How balanced is your trustee body?

Mazars' Margaret de Valois has spent a lot of time recently considering the question 'What is a balanced trustee body?'

As an actuary at Mazars I am privileged to work with individuals across a number of disciplines, including those of behavioral science, accountancy, tax, insolvency and the making of a perfect cup of tea (do not underestimate the skill of my colleagues in the latter group.)

When I joined Mazars in September 2011 I made a point of talking to as many people as I could, with a view to sharing skills and establishing whether we could develop products that would be bigger than the sum of our parts. I found two goldmines, one of which was Board Polarities.

The principle of Board Polarities is simple. When a number of individuals come together as a group to make decisions and then implement those decisions, they are often asked to exhibit conflicting behaviors, or strategies. The theory of polarities says that a “balanced group” will make “balanced” decisions within these pressures and so exhibit good governance as a group. 

This struck chords with me, given the Pension Regulator’s focus on governance, and my own belief that good governance is the route to good outcomes. The Mazars model identifies five conflicting behaviors or strategies. A score is given to each five of the conflicting behaviors, with the ideal position being balanced on all five – the “perfect” balanced board.

My team’s challenge was to map these behaviors on to scheme trustees. Interestingly, the fit was pretty instant. The assessment, made up of around 80 questions that trustees answer individually also translated well onto the pension scheme model.  

So how does it work? All trustees answer around 80 questions, answers being on a scale of 1 to 5. This takes about 30 minutes per trustee. The results are collated and presented in a report. An assessment is given for the behavior of the board as a whole as well as for each individual, which gives an interesting insight into the coherence in a trustee board’s view. The useful point about the exercise is that it draws out issues in governance, which lead on to discussions about risk appetite, strategy, behaviors and the practical ability to achieve the funding strategy that the scheme actuary has set. All pretty fundamental stuff.

Interestingly for me, I am yet to meet the perfectly “balanced trustee” and am not sure, really whether they exist.

So the question remains: Does the “balanced trustee” exist?  And would a trustee body work any better if they achieved that elusive score. I’m interested to hear from Trustees who would like to here more about the model. Please let me know.

Contact Margaret de Valois or follow her on twitter at @deValoisPens

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