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POST OFFICE LIMITED
BOARD REPORT
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Title:
Board Review
Recommendations
Meeting Date:
27" July 2021
Author:
Veronica Branton, Company
Secretary
Sponsor:
Tim Parker, Chairman
Input Sought
The Board is asked to DISCUSS and APPROVE the recommended actions linked to the
Board review produced by Independent Audit Limited for 2020/21. The recommended
actions for the Board are set out at Appendix 1 and map to the recommendations from the
report. In sum, it is proposed that:
A more structured Board forward plan for the year ahead is produced for the September
Board meeting that builds in the areas the Board wants more focus on
Board Directors provide their feedback on papers at the end of the next few meetings to
help get the balance right on the information needed to take decisions while avoiding
extraneous material
The Board reverts to the pre-Covid pattern of holding Board dinners before most
scheduled Board meetings
Sessions with the CEO and the NEDs to discuss senior team development etc. are
arranged around every other scheduled Board meeting (3-4 per annum)
NED only meetings are scheduled before each Board meeting, and before the Board
dinner on the preceding evening where feasible
A specific slot on organisation culture is included in the Board agenda bi-annually in
addition to regular updates
The Company Secretariat Team develop a programme for the Board’s consideration for
NEDs to make branch visits and attend employee events etc. periodically
A report back from the Committees will be built back into the Board agendas
The appraisal process instigated for each Non-Executive Director to meet the Chairman
annually will continue.
The recommended actions for the Committees are also at Appendix 1 and are to NOTE.
The Board is also asked to CONSIDER the concept of a “hybrid” calendar where the main
scheduled Board meetings are held in person but where shorter, and less strategic meetings
are held remotely.
Previous Governance Oversight
The Board considered the report produced by Independent Audit Limited at its meeting on
30" March 2021.
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Executive Summary
As recommended by the UK Corporate Governance Code, POL carries out an independently
facilitated Board and Committee review every third year and runs internally facilitated
reviews annually in the intervening years. Catherine Stalker and Richard Sneath from
Independent Audit Limited presented their Board and Committee review for POL for 2020/21
to the Board on 30" March 2021. This report and the summary of recommendations are in
the Reading Room at [xx]. The recommendations for the Board’s consideration are at
Appendix 1.
The report highlighted many Board strengths and ways of working that should continue; it
also, and to nobody’s surprise, noted the strain the Board and the executive have been under
trying to respond to the historical matters while overseeing the running of the business
during a pandemic, dealing with funding challenges and implementing the new strategy
focussing on the core products and building a modern franchise that is postmaster-centric.
Whilst acknowledging the stretch, a clear message from the Board and the executives who
were interviewed was that they wanted the Board to spend more time on strategy and the
development of the business today, noting the need to identify growth opportunities,
understand what we mean by social purpose and how this fits with being commercially
sustainable and understand better the markets within which Post Office operates. There was
also support for stepping back from the operational detail and building “grounded trust” to
allow that to happen.
Questions addressed
1. What recommendations were made by Independent Audit Limited and which are we
proposing adopting?
The recommended actions are at Appendix 1 with proposals for how these might be
implemented and progress updates where applicable. There are a couple of
administrative points on scheduling breaks and meetings where there is a balance to be
struck with not taking up too much Board directors’ time: your preferences should guide
how this is managed.
2. What other recommendations are made and why?
Boards have had to adapt quickly to remote working and as we to return to more face
to-face working, some governance organisations, like Board Intelligence, have asked
how we avoid reverting to the pre-pandemic norm without thinking about longer-term
gains of new ways of working. One idea, is the hybrid calendar (as opposed to the
hybrid meeting) so that meetings that are predominantly focussed on oversight rather
than brainstorming or taking major decisions and/ or are shorter meetings could be held
remotely but the main Board meetings held in person. The Board could consider whether
this approach should be adopted and, if so, which meetings it would continue to hold
remotely.
Next Steps & Timelines
1. The ARC considered the response to the Independent Audit Limited Report proposed
actions at its meeting on 18 May 2021 and the approach adopted is included in
Appendix 1. The Remuneration Committee has adopted the recommendation to involve
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the Remuneration Committee adviser more at its meetings. The Nominations Committee
will be considering succession planning at its next meeting.
2. The Nominations Committee will be asked to review progress with the implementation of
the Board review actions agreed at its meeting on 30° November 2021.
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Appendix 1
Recommendations from the Independent Audit Board Review 2020/21
Section/ recommendation Adopt: Y/N I Proposed approach: Progress:
Focus and balance
1. Strike the right balance in agendas, discussion and I Y The Board will be establishing aI For the Board Strategy sessions
pre-papers between dealing with historical issues, Board Committee to deal with I this year, briefing sessions with
business as usual and the future. (16-17 of report) Historical Remediation matters. I pre-reading materials have been
Some decisions, especially those I run but it has been for the NEDs
setting a precedent or I to decide whether and which to
establishing a principle, will still I attend; hopefully this provided
come to the Board, and theI the context for the Board
Statutory Inquiry also means I discussions without making
that some Board attention will I onerous demands on time.
inevitably remain on_ historical
matters.
Mapping out and discussing the
forward agenda at Board
meetings may help get the
balance right. The on-going
challenge will be the new issues
that crop up = and_ overfull
agendas.
2. Create a forward agenda that extends to a full year I Y Develop a more detailed Board
supplemented by a “strategic governance map”. forward agenda for the
(22-23 of report) September Board meeting and
allocate time to discuss this.
3. Continue to improve the papers, tying inI y A template, guidance and briefing
appropriate KPIs and strategic goals, and removing
unnecessary information. (20-25 of report)
sessions for preparing papers for
boards and committees are all in
place (though not always adhered
to in terms of paper length and
adhering to the template).
It may be helpful to get views at
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the end of the next few Board
considered at that meeting and
where: 1) there was information
not included that would have
helped you reach a decision; and,
2) where there was extraneous
material or material that would
have been better placed in the
Reading Room. This feedback
could be tied to the discussion on
the forward agenda.
Composition, succession and dynamics
Prepare carefully for the induction of postmaster
NENc ta ancira thay ara intanrated ac directors on
a par with existing NEDs. (28-31 of report)
It has been an_ intensive
induction programme for Elliot
and Saf and their feedback of
what worked and did not work
will be helpful for planned
inductions in the future (and
indeed, what might be helpful for
the non-statutory Postmaster
Director when they join POL).
Stav an the frant fant on succession, planning
further ahead (35 of report)
Annual discussion to be
scheduled for the Nominations
Committee as well as any further
discussions required for specific
appointment.
On Nominations Committee
forward plan for September
2021.
Raciima haard dinnare and infarmal catch ups to
cement relationships (39 of report)
Revert to Board dinners the night
before scheduled Board meeting.
A Board dinner will be held on
27" July 2021 and the normal
pattern should resume as long as
no further lockdowns or
restrictions are in force.
Maintaining an effective management team
Increase focus on development of senior team,
These sessions could be
To be scheduled for September
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oma, a_eWwith the CEO. (43-46 of report),
including regular discussions @
scheduled in advance of every
(circa quarterly), before or after
the NED only session.
2021.
Hold regular private sessions of the NEDs without
the executives (47-48 of report)
A short NED session is proposed
in advance of each scheduled
Board meeting (potentially in
advance of a Board dinner, when
taking place).
Make more use of external advisers at the
Remuneration Committee. (51 of report)
Paul Townsend of Willis Towers
Watson will attend the whole of
the Remuneration Committee
meeting and a session with the
Committee and the adviser will
be scheduled at the end of each
meeting.
This approach was followed at the
Remuneration Committee
meeting held on 1% July 2021.
Cultural transformation
10.
Make time to specifically discuss culture, ensuring
the right indicators and monitoring are in place,
including surveys and speak-up reporting. (52-54
of report)
Include on Board agendas bi-
annually and include updates in
the CEO report and at the
Remuneration Committee via the
Group Chief People Officer's
Report.
People Strategy slots are
included on the Board agenda for
27" July 2021 and for the
September agenda which touches
on issues such as ways of
working.
11.
Plan out how NED will “sniff’ the culture
themselves and organise events to meet more
middle managers, postmasters and junior staff.
(55-57 of report)
CoSec to develop a programme
for the Board's consideration to
include periodic branch visits and
attendance at employee events
periodically.
Include with the Board forward
agenda at the September Board
meeting.
Risk, controls and grounded trust
12.
ARC should encourage the CRO to provide an
overview of current and emerging risks and share
his subjective concerns. (62 of report)
The ARC has agreed that in
addition to the Risk Dashboard
that is already supplemented by
a summary paper, the Head of
Risk will ensure that an overview
of current and emerging risks as
well as his opinion on areas of
Implemented and on-going.
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concern etc. is included in this
Risk owners will be invited to
ARC Committee meetings where
a risk is outside of appetite or
rated red (with exact criteria to
be decided by the Head of Risk)
or attendance has been
requested by the Committee.
13. IThe Board, ARC and the Executive should work The ARC has agreed that the An update is proposed for
together to develop a strategic approach to risk Risk Report should be developed I September 2021 with the new
management, with clear goals and outcomes. (63-I to focus on how management are I approach targeted for March
67 of report) responding to the critical risks, 2022.
both current and emerging, in a
shorter more narrative paper.
This should avoid too much focus
on “method, categorisation and
definition” and focus on how risk
appetites can be used to
strengthen management and
operational decision-making.
14. I Consider developing a risk controls assurance map The ARC has agreed that The new approach is targeted for
and ensure that data, IT and cyber risks are a risk controls assurance map I March 2022.
getting sufficient focus. (71, 73 of report) should be developed by Risk,
Compliance & Audit together with
an annual Compliance Assurance
Report.
Quick wins
15. I Plan regular breaks. (75 of report) There is a balance between not
wanting to use up too much of.
Board directors’ time and
providing breaks during and
between meetings.
Overstretched agendas tend to
squeeze out breaks but longer
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breaks can be included if that is
“hybrid” calendar where the main scheduled Board
meetings are held in person but where shorter, and
less strategic meetings are held remotely.
16. I Schedule the ARC and the Board meetings on I ? As above.
different days. (76 of report)
17. I Dedicate a clear section to committee reporting and I y This has fallen away on occasion I Committee update included for
leverage the expertise of particular NEDs on key when the Board agenda has been I 27** July 2021.
topics. (78 of report) overstretched and when most of
the Board have attended the ARC I Any further ideas for leveraging
and the Chair of the ARC has I NED expertise would be
briefed those who are not I welcomed but NEDs do seem
members separately. active in their engagement with
the parts of the business where
they bring particular knowledge
and expertise (e.g. Lisa with the
IT and SPM teams; Ken with the
Mails Team).
19. IThe Chairman to provide regular individual I y A formal annual appraisal process I Appraisal discussions took place
feedback to the NEDs. (81 of report) has been instigated. with each of the NEDs in post
during 2020/21 in June 2021.
Additional question/ proposal
20. I The Board is asked to consider the concept of a I N/A
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