The reputation of the Post Office, which as recently as 2019 claimed to be “the nation’s most trusted brand”1, has been left in tatters thanks to the recent Horizon IT scandal. It is a sobering reminder of the importance of good governance in an organisation and serves as a cautionary tale for Non-Executive Directors.
So, what is The Post Office Horizon Scandal?
In 1999, The Post Office procured and implemented a new accounting software programme in all of its branches called Horizon IT, which was developed by Japanese technology company, Fujitsu. Shortly after its installation, sub-postmasters and mistresses reported bugs in the IT system, which was repeatedly reporting inaccurate shortfalls – often for many thousands of pounds. The Post Office, which is a commercial public entity owned through UK Government Investments, used its own statutory powers to prosecute several hundred sub-postmasters and mistresses after accounting irregularities appeared. The new IT system was subsequently found to be faulty, but still the prosecutions continued until an ITV drama, Mr Bates vs The Post Office pushed the topic into the public consciousness.
Lessons to be learned
Where was the board in all of this? The truth is, we don’t know in any degree of detail at this stage what The Post Office NEDs were or weren’t doing. The scandal highlights significant (and repeated) failures in corporate governance, leadership, and transparency, or a lack of. Non-Executive Directors can use this to explore what is going on at their own board.
As part of our NED Community session in February 2024 (learn more about our NED Community here), Barry Gamble was asked the question, what can Non-Executive Directors learn from The Post Office Horizon Scandal?
You can watch the full video below:
Here are some of the key points from Barry’s talk and our NED Community’s discussion that followed:
Don’t be afraid to ask questions
“Good boards should thrive on transparency, scrutiny and challenge,” says Gamble. “Otherwise they risk becoming too internally focused and unable to question long-held views or a course of action and overly fixated on protecting their reputation,” he adds. 2
Non-Executive Directors aren’t expected to be an expert on everything or hold all of the answers. However, they must understand the decisions being made in their name. It is their job to be curious and to ask questions. If the response isn’t satisfactory then they must speak up and respectfully challenge it. It’s important to be prepared for this line of questioning to sometimes lead to difficult conversations and to be comfortable with being uncomfortable in those situations.
Clear away the mental clutter
Having a tunnel-vision focus on an exhaustive agenda can mean that problems lurking in plain sight are easily missed. “Board agendas these days are full to overflowing with compliance, rules and prescriptive best practice. Boards and individuals have a limited bandwidth and energy so it is vital that space and time is allowed, facilitated by good chairing, to consider what is not on the agenda but which could be a risk or develop into a material risk,” says Gamble. Taking a step back and regularly scanning the horizon for potential threats can help ensure risks are identified early and then correctly monitored and managed at all levels.
Understand the culture
Building relationships at all levels of the organisation is key to gaining a true insight into what’s really happening on the ground. Employee feedback surveys are a good starting point and can provide valuable nuggets of information but they will only reveal so much. Taking the time to be a visible presence in the organisation and a friendly face will earn trust and build rapport with employees, leading to some interesting conversations. It’s also worth checking sites like Glass Door online regularly as people are most likely to be most brutally honest after they have left a company. This can help to identify any recurring problems or underlying toxicity within the organisation. A company’s culture can affect everything from performance to how a company is perceived so it’s essential for Non-Executive Directors to understand and monitor this.
The Post Office Scandal is a wake-up call for Non-Executive Directors to reflect on their organisation’s processes, practices, leadership and company culture, to avoid their own Horizon scandal from materialising.
Join the discussion
Are you on a UK board in a Non-Exec capacity? If so, sign up for our free NED Community to hear from experts in the industry and connect with other Non-Execs across the UK. If you want to become a more thoughtful and effective board member, register here.
Are you looking for Non-Exec roles?
We list c.100 paid NED board roles each month from right across the UK and provide access to free blogs and YouTube videos to encourage and inspire NEDs. It’s free for candidates to view our roles. You can sign up to view them here.
Is your board looking to recruit a NED or Chair?
We can help advertise a role to candidates who will bring the skills, experience and perspectives you need on your board. We advertise over 1000 Non-Exec board roles a year from across the UK. You can see information on our advertising options here and you can get in touch with the Dynamic Boards team at hello@dynamicboards.co.uk
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References:
1 – PR Week – ‘Honesty should be non-negotiatble’ – comms lessons from the Post Office Horizon scandal
2 – FT – Letter from Barry Gamble – A Functioning Board Needs Non-Executive Directors
