Question

What are the strengths and weaknesses of having lay trustee membership for a board? Think here in terms of democratic vs. meritocratic/technocratic governance but also the role of special interests whether internal or external to the board.

Answer 1

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A. traditional board is a collection of individuals acting together as a trusted board. Each individual will be a believer in the scheme and will be appointed either by members or employers, or a person or company that is entirely independent of the sponsoring employer sitting next to other individuals.

Strength: -

1. An independent trustee will meet the requirements through their membership in industry bodies and the ongoing standards of professional development they have set.

2. It may delay in decision making, which in turn can lead to increased costs and missed opportunities. One of the most critical points is that a single believer must speed up the decision-making process.

3. The sole trustee may manage the scheme and make decisions outside the regular meeting cycle.

Weaknesses: -

1. While a professional trustee adds retirement experience to a board of directors, the board trustee also adds an essential skill, I .e.understanding was engaged in the employers' business before any public announcement, or financial results are published.

2. Any change in the Board of Administrators must communicate to the members. Switching a scheme from a trusted board with members appointed by the delegated administration to an independent trustee appointed by the guarantor, if not adequately communicated, may worry members, especially as the sole trustee appointed and paid generally by the sponsor.

3. Switching from a trusted board to a completely new independent believer creates the risk of losing historical scheme information.

Meritocracy is a situation where a person receives a position based on his/her overall ability (and merit). It is a situation where one usually has to prove one's ability to achieve a particular position in society.

Technocracy is a situation where a person receives a position based on technical ability. It is when one has to prove his ability based on a comparatively limited but more in-depth knowledge of a particular field.

Interested internal parties are people whose interests in business come from a direct relationship, such as employment, ownership, or investment. Interested external parties are people who do not work directly with a company, but are somewhat influenced by the actions and results of the business.