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POST OFFICE LIMITED
BOARD REPORT
Title: Board Evaluation Report 2022/23 Meeting Date: I 6 June 2023
. I Rachel Scarrabelotti, Company . zl
Author: Secretary ' Sponsor: Henry Staunton, Chairman
Input Sought: Discussion/Decision
The Board is asked to:
. NOTE and DISCUSS the Board Evaluation results for 2022/23. The Committees will
consider their reports and proposed actions at their next scheduled meetings; and
. APPROVE the recommended actions to address points raised and areas which may
require development.
Executive Summary
The 2018 UK Corporate Governance Code and the Corporate Governance Code for Central
Government Departments’ both stipulate that there should be an annual evaluation of the
Board and its Committees which should be externally facilitated at least once every three
years.
The Board questionnaire for 2022/23 mirrored that for 2021/22 to allow comparison across
years.
The Board Directors and Ben Foat, Group General Counsel, Tim McInnes, Strategy and
Transformation Director, and Zdravko Mladenov, Group Chief Digital Information Officer, who
have been regular attendees at Board meetings, were invited to participate in the Board
Evaluation which they did.
Progress against actions from the Board Evaluation of FY21/22 were previously reported to
the Board at the Board Meeting on 24 January 2023 and overall progress this year is reflected
in the summary below.
All sections in the questionnaire? overall achieved an average score higher than 3 (“good/at
the required standard”). However, some individual questions had average scores of below 3
(2 = “requires development”).
Report
Board Directors were pleased about a number of aspects of the way the Board operated
during FY22/23 including:
(i) the continued focus on the resolution of historical matters;
(ii) the level of contributions from Directors across the Board;
2 Provision 21 of the UK Corporate Governance Code 2018 and paragraph 4.12 of the Corporate Governance Code for Central
Government Departments.
2 A, Skills, experience, diversity, knowledge B. Leadership, ways of working, time management C. Decision-making and risk D.
Specific Questions for NEDs, EDs and UKGI representative E. Information and support F. Stakeholder engagement
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(iii) the clearly apparent time and effort Board colleagues spent preparing for
Board meetings, as well as the time and effort Board members invested in
engagement with the business outside of Board meetings;
(iv) the decrease in the length of Board packs;
(v) the Executive directors noted the support of the independent Non-Executive
Directors;
(vi) the contributions of the Postmaster Non-Executive Directors, particularly in
bringing the Board closer to the business;
(vii) the Board recognised the diversity and strength of skills that were utilised by
the Non-Executive Directors across the Board, and that the Non-Executive
Directors were there to support and assist.
Responses revealed an overall sense of pride across Board members at what the Board had
achieved, despite continued and varied challenges during FY22/23.
Points raised/ areas for development:
1. Board Agendas could be re-shaped to allocate more time to discuss strategy, trading
performance and the long-term sustainability of the business, with less time allocated
looking in the ‘rear view mirror’;
2. Whilst the length and content of Board packs has improved this is an area where further
progress could be made. Comments were made that the Board papers at times
appeared to be recycled Group Executive papers;
3. The Group Executive and management would like to work in a more cohesive way, with
the Non-Executive Directors further developing their professional relationships with the
wider Group Executive and the Senior Leadership Group;
4. The Board would like clarity on the shareholder representative's role on the Board. There
was a widespread view that UKGI delved too much into the detail, and some felt that
UKGI acted as a filter on messages to the shareholder.
5. The view of a number of respondents was that the business is risk adverse and that
management decisions were not taken without looking over their shoulder.
Recommendations:
1. Time on each Agenda be allocated to focus on the future of the business, including
strategy discussion and trading performance updates.
The Chairman indicated at the last Board meeting that the content of Board meetings
would be re-jigged with more time allocated to the business, and Board meetings would
commence earlier in the day to allow sufficient time for these matters to be considered.
That said, the Chairman was fully cognisant of the need to continue to monitor the
progress of the Inquiry and the resolution of historical matters, therefore the re-focus on
the business would be a gradual process over a 2-3 year period.
The CEO is in agreement that more time needs to be allocated in Agendas to discuss
present day issues in relation to the business. Going forward the CEO Report will be
allocated an hour’s presentation and discussion time.
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It was agreed at the last Board meeting in March that the Board Strategy Day would be
a teach-in on the business, particularly in light of 4 new Non-Executive Directors who
are joining/ have joined the Board;
2. The length and content of Board packs should remain under focus; Board papers should
be more high level, and less operationally focused and the Board should assist
management by calling out any papers that are inadequate. From the side of
management, the CEO agrees that Board papers can be further improved by distilling
down content to key points, and will continue to review draft Board papers from this
perspective;
3. Sessions on different business areas and functions (e.g., People and Culture,
Postmasters, Mails, Retail, Banking, Marketing, IT, Insurance, Logistics) be scheduled in
Agendas to provide opportunities for relationships to develop between Board members
and members of the Group Executive and the Senior Leadership Group. The CEO will
encourage this process as part of a greater focus on the future of the business.
At the last Board meeting in March it was agreed that Group Executive members would
attend across a number of the sessions at the Board Strategy Day scheduled for July
2023, and that Group Executive members would also be invited to attend the
corresponding Board dinner.
Additionally the Non-Executive Directors will be invited to attend the Senior Leadership
Group meetings periodically;
4. The Chairman and the CEO noted the points raised by the Directors in relation to the
role of the shareholder representative and are continuing to reflect on these and the
relationship with UKGI;
5. The Board must give the Group Executive the confidence to ‘get on the front foot’. The
Chairman and the CEO recognise the need for cultural change to empower management
and to turn the Post Office into a sustainable business, and one where decisions are
made more rapidly, with a Postmaster centric focus, and with appropriate thought given
to other key stakeholders including customers;
6. The CEO needs a best in class management team to lead the business by providing
technical competency, depth and breadth of experience, as well as sheer nerve, to
deliver change in a complex operating environment. The Board can assist via support on
succession planning and People matters. Establishing a suitable management team to
lead the business is a key priority for the CEO. The Chairman has requested a talent
review and succession planning session be scheduled followed by a Board dinner, where
People issues will be the central theme on the Agenda;
7. Wider cultural change is required and morale within the Senior Leadership Group could
be more positive. Cultural change is seen by the CEO as vital to the future of the
business.
The Chairman made a presentation to the Senior Leadership Group in March 2023 and
shared his experience of having been Chairman of WH Smith Pic; WH Smith Plc emerged
as the most successful high street retailer post pandemic, and the Chairman advised his
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expectation for Post Office to follow similarly. Whilst funding constraints have made
effecting change difficult, huge strides can be made with the right leadership behaviours.
Next Steps & Timelines
1. The Audit Risk and Compliance Committee, Nominations Committee, Remuneration
Committee, and the Historical Remediation Committee will be asked to consider their
evaluation reports at their next scheduled meetings.
2. The Nominations Committee will be asked to review progress with the implementation of
the actions agreed from the Board Evaluation 2022/23 at its meeting on 26 September
2023.
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