The role of the board of directors has been brought into sharp focus in recent weeks by the accounting scandal at Tesco, and the coming weeks will be crucial for the retailer.

Tesco boss Dave Lewis

With Philip Clarke exiting before the facts were made public it was left to chairman Sir Richard Broadbent to bear the brunt of the criticism for the poor governance that resulted in a £263m profit overstatement at the supermarket giant. Broadbent came under huge pressure from investors to carry the can for the financial mismanagement and sure enough in late October he announced he would step down from his position next year, citing the “important principle of accountability on behalf of the board”.

It begs the questions what makes an effective chairman? Here are four qualities that seem to me to be integral: strong oversight, sound judgement, relevant experience and the ability to ask searching questions when they need to be asked. On each of these points, Broadbent – whose experience is primarily in the public sector, firstly with HM Treasury and latterly as Executive Chairman of HM Customs and Excise - arguably came up short.

If he had an inkling that the numbers didn’t quite stack up (and the fact that Tesco’s margin was holding firm while sales were shrinking and costs were rising was a fairly big clue) it was incumbent on him to get to the bottom of it. If he genuinely had no idea that there were internal finance issues then he failed in his duty to provide effective oversight of the business.

Tesco has moved swiftly to address criticism that its non-executive board lacks relevant experience by appointing two new non-executive directors whose skillsets should complement each other well. Richard Cousins and Mikael Ohlsson bring, respectively, a wealth of food industry and retail experience to the table.

Cousins has been the Group CEO of the world’s largest contract caterer Compass Group since 2006 and has also acted as a non-executive director of HBOS and Bank of Scotland and the consumer goods supplier Reckitt Benckiser. Ohlsson is an IKEA lifer who worked his way up to the position of CEO and president between 2009 and 2013 making him perfectly placed to offer insights into the nuances of a retailer with a diverse customer base and a global supply network.

Tesco’s next task is to appoint a chairman to steer the business through what’s set to be the toughest period in its recent history. Board positions don’t come any more challenging.

  • See the table on the right for a run down of who went where in retail in October.

Tony Gregg is chief executive of the Anthony Gregg Partnership

The Anthony Gregg Partnership

Founded in 2003 and located in Henley-in-Arden and London, The Anthony Gregg Partnership specialises in the consumer search market space.

You can call Tony Gregg on 01564 796830 or email him at tony@anthonygregg.com.