Can engineers add value in the boardroom?

David Falzani
President, Sainsbury Managment Fellows

A company’s board of directors is like the bridge of a ship. It’s the forum where overall direction is set, major gauges are monitored, and risks assessed. The title directoris often misused today, particularly in industries such as investment banking, where graduates appear to start as vice presidents and titles such as director, managing director, executive, and principal are compounded and interwoven to dazzling effect.

However, for clarification, a de jure director is an appointed officer of a company, holds a primary fiduciary duty to the company itself, and sits on the board of directors.  Such directors can also, in certain circumstances, be personally liable for potential financial and criminal penalties related to the conduct of their roles.

Engineers have a unique mix of process and technical knowledge that can be applied in the boardroom to tackle many business challenges.  This mix includes a suite of analytical skills combined with a pragmatic, structured and realistic approach.  They are often trained risk assessors, trained decision-makers and project management experts.  Additionally, they have hands-on experience, working with real people and real-time issues to bring together theory and practice.  These attributes form uniquely strong foundations for senior corporate positions.

To be a truly effective board member a spectrum of skills and a wide perspective on business are required to balance the ‘big picture’ against the dynamics of business. This is particularly important as the unprecedented rate of change continues: globalisation, cross culturism, rising Asian markets, economic flux, and environmentalism.

In preparing for senior and board roles many engineers seek additional qualifications and experience.  Some acquire skills organically over time, whilst others pursue an intensive formal qualification such as an MBA.  I chose this route and fortunately won an MBA scholarship from the Sainsbury Management Fellowship (SMF) scheme.

In the late 1980s Lord Sainsbury recognised that in comparison with overseas businesses, the UK had fewer boardroom executives with professional engineering and science qualifications. Therefore to increase the UK’s competitiveness more directors should understand how things are innovated, developed and marketed. So far £7m has been awarded to 270 engineers to acquire MBAs from renowned business schools.

SMFs’ recent research of 100 HR directors from leading UK companies* shows 86% reported a willingness to hire directors with non-finance, accounting or legal backgrounds, but only 66% believed that professional engineers have the skills and attributes to be appointed to boards. This figure improves to 80% if the engineer’s qualifications are supplemented with business qualifications such as an MBA.

In my view, the shortfall in the statistics is related to the image of engineering and the misunderstanding of what engineering is. Much work is required to improve the way the media and industry portray and educate as to what engineering comprises and its diversity of career paths.

Assuming engineers do acquire positions to improve UK industry there’s another hurdle: Will these engineers still be called engineers? If not, how do we identify them and measure success? They may be called marketing directors or development managers or finance directors. Qualifications like CEng may make it easier to identify and monitor their contribution to boards but otherwise it’s difficult to recognize, encourage and promote them when no ready-made label exists.

There’s also another possible view. If a greater presence of engineering approaches and pragmatism is what’s needed to improve decision-making and risk assessment at board level, then perhaps it’s the skills we should also be promoting rather than just the profession?

Many engineers do courses on accounting, marketing, and law. Why don’t accountants, marketers and lawyers do courses on engineering?

During my MBA, my non engineering classmates enthusiastically appreciated the new insights that subjects such an operations management provided.

I’m not suggesting that an accountant would be improved by knowing how to minimise the number of transistors in an oscillator. However, engineering concepts such as specification writing, bottleneck theory, operations management, and balancing fitness for purpose with value for money, are just a few examples of engineering topics offering real value to corporate management.

So, rather than just banging on about how engineers should be more appreciated and getting onto company boards, perhaps we should be arguing for other professions to get up to speed on engineering?

*The report ‘Re-engineering the Board to Manage Risk and Maximise Growth’ can be downloaded from www.smf.org.uk

 

David Falzani

CEO of Polaris Associates

President Sainsbury Management Fellows Society

Education

  • Elected Fellow of The Institution of Mechanical Engineers, FIMechE
  • Diploma in Company Direction, Institute of Directors, UK
  • Marketing Strategy, The Kellogg Graduate School of Management, USA
  • MBA, The Wharton School & S.D.A. Bocconi
  • Chartered Engineer, CEng
  • Master of Technology in Operations Management, Brunel University
  • BEng (Hons) Engineering, Manchester

1995-1997: Special Projects Manager, Madge Networks (subsequently CELESTICA)

  • supplier of mission critical LAN infrastructure and telecoms products

1999-2000: Consultant, LEK Consulting

  • Developed business unit and corporate level strategies for multi-national and City clients including

British Aerospace, 3i, Apax, Bass, Co-operative Bank, Marks & Spencer, and Kingfisher

2000-2002: Chief Operating Officer & General Manager, Moda 1to1

  • Developed an internet company which provided software to the retail industry

2002-2006: Chief Executive Officer, Advance Valve Technologies

  • World leading developer and manufacturer of reinforced composite valves supplying

Exxon, Dow Chemical, the Royal Navy, the US Navy, Statoil, Petrobas and Dupont

2006 to present: CEO, Polaris Associates

  • Business consultancy working extensively with professional membership organisations such as the

engineering institutions, including Engineering UK and the Engineering Council