Lord Charles Allen - The Chair-CEO dynamic: the most important relationship in the boardroom

🎙️ You can listen to the full podcast interview with Charles Allen on Apple Podcasts, Spotify and YouTube.

Lord Charles Allen, Baron Allen of Kensington, CBE, is Chair of Moelis & Co, Balfour Beatty Plc, Global Media & Entertainment Group, and The Invictus Games. Listen to his conversation with Nurole CEO Oliver Cummings to hear his thoughts on:

• As a CEO and NED, what have you learnt from your Chairs which you now replicate as a Chair? (2:26)
• What are the bad Chair examples you’ve learnt from? (5:39)
• What have been your most challenging experiences hiring and firing the CEO? (8:04)
• How do you evaluate incumbent CEOs? (10:07)
• What role do your NEDs play in the CEO evaluation? (12:10)
• What are the most effective ways of developing under-performing CEOs? (13:31)
• Have you ever considered stepping into the Exec Chair role? (17:29)
• As a Chair, are you still too slow to fire people? (20:19)
• What have you learned about assessing prospective CEOs? (21:28)
• What have been your biggest mistakes with CEO succession? (22:36)
• How do you do due diligence for prospective Chair roles? (24:32)
• How does your due diligence differ if your prospective Chief Exec is a charismatic Founder-CEO? (26:38)
• Is there a right time to become a Chair? (27:40)
• ⚡The Lightning Round ⚡(28:37)
• And audience Q&A: first-time NEDs, challenging dynamics, different styles, ESG, regrets, skin in the game & compensation (34:08)

** This manuscript has been generated by AI and contains inaccuracies**

Oliver Cummings: [00:00:00] Hello, and welcome to another episode of Enter the Boardroom with Neuro, the business podcast that brings the boardroom to you. I'm your host Oliver Cummings, CEO of Neuroll, the board search specialist and market leader bringing science to the art of board hiring. Before we get into the interview, I want to let you know about the Neuroll board community.

One of my favorite elements is the Neuroll mastermind. A safe haven for board members to discuss challenges and opportunities with peers. As an observer, I've been struck by how valuable it is to just listen to these discussions, which often make me more aware of my own blind spots as a board member. It was this realization that catalyzed the launch of the New Role Board Community Discussion Forum, where members can seek advice and share experiences on pressing challenges and opportunities.

openly or anonymously. I always loved the idea of being able to tap into the hive mind of the Neuroball community and get its best thinking of tapping into its network to open stubbornly closed doors. Well, now you can. Recent popular discussions [00:01:00] include how to reconcile CEO board differences about a chair candidate.

How do I manage conflicts of interest, as I go plural? What can I do to get our new CEO up and running as quickly as possible? And how to be a good investor director? If you want to know what's top of mind for your board colleagues, or get help with a challenge you're wrestling with, or open a door for you or one of your boards at the click of a button, you can try the community for free for 30 days.

As well as discussion threads, you'll benefit from smart online networking, one to one career guidance with our headhunters, third party board roles, mastermind groups, and Q& As with senior board members. Head to community. newroll. com to find out more. Today's guest, Lord Charles Allen, Baron Allen of Kensington CBE, is chair of Mollison Co, a global investment bank, Balfour Beatty PLC, an international infrastructure company.

Global Media and Entertainment Group, the largest commercial radio, digital, and outdoor group in the UK, THG, an e commerce retailer, and the Invictus Games, an international sporting event for wounded, injured, and sick [00:02:00] veterans. Formerly, he was non executive director at Tesco and Virgin Media, senior advisor at Goldman Sachs, and CEO at Compass Group and ITV.

Lord Allen was also vice chair of the London 2012 bid and served on the London Organising Committee for the Olympic and Paralympic Games. James, a former chair of the UK Labour Party. He sits on the House of Lords Select Committee for Industry and Regulators. Charles, a huge welcome and thank you so much for joining us today.

Thank you, Ollie. Good to see you again. Charles, I'd like to dive straight in with a discussion around the CEO chair relationship. As part of the New Role community we run these online mastermind groups for chairs who can bring issues they're wrestling with and benefit from the experience and wisdom of their peers and one of the topics that commonly comes up is this CEO chair relationship.

I'm curious to hear what have you learned as a CEO and a Ned from the chairs you've worked with that you use now as a chair yourself? 

Lord Allen: I think the chair CEO role is the most important role in the board. And that requires clarity on what the [00:03:00] chair does and what the chief exec does. And put simply that the chair leads the board and the chief exec leads the company.

And where I've seen it go badly wrong is when you've got chairs who really want to be chief execs and there's real confusion. So I think it's really important. And the other thing, To avoid is going into an organization, exactly as I said, where the chair really wants to be the chief exec and starts acting like the chief exec.

There's real confusion. I was a FTSE 50 chief exec for 15 years. I got the t shirt and I knew at that point in time, I didn't want to be a chief exec. I wanted to do other things. I wanted to do boards. I wanted to do charity. I wanted to do other things. And that was age 50. 50 company, age 35. I did it for 15 years, got the t shirt.

And basically I wanted to do something else. And then I had to learn about how do you become a chair, as well as understanding what the role is of the chief executive. That clarity is really important. 

Oliver Cummings: Bring that to life with any examples of specific things that specific [00:04:00] chairs, not necessarily naming them, did that you really liked and took into your own role?

Lord Allen (2): Yeah, I mean, I worked with a guy called Jerry Robinson. So Jerry Robinson sadly passed away a couple of years ago and he was my chairman at Granada when Granada was a group, motorway services, television, whatever. And he, strangely in those days, He was the chief exec who became the chair and I know that's not acceptable now, but actually he absolutely knew that he didn't want to be the chief exec and he knew I was the chief exec.

So that was a great example. And Jerry said, as chair, I will make five decisions a year. That's all. You will be running the business and I will hold you to account. And that was a perfect scenario. I wouldn't name the other chair that I worked with, but actually he would get. In some ways too involved in the business, she would go out and about in the company.

And I would be saying, this old husband painted blue. And he would tell him to paint it red. It was a nightmare because he was confused or didn't really understand the role of the chair chief exec. And when things get tough, you want strong chairs and strong boards because sometimes the chief exec, you think we'll have a few patsies on the [00:05:00] board and that'll be good.

I can assure you that you never, ever want that. You want strong non exec directors who will be there to challenge, but support. And I talk about. Cheer and challenge in equal measure. I want my non execs to cheer my management teams. I think equally I want them to challenge. You gain the right to challenge if you also cheer.

Otherwise the role of the chairman then becomes scraping the chief exec off the ceiling when somebody has been picking away at something and they don't let go of it. So I think it's about understanding the role of the chair, the chief exec, the executive directors, and the non exec directors. And that's a key part of the chairman's role to make sure people are really clear on what.

position you're playing in. 

Oliver Cummings: You touched on one already there, but are there other behaviors that you experienced as a CEO and Ned from your chairs that you now avoid as a chair? 

Lord Allen (2): I think what drives me up the wall is board members who feel they have to make, ask the same question as somebody just asked.

They feel as if they have to be heard and almost the role of [00:06:00] chair is to be the conductor. There's somebody who's always on the drums and they're a bit noisy. And there's somebody who's on the flute who doesn't, you know, play very much, but actually they're very important. So I see the role of chair as the conductor to actually get That happening and get that working well together.

The other thing is in the old days, you used to be able to tell whether the board had read the papers because you could see they'd written or not, or whatever, the problem with iPads and computers now is you can't quite do that. But I challenged the board. I'd like to take my board papers as read. I don't want to go through death by PowerPoint for management.

You're allowed five slides with five points each slide maximum. And I want it to be much more of a dialogue, not a monologue for management. Ways to play the game, I think then become much more effective and you enjoy it more because actually it's discussive rather than death by PowerPoint. 

Oliver Cummings: Very interesting. We, one of the things we have these mass spines dedicated to chairs and what we normally do is we get the paper sent out before. But I still ask people to have spent time reading the paper at the start of the meeting. And for one reason or another, [00:07:00] this particular session was delayed. And so I thought, I know that I'm going to ask them if they've read these papers, because chairs are normally well behaved, they read their papers, and maybe we can cut out that time.

So I said, has everyone read them? And all the chairs said, yes, we've read them. Okay, great. We can go straight to these clarifying questions. And about halfway through these clarifying questions, one of them messaged me to say, Could you send me the paper, please? And I just, my mouth dropped and I thought, my gosh, if even chairs aren't brave enough to say, I haven't read the paper and never mind, they didn't read the paper.

What hope is there for everyone else? And as a reminder for me now, every session, I'll always make sure everybody reads the papers at the beginning, whether they tell me they have or haven't. It's just incredible. 

Lord Allen (2): Yeah, I think it's a really good point because everybody says, and the other thing is sometimes people come late, so there can be reasons, but actually you need to have read the papers and I want you to have the questions in advance.

I don't want you saying, Olly asked that, I'll ask the same question. Yeah, I want you to come with the questions or the points you want to raise to the meeting. And often I'll throw it open to them. I won't actually have the presentation. I'll say, Olly, do you want to comment on this? Or Mary, [00:08:00] do you got a view on this?

And that keeps people on their toes a little bit. 

Oliver Cummings: I want to move on to talk a bit about CEO succession and the more I've thought about this and the more of these sort of podcast discussions I've had a couple of recently with Stuart Roden and Roger Martin, it's really become clear to me that the number one responsibility of the chair and the board collectively, but particularly the chair is to get the CEO.

I'm really interested to hear what have been your most challenging experiences with hiring and firing CEOs as a chair. 

Lord Allen (2): I think for me, it's about. Starting the process early. It's having an honest dialogue with the incumbent chief exec or whatever. They may be coming to retirement or they may have been great at one point in time.

I had a chief exec who was an amazing entrepreneur that actually wasn't a great chief exec. So I was able to then change the role. I was chairman. He then became president and I brought in a professional chief exec and he was very comfortable with that because that wasn't his bag. So you need to look at each individual case on its merits.

And I think the key point is starting early. The other thing to look out for is if you've got a very [00:09:00] strong chief executive, then effectively they're maybe not the best people at bringing the rest of the team through because they're oak like, oak tree like in that process. And that's something where you really need to work hard with the chief exec.

To make sure there's real succession, real internal succession. So I think that internal succession is really important and I very much see that as the role of the, the chair of the company, but often I'm chairman of the nominations committee and I make sure that succession, internal succession is key.

What I also do with the support of the chief exec, I see the Exco and Exco minus one in each of our companies every two or three months. It's a coffee with Mary and just pick up and things. And if you have the confidence of the Chief Exec, they see the benefit of that. If you're more nervous Chief Exec, they might get a bit worried.

And I keep saying, I don't do running the day to day, but it's really helpful. And I call it raffling around. And in addition to that, go out and about and see people in situ, go and see the operations, go to the M25 Beatty, go to our distribution center, go to the studios if you're in media, and that really [00:10:00] is incredibly helpful because you see 360 way in terms of people's skills, experience.

And you just chat to people and pick up on things. 

Oliver Cummings: How do you evaluate an incumbent CEO's suitability? It comes up a lot in these masterminds, people wrestling with, Oh, they're doing a good job, but are they right? Are they going to be right for this next phase? Like, what's your process for evaluating a CEO's suitability?

Lord Allen (2): It's almost what I've said, what you need to do is not only talk to the board, the directors, You need to rattle around the company and understand where you think you've got strengths and where you need areas of improvement. And I think nobody's perfect. We always look in a recruitment process, there must be an amazing chief exec out there.

She will do this. He will do that. Well, life's never like that as such. So I think you need to look at what have you got to start with and be really clear in terms of where they need to improve. You need to praise and say, you're very good at A and B and C. D, I think we can work on this better and E and F, we really need to do it.

And that requires you being honest and that's a soft word, but it's really tough [00:11:00] to be honest. Most people duck that. And I think what I've learned over the years is the more honest you can be in the feedback with the chief executive, not behind his or her back with a board is saying, this is what I'm picking up.

How do we deal with, and maybe the perception is wrong. And I very much see my role as chairman and I joke about being the mentor. And the tormentor, the mentor is putting my arm around his or her shoulder and basically saying what can we do together? And the tormentor is me tapping the desk and looking after, looking over my glasses and saying, come on, we've been talking about this for three months now.

When are we going to see some action? Well the tool is humor. I do it with a bit of fun. And I use humor in the boardroom to lighten it, and it allows you to have those more difficult conversations to make sure you really are making sure it's happening. At the end of the day, it's about performance, but it's not just about the numbers.

You need to perform in the right way with the right culture. Not a chief exec, but a very senior commercial director. I had to find Fire and the chief exec was very uncomfortable. I said that I am not comfortable with his behaviors and how he gets his results. And that was a tense moment for [00:12:00] myself and the chief exec.

I said, I'm not happy to be involved with somebody who's getting these results in the way they are. And therefore that's when you get those, the relationship really matters and you have to make the tough decisions. 

Oliver Cummings: The way you described that sounded like a very effective approach to man management or person management.

One chair I know has a an in camera session every quarter where they get everyone in the board to traffic light the performance of the chair, so red, amber, green. How much do you use your non execs as chair to make that assessment versus actually it's your one to one interactions with them and those around them?

Lord Allen (2): Very much. It's not just about me. So I think I take that much more regularly than that. I would do an in camera session every second board. So I would get feedback, the chief execs, and initially, sometimes I'm uncomfortable with that because saying what's being said behind my back. And I'll say to them, these are the things that came up.

I don't say she said, he said, whatever. And you'll position it in such a way that's a positive conversation. [00:13:00] And you're saying, A, it was good. B, we can do better. I don't want too many C's. And you have a knownest dialogue. So it's not just my view, it's the view of the non execs. And it's not just the view of the non execs.

It's the view of the team when you're out and about as well. So that, that rattling around thing for me is crucial. And to say it's done positively, if you like, cause I'm there to support the chief executive until it's untenable or things move on or whatever. I've been pretty fortunate. I haven't had to fire.

I've had to change the role or do other things. I've never needed to fire a chief executive. 

Oliver Cummings: We had an interesting discussion with one of the masterminds recently with a chair having questions about their CEO and they were weighing up how much should it be them stepping in to help develop the CEO and how much should they bring in outside coaches, consultants to train and educate them on their gaps.

What have you found to be the most effective ways of developing a CEO who was not yet a mastermind? High performing. 

Lord Allen (2): I think as I say mentoring to mentor I do both. I see it as my role. I'm actually I do mentoring for other an organization and they have an interesting model [00:14:00] where effectively the individual gets two mentors and effectively very different backgrounds or whatever and that model works incredibly well.

But I think it's also the role of the chair that you have to play that mentoring and support role because you're on the ground and you see it happening. And if there is a mentor, you need to be very honest with 'em. In terms of saying, here are the three things that Jane or Ollie needs to focus on.

Their model is you meet, say it was the chief executive organization. Uh, the two mentors meet the, the chair twice a year. And it's quite scary, although the two mentors don't speak to each other, how aligned we are. You can put a cigarette paper between us. In terms of what we're all picking up on. And again, to be an effective mentor, you need to get the trust of the individual.

So 50 percent of the time I spend with the mentees is talking about life, family issues, and helping them with some of the area. One of them I'm working with at the moment is she's amazing, but she tries to do everything. And our chief exec saying she's a visual chief exec saying she can't do everything and she won't have the bandwidth if she's going to be the chief executive.

To do all of [00:15:00] that. So it's amazing how you can focus on it. The other thing I focus a lot on is how do you spend your time? How do you manage, you know, are you focusing on the right things? And when I do chief exec mentoring, I ask them to tell me what are the things they're really focused on? They're green.

Amber, what are the things that you don't really need to do, but you do? And board meetings or meetings or whatever, red are the things you really could you delegate? And one of them six months ago said, Charles, I've added blue to the color coding and blue was just time to prepare. Yeah. And I think it's about helping them look at, are they really focusing on what you think the board think they should be focusing on?

So that, that sounds very boring and practical, but actually are you really effectively spending your time? The other thing I do with diary management is encourage them to think in quarters. A year's too long, days in online companies is a lifetime. So I think, and I worked in the Middle East a hundred years ago, and you worked for 11 weeks, you had two weeks off.

So I think in quarters, what are we going to do January to March? What are we going to do the second quarter? So I think in quarters and otherwise everything gets deferred, [00:16:00] everything gets delayed. So helping people really manage the time I think is really important. That's back to this mentoring role with my own chief execs and members of their team.

Oliver Cummings: That resonates so much. It reminds me actually, I had a real penny drop moment reading. There was an HBR article on how CEOs manage their time. They'd benchmarked across the highest performing CEOs. And I mapped my time against theirs and most of them were much larger companies, but actually it suddenly made me realize I wasn't spending nearly enough time on strategy.

And so I now block out. day a week on strategy because that's most CEOs are spending 20 percent of their time on strategy and it's so easy to get sucked up. The point there was this idea of having two mentors there so that even if the CEO can turn around and dismiss one and go, what do they know? But if they haven't taught, it's quite hard to dismiss two who've reached the same conclusion.

Is that why you have? 

Lord Allen (2): I think this particular model for this company, I think what It's incredibly well, and also you don't necessarily tell their chairman everything, but interesting. You're saying, what are the challenges that John has or what Mary has or whatever? And you start with that premise and also you ask them, cause it's interesting whether their [00:17:00] boss had a situation where actually it was the chairman who was more of a problem than the chief exec because the chairman had never actually said to the chief exec what he said to us.

So sometimes people back to that point of honesty haven't actually said this isn't working. They haven't actually had that conversation nor had the board or nor had he, in this case, taking input from the board. So it allows that conversation to happen. But I think it's, I don't think it's one way to do it, but I do think the chair has a key role to play in this mentor and tormentor thing, as I joked about.

Oliver Cummings: Have you ever had to consider stepping into 

Lord Allen (2): an executive chair role? I have a phobia about that. There's people around who, that's their MO. They pick a company, they know it's a weak chief exec, and they go in, and six months later they fire the chief exec. And seemingly, they obviously don't use your role.

Seemingly takes them two years. To find a good chief exec. Meanwhile, they become executive chair and they'll be taking the salary. I absolutely abhor that. That's not the role. If it was an emergency, God forbid anything happened, then you need to be available. I did that once and that was an emergency. [00:18:00] It was EMI music.

I became executive chair. But that was for a very short period of time when it was going through real financial. Difficulties and there was nobody else to take it. And I had to find financing. This is what it was owned by private equity. So you need to do it in extremis. I don't think that's the best MO because what it does do is makes the chief exec nervous that the boss, this chairman wants his job or her job.

Oliver Cummings: We had a mastermind with a chair who is debating exactly this. They were debating whether they should train up the existing CEO who they felt was just not there, or they felt like they were being pulled in by the stakeholders to take the executive role. Apart from an emergency, can you ever see a situation where it would be the right thing to do, or why do you think the chair should remain?

Non executive. 

Lord Allen (2): I think because they're two different roles, as I said from the beginning, I think if you blur that's not great, but it's an extremist you might need to do. There'll be situations where the shareholders may put the shareholders, the private equity, the private company may put the chair under inordinate [00:19:00] pressure to do that, to actually make a move.

And I think you need to, with your board colleagues, make a decision of that. Do we want to really try and make this work? Or have we got to a point where we're not going to make this work? And I think one should make those decisions that the actions follow from that. That's why, but things don't happen overnight.

The big mistake I've made in an executive career is not making those tough decisions early enough. Cause I like Ollie, I think he's a really good person. He, I think he's got potential. But that never seems to come through and then you're six months into your nine months into an era and you've not made the decision.

So it's easier for the chair then to say, come on, that person in your team simply isn't going to make it. When are we going to make a tough decision on it? And it's easier when you're one step removed because nobody wakes up. I didn't wake up this morning. I'll get in fire thousands of people in my various companies.

And you don't want to do that, but I think sometimes it's the right thing. And often when I have done it and a number of people that I've hired over the years basically became friends because they [00:20:00] were, they knew they weren't performing, they weren't in the right job and that honest dialogue was better.

And I've got some more recently where once they know they're going, they actually end up doing a better job. It's really quite a strange thing because the pressure is off and they become themselves, they become authentic and they can do better. But because the pressure was so much, that precludes them from really delivering.

Oliver Cummings: Reminds me of a coach I work with who challenged me when I first started in the CEO role and said, how many people have you fired where you've been too early? I thought, you know, how do you know that you're pushing far enough? Do you think as a chair, you've got better at that of not being late with those firing decisions versus you said as a CEO, you were too late, or do you think you still are on the side of being too late as a chair?

Lord Allen (2): I think I'm proved in that area. I think you have to have milestones. So actually said, you're saying it's three months, six months. I need to see this being delivered and that can be change of attitude, change of culture. The performance, numbers performance is a different issue because actually you can see it's very obvious, but does he or she get followership?

Is that [00:21:00] team going to be behind them when things get tough? And I say, having done it over many years, you just realize that it is better. The strange thing is people say, my God, why did it take so long? Colleagues say, my goodness, you put up with that for so long. Why? Because everybody knows. And you, if you rattle around, as I said earlier, you'll pick that up.

Your colleagues will, wouldn't be inappropriate, but you'll know whether it's working or not. And you have to then say, okay, two options. Here's what you need to do to deliver, or we need to be thinking of a different option. 

Oliver Cummings: What have you learned about assessing a prospective new CEO that wasn't obvious to you when you first started?

Lord Allen (2): I think the interview process is a particularly false process. You're on your best behavior, they're on their best behavior, and everybody's presenting, it's all wonderful. And then you compare it to what you've got, and you're like, that'll be amazing. I think you just need to put a lot of time into it, and you need to use your other colleagues.

to get them in. I would have multiple sessions, both personally and with colleagues, just to get them to maybe two at a time, non exec and a potential [00:22:00] chief exec, just to get different people's perspectives. The other thing I like to do is if you get to last two or three is I want to travel with them. I want to be in the back of a car.

I want to be in a plane. I want to be whatever. And sometimes what I've done is say, I want to meet the partner. Let's have dinner just because you see people in different lights. And often we've done things like they bring the family and they come for a barbecue, just how to see people in different environments, because it's quite tough to keep that mask up.

And I find that to be personally very helpful when you're making really, and the biggest decision the chair makes with his board or her board is that, that appointment, as you said, when we started the conversation. 

Oliver Cummings: So what, when you look back at. All the sort of CEO succession planning you've done, what have been your biggest mistakes?

Lord Allen (2): I think I touched on it briefly earlier, not starting it early enough, because you, particularly when people are doing a good job, whether they're coming up to retirement or whatever. And then, and the other thing is the chief execs themselves, then if they're coming up to retirement, they don't want to make tough decisions about their own team.

So effectively really [00:23:00] need to have an early decision. discussion with the chief exec in terms of what he or she wants to do and manage it professionally. And I've just done it in one of our companies where effectively we started the process. We've just announced it and we started the process two and a half years ago with the chief exec, with the private company.

And that's worked incredibly well because there was a lot of openness, a lot of honesty in relation to what do we want to try and achieve here. Um, and so I think it's building sufficient time. 

Oliver Cummings: Why aren't you starting it on day one, the day they're appointed? 

Lord Allen (2): I suppose you do that anyway, but then you need to make a decision.

The day they come in, then you're gone going assessment, but you're not necessarily going to do succession immediately because if you think about it, you brought a chief exec in, it'll take them a year to get their feet under the table, at least the second year, you'll start to see it hopefully coming through in the third year.

And then you can do a proper assessment because they need to understand the business, uh, and you need to understand them. So it takes a period of time. Although I say move quickly, you don't want to move, you don't want to need And you need to build in time to [00:24:00] develop if you think it's, if that's the appropriate course of action and you need to get your board aligned to that.

What's the worst of all is you've got a board of six people, three think he or she has to go and he thinks they're very good and no, you won't be aligned. So how do you get some consensus in the boardroom about how do we want to. Play this out with the chief exec and or members of his board, such as the chief exec, the CFO and other executive board members, including their ex co.

And that's why I encourage chief exec to bring the ex co. I want to see the ex co perform in the boardroom and take us through their businesses. 

Oliver Cummings: Charles, time is flying, but before we go to the lightning round, I want to quickly pick your brains on how you go about picking a chair role. This was a question that recently it came up in our community forum where members can ask questions anonymously to the new role community.

The question was around how do you go about doing due diligence on a prospective chair role? What have you learned that you didn't know at the start of your chair career? 

Lord Allen (2): And I think I see it in two ways. There's this dating part of it [00:25:00] where you're putting yourself forward and you're selling yourself.

You're a bus salesperson and you're selling yourself. There's a point there where it flips and you then need to say, okay, what do I need to know more about this company? And that's spending time with the chairman and spending time with the chief executives. Spending time with the board as much as you can and glean as much information as possible in spending time with the auditors.

So they actually have a session with the auditors. You want to understand what's there because the worst of all worlds is for them. And you then you think what I've inherited isn't what I thought I was getting. Strangely in a listed company where there's a full board, that's somewhat easier than it may be in a private company or a private equity company, but the model is still the same.

You need to basically get as much input as possible and you need to challenge at that point in time, where is the balance sheet? Where's the cash flow? Where are the dead bodies? Cause you don't want me coming in as a chair and then I find it. So there needs to be that moment of honesty or a period of honesty, and then you need to make the assessment.

Is this what you want to do? Strangely, a bit [00:26:00] odd, in the sense that I've got two opportunities. One's one that I think I could do, and one's a tough challenge. Then I will tend to take the tougher challenge. I like the challenge. And that's why I tend to do a number of these things. And people say, why did you do this?

Or why do that? I'm somebody who's driven by the fear of failure, but rather than the need for success, but I will always go for the tougher challenge, cheering me. Managing Board of the Labour Party, cheering some of the companies I've cheered over the years. They're tough challenges, but for BT, really great business.

9 billion turnover and a 2 percent margin is a tough gig, but really enjoy that challenge. So basically make sure you're up for it and you know what you're getting into. 

Oliver Cummings: Is there anything different about an organization where you have a founder, CEO, you've worked with some very, I don't know if headstrong is the right way to think about it, but as creative individuals?

How does that process vary when you've got that sort of dynamic at work? 

Lord Allen (2): I think if they're still a major shareholder, it's quite difficult. Uh, the one company I mentioned earlier, they [00:27:00] were, he and his wife owned the business. So you had to then transition them into a different role. But it's about that honesty.

It's about the relationship as such. And very often we're all dealing with a private equity or, or listed. Very strong individuals because back to where we started the conversation, you need to have that honest dialogue so that we can actually then move it in the right direction. And truthfully, if they're the owner or major shareholder, they want the right thing, but you have to help them develop where they're the best and where they could get support and help.

Oliver Cummings: And for listeners considering a future transition to a chair position, what advice would you give them around when's the right time to do that? 

Lord Allen (2): I don't know if there's a right time, but there's a right mindset. And I think a lot of people say if you rush from being a chief exec to being a chair, That's a bit of an issue because you're still in chief exec mindset.

Some people have been able to, I was fortunate enough to be able to go into advisory and government roles between being chief exec for the company and then taking on [00:28:00] various chairs or advisory roles, Goldman Sachs and Wallace and whatever, so there was a transition period where you had to then think about, I need to influence.

Not direct, and that's the big difference, I think. And that's why a lot of companies for a period of time have looked at the CFO becoming chair over sometimes the CEO, unless they've gone through a transition period to actually address that. Cause it is different and some people don't enjoy that. They actually, the best job ever is always the CEO, but I've really enjoyed over 17 years, this portfolio, uh, management as advisor or chairman or non exec or whatever, and that's been fun.

Yeah. 

Oliver Cummings: Charles, it's time to move on to the lightning round, where I'm going to say a short statement and ask you for a quick response if you're ready. Best book every board member should read? 

Lord Allen (2): I'm dyslexic so I don't read much. I think there's one that I read quite recently before my ISA. How big things get done.

And the reason I read that was I really wanted to understand going into Balfour Beatty is a multi billion pound contract. So what's different about [00:29:00] big things getting done and that's a good book. I think it's Ben Fleiberg wrote it and he talks against very good practical examples in terms of things like the iPod was created by one person launched in 11 months and some of the simple things he talked about was plan slowly and act fast and sometimes we do the opposite.

Think from right to left. Think of where do you want to get to and work back. There was a couple of things there that just simple things that resonated. My partner basically is a Lego fanatic. So basically he talked about finding your Lego because big things are built from small pieces. And that really, really resonated.

So those would be a couple of things that I remember from the book, but it was just simple things that you think I can remember that all such. 

Oliver Cummings: Boardroom 

Lord Allen (2): behavior that irritates you most. I think I've touched on that. People repeating each other. It just drives me up the bloody wall. Hey, the question did ask, as you manage AGMs as a chair, you have to realize that you're probably going to get the same threat pressure three times.

I don't get upset with my shareholders. I said, that's a really good question. Again, I don't quite say again, but that's a really good question. And respond to them with respect. The boardroom. [00:30:00] Things that have already been asked and don't ask the same question. Most valuable board ritual? In a lot of my companies, one of the things that I really value is health and safety.

It's very valuable. So every meeting, not just board meetings, starts with what we call a health and safety moment. So there's something around the world. ISS was something I started many years ago. Uh, 500, 000 people in 50 countries. Every meeting in every language started with a safety moment, and it was just about making sure that people understood that lives can be lost.

And very similarly, Balfour Beatty and some of our other businesses, that health and safety moment, I think was a very important ritual, if you like. Favorite quote? I'm a big fan of Nelson Mandela. I think the quote was something like, it always seems impossible. until it's done. And I think that's back to, you know, when I'm interviewing people or whatever, I like to recruit people who don't know they can't do it.

The really bright ones will tell me 10 reasons why it can't be done. I want to know. I know it's impossible. I know it's, I know the industry's in decline, in terminal decline. How are we going to turn it around? So I think that would be the one that I'd probably focus on. [00:31:00] I think it's all about people, stupid.

It really is about, you know, you can have, you can have an amazing strategy, but not the right people. I'd rather have a poor strategy and the right people, because the right people will change it. So it's all about people, uh, and making sure you make the decisions we talked about earlier to get the right people.

And importantly, the right people in the right job. Because sometimes it's your responsibility. You've put him or her into the wrong job. And therefore you need to take that responsibility. Worst professional advice you've ever received? Probably with some of the roles I took on, don't do it. And therefore that motivated me to go and do the tougher job as such.

There was some of the jokes I've taken on. Our friends have said to us, what the hell are you doing this? But I've really enjoyed it. That's it. I suppose it's, I suppose it's a personal thing in terms of the imposter syndrome. I came from very humble beginnings and you think I'm doing this now and I'm cheering that I'm doing Lords or whatever.

I still in my sixties want to prove myself. I can do it. 

Oliver Cummings: What have you changed your mind on about boards over time? 

Lord Allen (2): I think as a chief exec, as I said [00:32:00] earlier, was maybe you didn't want such strong non execs, and I've obviously changed my mind in terms of not just as chair, but I thought when things got tough, if you had good, strong non execs, then that, that's very important.

And the other thing as the chair, and we haven't touched on this, is to make sure that the chair kills any politics. I was in a board where we merged two organizations, and it was probably the worst time in my career because you had complete politics at play at every board meeting. It was a nightmare. So I think the role of the chair is to kill politics.

Oliver Cummings: When was the last time you got a significant judgment call wrong in the boardroom and what did you learn? Gosh, I'll probably have to go back 

Lord Allen (2): a while. It was when I was at ITV and effectively I got a call to say that there was three players in ITV, there was Granada, Carleton and United. And basically I got a call in the evening, I might have had a dinner part ago, to say basically Carleton and United are coming together.

There'll be 60 percent and you've lost 60%. The race for ITV. And I thought, Oh my God, I've just got this so badly wrong. I thought I'm consumed by it. I'd say probably the reason to tell you that is actually we were then able to, we were then [00:33:00] able to buy either Carlton United and we then became, Granada became ITV.

So that moment in time, I thought, Oh my God, I completely didn't see this coming. Um, 

Oliver Cummings: How are you better today as a board member than when you started? 

Lord Allen (2): Oh, nothing. I'm better. I still feel that there's more to be done. I think I'm still learning. I think the reason I do it is I'm learning every day. And what's great about portfolio is I take, I steal with pride.

I take from company and I take that idea to company B and I take it to company C. I steal with pride and I'm always learning. 

Oliver Cummings: Finally, three things our listeners should take away from this podcast. If they take nothing else, , they probably won't take nothing 

Lord Allen (2): else. That's another question. I do think, I know it's a joke, but I do think this mentor tormentor thing is quite important how you balance that in terms of, and the jokes around the tremend, but that's about, you know, driving things through.

The second thing would be don't be afraid to ask for help. Asking for help is the most empowering thing that you can actually do, and. I briefly touched on humor, using humor for HQ is the, I think it's now [00:34:00] being referred to, is a really powerful tool. And if I'm allowed four, treat people the way you want to be treated yourself or you would like to have been treated yourself.

Oliver Cummings: Charles, we're going to move on to the questions, which I can see have been coming in and I can see being voted on. If you haven't got your question in, or you haven't been voting them in. Please upvote those you most want to hear. I'm going to start with the number one vote there, a question from Eddie Norton, which is a question on balancing board.

How do you balance the ball between long tenured Neds and fresh or prospective Neds, where this could be their first board role? It seems many chairs tend to be cautious in taking a risk on first time Neds, preferring those with existing experience. 

Lord Allen (2): I think it's really important that you bring people on board.

I think two things, one is the pacing. One of the problems I've had sometimes is they brought, maybe a new company was created, uh, as it was in, in one of the companies I currently chair, and therefore they all came on more or less at the same time. So in terms of tenure is important, but recognizing that effectively you want people that are going to be there three, six, nine years, and it's not automatic.

And then I think you can afford to then bring people in who've never done it [00:35:00] before. But what you want is. I want people who are inquisitive, and if you look at the businesses I'm in, then I want people who don't necessarily need to be, have the board experience, but I do need them to understand. And I don't just see them in the digital space, bringing different experiences.

I want them to be challenging, inquisitive, curious is important, but then also having done their homework. I interviewed somebody quite recently who clearly haven't even looked at a website. So I want them to actually come and challenge me. And particularly as a new need. Then do your homework. Literally understand what are the challenges for the business and go beyond what's on the website as well.

Oliver Cummings: Yeah, I'm always an advocate of that Fisher scuttlebutt talking to suppliers, competitors, disgruntled former employees to just get a different perspective. Emma Fitzgerald has got the next most upvoted question, which is what's the most challenging board dynamic you faced in a meeting? And how did you navigate it in the moment?

Lord Allen (2): I think when you've got two, there'll be a number of examples, but when you've got two non execs who have [00:36:00] completely diametric views on something, and it's how do you diffuse it? How do you take on board what they're saying and their point of view, and how do you diffuse it? And therefore, that's about listening to both, allowing them to articulate their argument and then taking it off because if you get into a head to head in the boardroom, that's not the best way to address it.

So, it's when you've got, and I encourage dissent, I encourage a lot of board chairmen, Don't want that, you'd like everybody to agree with vanilla. Um, but I don't like, I like challenge, but it goes back to my point earlier. Cheer and challenge equal measure, treat each other with respect. What I don't like is when, if people then are personal or it gets a little bit silly.

I've been fortunate enough that the boards I've had, we haven't had that, but I've had a couple in the past where it just clearly wasn't working, the chemistry wasn't right between directors and therefore that needs to change. So is that, that how you navigated it? You did change them. For the issue I took off offline and then basically [00:37:00] one did require to be changed.

Uh, and if I take an example, I chaired a very big charity and they, nobody had really defined what the role of the non execs were. And that was probably one of the most political things I've been involved with, even more so than the labor party, believe it or not, the charity world. And people think, Oh, it's a soft option, run a charity, chair a charity.

That was a tough gig. So be. We've gone back to your due diligence, be very careful that you get the right charge and you understand that I had to then make fairly significant changes there because people weren't clear on what their draw was as a non exec. 

Oliver Cummings: Next most upvoted question comes from Royston Donnelly.

What makes an outstanding CEO today beyond delivering and over delivering the business results? 

Lord Allen (2): For me, it's basically getting that followership right up there would be, I differentiate followership from leadership, but basically will the team, will the company, will the clients, whatever. Followership isn't just people in the organization.

Followership is taking clients with you. Will we get followership? And if you've got somebody who's got the skills, the [00:38:00] knowledge, skill, experience, and communication skills, and emotional intelligence, and the HQ, as I said, and humor, to take people with them, that's to be as important as the technical skills.

I think you can draft on. technical skills or industry. So I'm a great believer that you don't need to have been in banking all your life. You're not, you've been in hospitality all your life. If you can manage people, you can lead people and get followership. That's the most important skill. 

Oliver Cummings: Which I guess goes back to what you were talking about earlier around seeing the full 360 picture of them, that family connection, that social environment traveling with them.

Next most upvoted question comes from Bavin Shah. Do you have to adapt your chairing style depending on the company, whether it's PLC, owner owned, charity, etc.? 

Lord Allen (2): Yeah, I think you do. You have to adapt. There will be similarities, but there will be differences. We talked about founder owners, private equity, listed companies, charities, government departments.

Some differences. The majority, 80 percent probably the same, but [00:39:00] understanding the individuals and understanding when to push and when to pull back. Uh, and one of the things my chairman, Jerry Robbins, did brilliantly is Jerry never needed to criticize me ever. And in the years, we were 15 years, we worked together.

He never, because he knew I was my biggest critic and therefore knowing how to motivate people to do the right thing is a key. 

Oliver Cummings: Next question comes from Mary. How is the role of the chair navigating sustainability governance, driving forward sustainability initiatives, effectively fostering collaboration and aligning board dynamics with.

Organizational sustainability goals. 

Lord Allen (2): I think it's a really good question. I don't think there's an easy answer to it. I was discussing with one of my shareholders yesterday, if you're a global company, you've got different pressures in terms of in the UK, sustainability is very much on the agenda for that.

government or whatever. In America, it's less so. How do you create a global agenda around sustainability? I think in most of my businesses, in terms of scope one and scope two, then [00:40:00] I think you can see real progress. The difficulty comes in scope three, where you have to take a lot of people with you on a journey through your supply chain.

So that's a real challenge, but I think it's still a challenge. Start at the top and the chief exec needs to buy into, that's what we're going to do. And you need to have a detailed plan to achieve it. Now that plan will change, but you need to have a plan and you need to review it regularly. Most, in fact, all of my companies, we have a sustainability, either health and safety and sustainability or a sustainability company, sorry, a committee, and actually then really making sure that's a legitimate, not just for the committee, the chief exec needs to hopefully buy into it and you need to review it regularly.

Oliver Cummings: There's one quick question that got submitted from the community before the call that I was reminded I should be asking you, from David. Are there any non executive chairman roles you've regretted taking, and why? What would the learnings be? The 

Lord Allen (2): honest answer is no. There'll be moments where I've thought, God, why have I done this?

If nothing else, I'm an old goat in that sense. I'm a Capricorn, so I stick with it. And managed through it as such. So there has nothing I've not moved on other than retiring. [00:41:00] I've not thought, Oh gosh, why did I do that? So I think that I'm sure there were moments where a number of them I thought, God, why did I take this one on board?

But no, overall I've enjoyed it. I enjoy the challenge. As I said earlier, it's the challenge of it. If it was easy, I wouldn't enjoy it. I'd get bored and therefore I've, I've deliberately, but I've chosen what I want to do. I know it's going to be a challenge and therefore that's the fun bit of it. 

Oliver Cummings: Question from Rachel.

Does the chair have personal accountability for organizational performance, ESG performance, and culture? The CEO could lose their job, remuneration, reputation. What's the skin in the game for a board chair? 

Lord Allen (2): I think you've got a much reputational issue. We've seen some of the disasters recently, and it hasn't just been the chief executive that's gone, it's been the chair as well.

So there's a reputation issue for the chair. So I think there's definitely some skin in the game, because if you're screwed up somewhere, you're not, there aren't many places to go if you're looking at listed companies. So I think arguably that's as challenging for the chair as the chief exec. I think there is skin in the game.

We're reputational. I don't just mean personal reputation, but in terms of the culture is a good question, [00:42:00] I think the chair has a key role to play with the chief exec on the board, the culture of the organization. When things have gone wrong, something's smelly in the culture. And that's why you want to rattle around and understand what's going on.

thing, are we doing the wrong thing? If you're not going to be found out doing something, do they do the right thing or the wrong thing? So there's a key role for the board to actually then understand whether people do the right thing. 

Oliver Cummings: Interesting discussion going on around compensation of boards at the moment.

You've worked across both private equity and listed boards as well as pro bono boards. How, what do you think the best compensation model is for a chair? 

Lord Allen (2): Because I've done private equity and whatever, I think if you're listed, then frankly, it's a fee. That's it. You can take your fees and shares, but it's a fee.

But what I also would encourage people to do is I'd like to see, I invest in the businesses that I'm involved with. So I want to see, uh, when I look at organization, I want to see the chair. Is it invested personally as well? So I think that's one thing chief execs is a different issue. I [00:43:00] want them to make good, serious money if they're doing well, and I want to make much less serious money from the note.

And that's the tough decision that the chair has to address. And in one organization that was in, we had a weak chair, it was a non exec director. And he didn't challenge the chief exec enough. And basically they just wanted to pay more and more. And I was the chairman of the remuneration committee and I wasn't up for that.

Saying I had absolutely no problem in making X million if we're doing well, but they don't make X million if we're not doing well. I 

Oliver Cummings: think you've covered that question on who's responsible for setting the culture. Charles, this has been a particularly special episode for me. You were the first chair I ever met.

I remember walking into the room, fresh out of university in my first job as a private equity analyst. And you were the only person in the room when I got there. I remember you introduced yourself to me as Charles, the new chair, and I responded by introducing myself as Ollie, and I'm just the analyst.

And you quickly reprimanded me saying, Ollie, if I were to introduce myself to you as just the analyst, how are you going to engage with me? But if I introduce myself to you as the analyst who is going to play a critical role in [00:44:00] determining the success of this investment, how are you going to engage with me?

It was such a wonderful lesson about how the importance of self framing can change how you're perceived. And it's stuck with me almost 20 years later. And I think the story is also symptomatic of one of your great qualities, which in my experience is common to all of us. Almost all the best CEOs and Chairs I've been lucky enough to work with.

You make time for others, even if they are just the analysts, and you do that fostering fellowship. So I wanted to take this opportunity to say thank you for that, and as well as thanking you for today. You've done an amazing job of covering all those questions. Thank you so much. Thank you, Ollie, and thank you all for taking the time to listen.

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