The IoD Board Crisis – Good Governance or a Hollow Victory?

I was surprised on the eve of International Woman’s Day to read about very poor board governance undertaken by The Institute of Directors (IoD),and disappointed by the pace at which this prestigious institution fell into an embarrassing crisis, losing three Board members within two days.

The IoD’s director-general, Stephen Martin, has classed this debacle as “a victory for good governance”. Airing dirty laundry in public, by leaking matters to press and potentially breaching The Data Protection Act, is a hollow victory for a trade body which prides itself on setting standards in UK corporate governance and ranking 100 of the largest UK companies on 47 key governance indicators for the last three years (including transparency, diversity and whistleblowing policies).

Details of draft findings from an independent external investigation into serious misconduct allegations made against its Chairwoman, Lady Barbara Judge, were leaked to the press one day before the IoD council met to discuss the findings. Lady Judge took up the unremunerated post in 2015 and has an exemplary record for championing the diversity agenda – in particular using her position to open doors for women to become chief executives. Ironically she did not intend to seek re-election in May 2018.

The IoD stated that multiple “mostly anonymous” complaints of alleged bullying, racism and bad behaviour were submitted to their HR department last year and were investigated by law firm, Hill Dickinson, under the direction of Dame Joan Stringer (senior independent director on the IoD’s council).

Draft findings from the investigation were released to the IoD council and shortly afterwards leaked to the press, before Lady Judge had seen the report, discussed the matter with the Council and rebutted the findings. The deputy chair, Sir Ken Olisa, called for Dame Joan Stringer to step down. Leaks to the press were also made about a covertly recorded conversation between Lady Judge and Stephen Martin, during which she allegedly makes discriminatory remarks against one black and one pregnant woman on the IoD’s secretariat.

Lady Judge took the decision initially to stand down temporarily, stating the investigation process was flawed, attempts had been made to smear her reputation and her trust had been breached. Within 24 hours of this decision she resigned in protest. Sir Ken Olisa and Non Exec Board member Arnold Wagner resigned on the same day. Stephen Martin later commented that the IoD would make a silk purse from a sow’s ear by sharing the learnings from this extraordinary board crisis with other organisations.

Leakage of board investigations can either be interpreted as a deliberate attempt to defame a hard-won reputation, or a desire to oust the truth which is believed to be in the public interest. It is clear that even the most basic of whistleblowing policies and practices were breached, by failing to include the accused person in the investigation before final decisions on how to proceed were made. Every organisation has a duty of care to protect both parties and treat them fairly. Lady Judge should have been allowed the dignity of rebutting each allegation formally before facing the music, both internally and publicly. It is not clear if Hill Dickinson interviewed Lady Judge, in addition to the complainants, to ensure parity.

If the decision had already been taken to remove Lady Judge at the draft report stage what was the motive for the premature public shaming? It is sure to come out after a hot public wash.

 

One response to “The IoD Board Crisis – Good Governance or a Hollow Victory?”

  1. Russell Dickinson-Deane Avatar

    It’s a wonder anyone wants to give their time to organisations now, especially voluntarily, when you can be publicly condemned without due process. Confidentiality clauses are inserted in contracts and policies for good reasons, and should be respected. The IoD has slipped up badly here.