Effective Boards

Board effectiveness can be broken down into two themes:

Having a robust approach to risk management, which not only considers the potential existing and emerging threats, but also considers positive risks which can result in boards meeting their objectives faster.
Making the most of valuable meeting time; both in how you structure the meeting itself and how boards equip themselves to make effective decisions.

At Aon, we have the right people and right tools to help you with these.

How We’ve Helped Our Clients

We were appointed to the Board of a large Industrial Multinational to help it further its understanding of where behavioural biases affect its decision-making. We also looked at approaching in a different way how the Board worked with its advisers to get the best outcomes. The Board was fascinated by the results and wanted to understand the make-up of its own skills and diversity. The results of this work led to a radical redesign of the way it recruits and trains trustees of the future, and has resulted in a pool of trustee talent for the future.

Having structures around risk management and ensuring that your meeting time is effective gives you the best chance of achieving your objectives without being distracted by activities that do not support your goals or thrown off-course by unexpected events.

Risk Management Plans

The risks associated with running pension schemes are complex and the outcomes are significantly impacted by how well those involved manage these risks. In addition to more traditional risks like longevity, investment volatility and data, we are also facing many new risks. These include those associated with the increase in complexity of options available to members, cyber risk, the risk of missed opportunities when pricing is transient or markets are volatile, and increasing focus from those running pension arrangements on the climate change and the environmental, social and governance impact of the pension scheme.

It has never been more important to have in place robust risk management plans to actively manage the broad range of risks that pension schemes face.

Aon's Risk Management Framework ensures that all aspects of risk are considered, from the documentation of the scheme's risk management statement, risk registers, controls dashboard, incident response plans, and Own Risk Assessments.

We have a wealth of experience in advising organisations on cyber risk and have a team dedicated to assisting pension schemes with understanding and managing cyber risks. Further details for pension schemes are available here and for organisations here.

Managing Meetings and Robust Decision Making

Over the last few years, Aon has partnered with Behave London, a behavioural insight company, to get a better understanding of both individual and group decision making. Our Better Boards document sets out the outcome of our research and led to the development of a suite of tools to (a) enhance your understanding of your current operational effectiveness and governance and (b) take tangible steps towards improvement, including improving pension board meetings and decision making.

Humans possess a ‘planning fallacy’ which means we have the tendency to underestimate how much time will be needed to complete tasks. The key here is to plan for life to be unpredictable. Aon's Trustee Meeting Framework has long-term strategy built into it, so that you can help your board meet the important challenge of planning for the scheme’s future.

The guide below provides a behaviourally-designed framework for running trustee meetings, and crucially, how to plan for the time between meetings. By addressing the spaces between meetings, we can make the meetings themselves as effective as possible.

Each step of the agenda has been designed using a combination of behavioural research, and canvassing the opinions of over 120 trustees in what they feel to be the most important items to cover in the increasingly short time that trustees have to execute. We also tested on 300 members of the general public so that we could see how trustees were different in how they made decisions.

We focused our attention in a number of areas:

How to restructure meetings to ensure that they focus on the strategic decisions and enabling actions to progress between meetings.
Consideration of behavioural biases and alternative approaches to assist with enhancing decision making, including a chair's checklist and tips to challenge the advice received.

This framework applies equally to any pension board meeting.

Key Resources

Trustee and adviser in discussion working through 10 questions to test and assess their ideas

This document considers the risk management aspects of the General Code and the requirement for trustee boards to prepare an "Own Risk Assessment" (ORA).

The trustee role can be viewed as similar to that of a non-executive director; they are expected to make decisions on a range of topics. The challenge here is that trustees are unlikely to reach a stage where they are as knowledgeable on every topic as the advisers who are presenting them with recommendations. Our questions will help you to understand the decision, to test it and to assess how robust the idea is, all the way through to completion.

Trustees in a face-to-face meeting reviewing information being presented on an tablet device

Get the most out of your meetings when combining virtual with face-to-face.

Two trustees discussing their decision-making process ahead of their next trustee meeting

Improve your trustee meetings and decision-making by using Aon’s checklist.

Small group of trustees having a quick efficient meeting in a breakout job

Our latest research, in conjunction with behavioural insight agency Behave London, has helped us to better understand how group dynamics can impact broader decision-making and planning strategy. Based on this research, we have developed our Trustee Meeting Framework.

Group of trustees discussing their roles between board meetings during a break

Our Between Meeting Organiser has been developed to help you to make the best use of time between meetings.

Happy trustee taking minutes of board meeting whilst being effectively chaired by fellow trustee

It is clear that how a meeting is chaired has a direct impact on the board as a whole, the decisions made and how effective those decisions are. Our research also showed that although trustees are better than the general public at mitigating their cognitive biases, errors in judgment are still apparent.