term viability, more what the future holds and the associated uncertainty. How will transport operating companies adapt their operating models so that they are not only fit for purpose, but also able to take advantage of opportunities in an uncertain future?

Since the UK went into lockdown in March, the transport sector has had to adapt to the significant fall in passenger numbers and contend its public health responsibilities. Unsurprisingly in most cases, standard funding models are broken due to the over reliance on ticket revenues to cover operating costs. With lockdown shifting how we work and socialise, the impact on finances are likely here to stay.

The impact of the pandemic has seen most of us embrace technology and adapt the way we work, socialise, and engage/interact with customers. This full-throated embrace of technology has – staggeringly – seen the value of the video-conferencing software business Zoom at US$115bn. (By comparison AIG is worth a lowly US$1Obn)

The uncertainty around how we will work, and travel, impacts on plans and future investment at both Government and company level meaning our transport clients are focussing on:

  • Understanding their people capabilities by undertaking structured/in-depth leadership assessment programmes. Building development programmes based around assessment outputs against company needs. Building business cases based on assessment outputs to swap out and upgrade
  • What can be learnt operationally from the pandemic; operationally, what should we look like for the near-term ‘new normal’; what does ‘future-fit’ look like; what challenges and opportunities should we be anticipating and how can we exploit them?
  • Funding in the long and short term
  • Post COVID-19, where should we be investing and when?

Our transport clients also feel that they have a duty to support the recovery of the economy by running full services. This is something the sector has done exceptionally well by:

  • Keeping the passenger infrastructure and vehicles clean
  • Providing safe, secure, controlled environments
  • Running full services, where possible, in a socially distanced manner

Despite the above, and the physical testing of transport ‘touch-points’ by Imperial College which showed no traces of COVID-19, public confidence in mass transport is still low. The rollout of a vaccine will go a long way to bring confidence back, however the ongoing impact of COVID-19 will be significant as more people will choose to reduce their time in the office and hold meetings via video conference rather than in person. Whilst history tells us that passenger numbers will come back – as they did following both the SARS crisis and 911 – the consensus from speaking to clients is that 2019 numbers are not expected to return for at least 5 years.

Considering the above, we are actively supporting our clients find solutions to these challenges by helping them:

  • Future proof their business: We are helping clients better understand the capability of their teams through the creation of success profiles (‘what good looks like’), the assessment of individuals against these, and the creation of individual development plans to help raise the calibre of individuals, teams, and the business as a whole.
  • Understand the capability gaps within their own teams: We are supporting clients and helping them understand – at a granular level – the competitor talent landscape. We then benchmark their own teams against the competition via our Research & Insight Practice giving clients the evidence needed to make properly informed people decisions. We build the business for any change.
  • Manage change and transformation: By providing our clients with experienced Interim Managers and independent consultants we can support the development/execution of sustainable change strategies.
  • Develop strategy: Our Research & Insight Practice are undertaking business intelligence projects which are designed to help clients better understand how other companies and sectors have achieved success in, say, digital transformation. They are then using this information to build investment business cases and support the creation of business strategies.

If you would like to confidentially discuss how Norman Broadbent Group could help you overcome your business or people challenges, please contact Nick Behan on +44 (0) 0207 484 0106 or via nick.behan@normanbroadbent.com

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“Heard the one about the weak Board?” Why rigour and independent assessment beat the ‘old mates act’

Norman Broadbent’s Board Practice has been working with Boards for over 40 years to create effective leadership teams, and we are proud to say that we have been at the forefront of the changing face of Boards during that time. We have long advocated for greater cognitive diversity on Boards, having seen the benefits it brings to Boards and businesses.  We are the only UK partner to the UN Women initiative, and one of only a handful of firms recognised by the Hampton-Alexander Review for Diversity. We were also an early member of the 30% club and have seen with pleasure the increased emphasis on diversity in boards – the advances made by the FTSE 350 in recent years, with the AIM market not far behind. As members of the Quoted Companies Alliance we work alongside them to encourage these businesses to adopt the best practice, encouraging diversity but also transparency which is so critical for shareholders and investors.

Our proven search process aims to de-risk board appointments by identifying weak spots in boards existing skill-sets or experience, then seeking out candidates with the relevant skills, and experience to fill those weak spots and create balanced, effective boards. Candidates are assessed against pre-agreed criteria to create an objective process, avoiding the perils of groupthink that ‘gut feeling’ assessments fall prey to.

This approach has been shown to be clearly effective, allowing Boards to move away from their traditional image as ‘old boys clubs’ that are largely ineffectual and allow their members to ‘help out’ their peers, by offering them a largely ceremonial appointment. Today’s NEDs are strategic partners, truly additive to the leadership of their organisation, bringing critical experience and skills which enable their businesses to thrive in an increasingly competitive marketplace.

All of which goes some way to explaining is why we were shocked to receive – in a reputable Board Newsletter that we shall not name – an article titled “How Personal Connections CAN get you a Board Appointment”, claiming that 65% of appointments are made based on the age old ‘who you know, not what you know.’ Without access to the specific studies, it is impossible to debunk the statistics themselves, but it is telling that the original article makes reference to a forty year old publication (Getting a job; Mark Granovetter) who found that 56% of his sample (300 US based Executives) found their current employment through personal connections. While that may have been believable in the 1980s, we firmly believe we have evolved a little since then!

Firstly, these statistics simply do not chime with our everyday, working experience. We are always willing to involve ‘recommended’ candidates into our search processes, should an existing Board member have a colleague, friend or peer they feel would be suitable. That candidate is then put through the same rigorous process as the candidates we have identified. This ensures that the ‘known’ candidate, can be assessed objectively against others, avoiding bias in the appointment. However, the practice is becoming much less common, with only perhaps one or two searches a year including a candidate who has been recommended to the process.

Secondly, they fly in the face of contemporary dialogues around Boards and Leadership. Across the board at Norman Broadbent we are seeing the rise in significance of the Talent Agenda as our clients understand the value of their people and seek to objectify their assessment, development and recruitment processes. Our Leadership Consulting and Research & Insight teams are kept busy from dawn to dusk providing objective hard data for Leaders at all levels. This insistence on maintaining the narrative that ‘personal connections’ lead to appointments is damaging for the industry but also for the reputations of Boards, who have worked hard over the last decade to improve their standing in the face of stricter governance and regulation, following the financial crash of 2008.

Thirdly and finally, any Boards which do recruit in this subjective fashion need to take a long hard look at themselves. They are unlikely to be effective or offer much in the way of good governance. Effective Boards need members with a variety of skills and backgrounds to challenge one another, to approach problems from novel perspectives and to challenge each other’s assumptions. One-dimensional Boards in contrast tend to fall prey to ‘groupthink’, are unlikely to take a novel approach to challenges and are simply less likely to survive in a today’s challenging marketplace.

With any luck, articles like this will not be seen again as the push for diversity continues. Yet it seems incredible that in this day and age we are still refuting this kind of nonsense. To individuals claiming they achieved a board appointment on ‘personal connections’ – isn’t there more pride in achieving one based on your hard-won skills and experience? And if there are any boards out there still recruiting from personal networks, you may want to reconsider your approach, before you get left behind or found wanting …

If you would like to discuss this article further, learn more about The Norman Broadbent Group, or discuss specific people, Board, or organisational challenges, please do not hesitate to contact Angela Hickmore, Group Managing Director via angela.hickmore@normanbroadbent.com for an initial confidential discussion.

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Insurance 2021, Sector Speed Read

During 2020, Coronavirus has impacted everything, and insurance is no exception. Despite a strong start, the pandemic has prompted some to call 2020 “a lost year”. Whilst this may be true in some senses, it has certainly prompted insurers to diversify and look for new opportunities meaning some businesses will potentially emerge stronger and more agile than before.

The most successful organisations will use their hard-won knowledge of 2020 as they prepare to grow their way into 2021. So, looking ahead, what should we expect to see …

THE INTERNET OF THINGS

An increase in data and new technology is allowing policies to become more individually customised, and insurers can minimise risk and improve accuracy by utilising more metrics during the underwriting process. 2021 will see insurers including new data points from the Internet of Things (wearables, devices, social media etc.) ultimately increasing the accuracy of pricing, and incentivising risk-averse behaviours. This should lead to cost saving for insurers and ensuring fairer pricing for consumers

HARD MARKET CONDITIONS

It would be naïve to hope that market conditions would improve at the stroke of midnight on December 31st. Insurers need to be prepared for hard market conditions to continue moving into 2021 which will feature limited growth in some areas and increased premiums. Policies will include new terms to protect Insurers against any further waves of COVID-19. Although higher premiums are expected in 2021, Insurers may increase efforts to retain customers by adding value and enhancing the customer journey. Product innovation and really listening to consumer needs will be more important than ever

THE MILLENIAL GOLDMINE

The Millennial consumer base (those aged in their 20s and 30s) is one of the largest population groups. They increasingly expect flexible and personalised products, and the customer journey is paramount. 2021 will see an even greater desire from Insurers to penetrate this tech-conscious group. Simplifying products, conveying good value for money, and making sure products are attuned to their specific behaviours will continue to be high on the agenda next year

CYBERSECURITY

Cybersecurity will remain high up the priority list for 2021 with many insurers acknowledging that more needs to be done to improve security. Next year will see an even greater increase in demand for top tier talent in this space, particularly those with knowledge of emerging Blockchain technology

ARTIFICIAL INTELLIGENCE

2021 will continue to see Insurers explore – and in some cases embrace – AI and machine learning technology, allowing some areas of insurance to be fully automated. Work needs to be done in 2021 to ensure businesses culturally embrace this technology. For it to be truly successful, customers and internal stakeholders need to be fully educated on its benefits for the long term

ENVIRONMENTAL, SOCIAL & GOVERNANCE

Although not new, ESG strategies will continue to take centre stage in 2021. Customers and investors expect strong ESG strategies and this trend will pick up pace. In the future, underwriting decisions could be affected by their clients’ behaviours related to environment. Underwriters will need to make their clients aware of ESG related risks and work closely with them to create solutions. ESG could certainly create new market opportunities.

In conclusion, the insurance industry is resilient and should be able to bounce back in 2021. According to Swiss Re, global insurance premiums have fallen in 2020 but are set to recover in 2021, with emerging markets leading the way. There is certainly plenty of opportunity moving into 2021, particularly for those who focus on improving and embracing new technologies which will enable the formation of new products to suit a younger generation.

If you would like to discuss this article further, learn more about The Norman Broadbent Group, or discuss specific people or organisational challenges, please do not hesitate to contact Clare Nash via clare.nash@normanbroadbent.com or on +44(0)7483 015591

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