Long Read: Corporate governance – it’s all about the people!

Haddington President Keith Wallace, who is a Chartered Director via the Institute of Directors, is worrired about how the SRU is operating

Keith Wallace [bottom left] demonstrates at the 2015 AGM that you don't need a sharp suit or a club tie to be part of good corporate governance. Image: Fotosport/David Gibson

by KEITH WALLACE

THE SRU last week announced its long promised review of Governance, to be chaired by the ‘independent’ Sir Bill Gammell … whose independence is questioned elsewhere.

As a passionate rugby man, and a Chartered Director through the Institute of Directors (IOD) who has sat on a number of Boards, governance of the SRU is a subject of great interest to me.  Before any review commences, I thought it would be good to remind ourselves what governance is, and how the current governance is working.

Definitions of corporate governance

There are many views on what corporate governance is but here are two particularly relevant ones to this issue

Firstly, from the IOD –

“… the system by which businesses are directed and controlled”.

Secondly, from that fine Scottish club man Kenny Hamilton (Glasgow Hawks) –

“My University Professor, Lewis Gunn, was outstanding on the understanding of governance and would point to the three elements – structure, process and people.”

So, ‘the system which directs and controls a business made up of structure, process and people’ would seem to sum up nicely.

What is the current governance system at Murrayfield?

The system and process elements of governance at the highest level in the SRU is that which Dunlop put in place in 2005 and is summarised on the SRU’s website –

“The Scottish Rugby Board and Council oversee the governance of rugby in Scotland, supported by the senior management and their departments.”

The Council consists of 15 elected representatives from Scottish Rugby’s key constituencies. The Board consists of the four Executives (full-time paid employees), four Non-Executives (including the Chairman), the President (elected by the clubs) and three Council members elected by the Council to the Board (also non-executives).

The IOD defines the role of the Non-Execs as –

“… to provide a creative contribution to the board by providing independent oversight and constructive challenge to the executive directors.”

This independent oversight and challenge aligns with Dunlop’s four key areas –

  • Accountability
  • Responsiveness
  • Participation
  • Transparency

Finally, let us remind ourselves what the organisation is trying to achieve –

According to the Bye-Laws, the Objects of the Union shall be:

  1. To act as the governing body of the game of rugby football in Scotland;
  2. To promote, encourage and extend the game of rugby football throughout Scotland;
  3. To be a member of World Rugby and such other bodies as the Scottish Rugby Board may from time to time determine and to facilitate the playing of representative rugby at all levels;
  4. To arrange trial, representative, international and other matches which may be for the good of rugby football; and
  5. To assist clubs which are Full Members or Associate Members, and Associated Bodies in furtherance of the Objects of the Union.

So, we know what the structure and process is, we know the ‘Objects’, and we know who is responsible for oversight.

How are the eight Non-Executives and the rest of the Council doing, when it comes to bringing “independent oversight and constructive challenge”?

Recently it was explained to me that the oversight role on a Board consists of ‘Strategy’, ‘Scrutiny’ and ‘Advocacy’, a neat way of exploring performance of the Board and Council.

Strategy

Typically, a corporate strategy would be encapsulated in some sort of corporate plan, often for five years, with principles such as ‘vision’, ‘mission’ and ‘values’ captured alongside some strategic goals or objectives. This would be shared with managers, staff and key stakeholders.

The RFU has such a document publicly available, and stresses its four strategic priorities which the plan is then built around, and is reported against in the Annual Report –

  1. Protect: Protecting everything that makes rugby in England so special
  2. Engage: Engaging and inspiring new audiences whilst developing deeper relationships with those already involved in the game,
  3. Grow: Providing more rugby through many opportunities for more people
  4. Win: Putting sustainable success at the heart of the professional game

Closer to home, Scottish Swimming has on its home page

  1. Participation – to get more people swimming for leisure, health and fun
  2. Development– to improve the delivery of swimming in Scotland through the development of learn to swim, clubs, volunteers, teachers and coaches and community partnerships
  3. Performance– to improve the performance results of our Scottish swimmers through coaching and through our continuously evolving performance programme
  4. Corporate Services– to lead a cutting-edge organisation that supports our development, healthy living, and performance initiatives, including the attraction of resources to invest in our sport

A search of the SRU website found no such plan, no such strategic goals or objectives. No links to the Objects of the Union.  No mention of Dunlop’ s four areas. There is nothing like this in the 2018 annual report, either.

No strategy.

There are a set of values, however, as follows:

  • Respect
  • Leadership
  • Achievement
  • Engagement
  • Enjoyment.

Whilst rugby people of all types have many personal views on the values of rugby, these ones would pass the test of most.

However, the importance of values is that they are there to be lived.

How do we fare?  Let’s pick the first one: Respect –

  1. Russell-gate showed no respect for an SRU employee who himself said: “It is so disappointing to realise that the guys at the top are not good guys and do not represent the values and culture of rugby”.
  2. There was the poor treatment of Murrayfield Wanderers, one of Scottish Rugby’s founding Clubs, over their clubhouse eviction.
  3. The condescending and patronising behaviour of the top table at the 2017 AGM, including a blatant attempt to bury a clause deep in a document taking power from the clubs, and several attempts to close down debate, showed complete lack of respect for the member clubs.
  4. The equally condescending and bullying behaviour of the top table at the 2019 SGM again showed a complete lack of respect for member clubs, including a President who spoke about the importance of clubs having their voice when elected – “exactly as we saw today – a democratic process, listening, reaching out to clubs” – yet shut clubs down with the SRU’s ‘if you vote for this we will take our ball away’ approach, as well as telling those who had left work early and travelled miles ‘I hope this does not take too long – there is an important Edinburgh game outside’. Then, during the meeting, certain Board and Council representatives at the top table rolled their eyes and tutted when club members spoke from the floor.
  5.  The 30 minutes of apparently genuine contrition over Russell-gate from the Chair at the 2018 AGM, which has not rated a mention in the draft minutes which clubs are asked to approve as accurate and fair at the upcoming 2019 AGM.

I am not sure there is any merit in looking at the rest: without respect what is the point?

This lack of respect certainly does not meet object 5: “To assist clubs which are Full Members or Associate Members, and Associated Bodies in furtherance of the Objects of the Union.”

So, we have a Board and Council with no visible strategy who are not living the values and respecting member clubs.

Scrutiny

Scrutiny is hard with no strategy. After all, if you do not define what you are trying to achieve, how do you measure progress?  How is Dunlop’s ‘accountability’ measured, when targets are not clear?

However, even without a strategy, there are some serious concerns over the lack of scrutiny, adherence to Dunlop’s ‘transparency’, and indeed the need for independence: non-executives for example often being described as ‘independent directors’.

  1. Russell-gate: How could the Board allow this to happen? What was the scrutiny before and after the tribunal?
  2. What was the remit for Lesley Thomson that allowed an eminent lawyer to remain ‘independent’ when to all intents and purposes the review should have investigated the Board she sat on?
  3. How did the two executives survive the findings unless there was some other failure of governance or process which is not transparent? How did one of those executives, the CEO, get a substantial contract extension between the tribunal and the judgement?
  4. What was the scrutiny given the Board and Council’s approval of Agenda 3 and more importantly Super 6 in July 2017, when not one single document on impacts has been released despite repeated requests by clubs through their Council representatives?
  5. Why do the Council allow the presentation of accounts to member clubs to adopt at AGMs, which consist of little more than a handful of lines of income and expenditure, but no detail on –
    • Expenditure on compromise agreements. For the record the Board have point blank refused to answer a legitimately asked question from my club on this. What is being hidden? Individually the amount is confidential, collectively it is not.
    • How much is being spent on such unexplained ventures such as Stade Niçois in France and Old Glory DC in the USA.
    • How much is spent on coach and player contract compensation/compromise agreements, particularly when there is the strange situation of having the same agency look after the outgoing DoR, most of the coaches, and many of the players?
  6. How can a formal question properly asked at the 2018 AGM by another club on the number of games played, still be unanswered, when the club game is on its knees?
  7. How can any sensible and objective scrutiny of Messrs MacColl and Gammell stand up to them being ‘independent’ when the former nailed his colours firmly to the Board and Council’s mast at the SGM, and the latter has chaired a Board which the chairman sat on, chaired the S6 tender process and by the CEO’s own admission is a friend?
  8. How can the Council have allowed the ebbing and flowing of the status of S6 which has gone from being firmly in the high performance game [minuted statement of former President Rob Flockhart, presumably to take it out of the reach of club control], to being firmly in the domestic game [SRU communications, presumably to allow it to show as part of overall spend on domestic game], to now, it would appear, somewhere in no-man’s land. Again, this was a formal question raised through the correct channels by my club, and after eight months of correspondence we have been told –
    • “It is the top level of the domestic game, played between Scottish teams and under the overall jurisdiction of Scottish Rugby as the governing body of the game in Scotland.” –Robert Howat (SRU General Counsel)
    • “In the view of the Governance Committee, and on the basis of the information that has been provided to us, the Super 6 is not properly to be seen as ‘in the Domestic Game’ or ‘de facto a National Competition’.” – Gavin MaColl

So, scrutiny leaves a lot to be desired, with not much of Dunlop’s Accountability or Transparency.

Advocacy

In terms of promoting the game and indeed the aims and objectives of the organisation, it would be expected that the leaders of the organisation would be to the fore, however –

  1. Whilst the former Director of Rugby was known in many circles as the invisible man, the CEO hasn’t publicly engaged with the media since his fateful interview with Tom English of the BBC on 18th June 2018, and the Chairman doesn’t seem to have spoken to the press at all since his appointment in the summer of 2012 – shamefully leaving Dodson and then President Rob Flockhart to face the music in the immediate aftermath of Russell-gate. The CEO and the Chairman’s words have been transmitted via press release but there has been no dialogue.
  2. Following his 30 minutes of contrition at the 2018 AGM, the Chairman (along with the Chief Executive) broke with protocol and declined requests to attend the post-meeting press call, leaving this to the President and the newly elected Vice-President.
  3. The President appeared at the SGM to be unable to voice a view on any matter without referring/deferring to her ‘independent’ QC.
  4. The CEO described the Premiership as “not fit for purpose” without ever defining its purpose. We now have a Premiership which has been significantly weakened but deemed suitable for Academy players who can’t get game time in Super 6.
  5. A President who was not seen at a single Premiership, National One or National Two/Three forum meeting in the lead up to the SGM when the matter of where Super 6 second teams should be placed was of extreme concern. Her predecessor frequently attended as has her likely successor (Vice-President).
  6. Radio silence from the SRU media department during the lead-up to the Club Awards night, the pinnacle of the club game and a huge good news story, then a post event press release issued in the middle of the night and therefore unpublishable for the mainstream press.
  7. Complete invisibility of the non-executives, except, of course, in the expensive seats on match day.

So, not much in the way of advocacy, and not much in the way of Dunlop’s ‘leadership’.

Conclusions

It is easy to conclude that there is –

  1. Not much following of Dunlop.
  2. Not much focus on the ‘Objects’.
  3. No Strategy.
  4. Not much living of the Values.
  5. Serious failures in Scrutiny and Advocacy.
  6. No evidence that the Non-Execs and the Council are carrying out their governance role properly.

Kenny Hamilton said on governance –

“Structure and process are important but if you don’t have the right people creating the right culture of confidence through transparency, the other two are a side show.”

This article shows violent agreement.


10 questions which must be answered before SRU can move on from Keith Russell affair

 

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Keith Wallace
About Keith Wallace 2 Articles
Keith Wallace this month celebrates 40 years of playing senior rugby since his debut at 15 for Haddington RFC. He played representative rugby at school and under-21 levels and is still pulling on his boots when needs must, having played briefly (in emergency) for his club 1st XV this year. He first held a committee position at 18, has been involved in many aspects of the club game ever since, and was elected as Haddington RFC president in May. He has previously served on the Board and Council of the SRU, and he was behind his firm’s sponsorship of the Border Reivers in their last season. He is a Chartered Engineer, a Chartered Director and has a keen interest in corporate governance.

9 Comments

  1. Thanks for all the positive comments here, and messages received directly from a broad church of our great game. It is good to know that many are of a like mind.

    In this respect a big lift to read this morning from the well respected and truly independent Bill Dunlop strongly supporting my key message that this is about people not doing their jobs.

    We need more and more Clubs to wake up to this fact.

  2. Excellent article from Keith which gets at the crux of the problem and why we are where we are – hubris.

  3. Who can forget the last 5 Year Plan?

    With its catchy “win a 6 Nations Grand Slam by 2016 and the World Cup”. Obviously I need to go check the records but pretty sure we didn’t achieve those particular goals.

    More interestingly try looking for this document on the SRU website. Or even using Google. Best I could get was a reference by John Beattie that he’d received a press release from the SRU on it.

  4. An excellent article from someone with the qualifications and experience to challenge those at the top. However, there are people in place who should carry out such a review? Clearly, they are unable, unwilling or take up such a position for some other reason? I’m sure many readers will be able to expand on that point. More to the point who scrutinises those in these positions?
    Like many previous writings, this article continues to raise serious concerns over the workings of the Union! It should be easy for the SRU to act to quash such concerns but the findings of a Senior Tribunal Judge made that a very difficult task. Of course, although not appealing the Judge’s decision, the Union’s response was that they did not recognise the Judges description/findings??
    The latest attempt to silence the base of the pyramid is almost destined to fail. Unless true independence is seen to be in place the outcome will only led to yet further unrest within the Union. No healing will take place however the salaries and pension pots of those at the top will continue to mount up.
    In conclusion, I would like to take this opportunity to thank the Offside Line and the various contributors for the continued effort to keep us all updated on such matters of importance. The team provide excellent match reports and analysis but I feel we should also recognise and applaud the investigative work they carry out on our behalf!
    Well done the Offside Line team!

  5. Excellent article from Keith. Charles Handy in ‘The Empty Raincoat ‘ talks about ‘Paddy’s Bridge’. When asked for directions the sage-like Paddy thinks and replies ‘ Ah! If I were you I wouldn’t be starting from here’! The governance of Scottish Rugby feels like that at the moment. The clubs need to be far more proactive and robust in determining what they want rather than simply saying ‘ I don’t like that..’. Time for the talking to stop and time for the clubs to put a clear plan on the table for the future of the game with defined structure, process and roles( people). It needs to be outcome focused not on individuals.

    • Interesting proposition John

      The challenge is to get the clubs aligned around that. That’s where the Exec and the Board manage to rule. The clubs don’t come together outside of SRU arranged fora to engage in this sort of discussion.

      It will also require quite a bit of humility on all clubs that they solely are the holders of the “truth”.

  6. Well said Keith; and well done Barney for publishing this excellent dissection of the current position.

  7. Well articulated piece Keith and thanks for taking the time to write it.

    The analysis is spot on. For me the values element trumps the others and if these are not being lived and practiced by all within the Council, Board, Executive and all who work in the SRU – then what is the point?

    I would also call out the leadership role that the CEO, Chair and President have with these values. Alongside living and breathing them in everything they do, they are the guardians of these values and need to deal with any examples where they arent being demonstrated and be specific role models on how these values are lived.

    As you point out, we have real examples of where those people have fallen far below what should be expected of them.

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