Exploring the key challenges facing company secretaries in a two-tier board context

• DOI: https://doi.org/10.1108/CG-06-2020-0226
• Published date: 06 May 2021
• Date: 06 May 2021
• Pages: 815-830
• Subject Matter: Strategy,Corporate governance
• Author: Stefan Peij,Pieter-Jan Bezemer

Exploring the key challenges facing

company secretaries in a two-tier

board context

Stefan Peij and Pieter-Jan Bezemer

Abstract

Purpose –This study aims to examine the core challenges facing company secretaries in a two-tier

board context. This studyfocuses on the key factors contributing to these challenges and how company

secretariescan effectively address them.

Design/methodology/approach –An analysis of the narratives provided by 291 Dutch company

secretaries in response to a series of open-ended questionnaire questions led to insights into the key

challengescompany secretaries face in theirday-to-day work.

Findings –Company secretariesperceive a myriad of factors contributingto pressures on their time, the

need to work for multiple organizationalbodies and the processing of information. They believe process

interventionsand social interventions are neededto alleviate these issues.

Research limitations/implications –The research highlightsthe need to deeply study boards from a

holisticand systems point of view that recognizes the variousactors, such as the company secretary, and

their relationships in a boardroom context. Furthermore, the research shows how the two-tier board

model may complicatethese relational dynamics owingto the formal separation of decision management

from decisioncontrol.

Practical implications –This study identifies various pragmatic ways to address the core chal lenges facing

company secretaries so as to improve their contribution s to decision-making at the apex of organizations.

Originality/value –This study sheds light on an important organizational actor (i.e. the company

secretary)that hitherto has received scant attentionin the governance literature.

Keywords Challenges, Two-tier boards, Corporate governance, Interventions, The Netherlands,

Company secretaries

Paper type Research paper

Introduction

The board of directors plays a central role in the governance of the modern corporation,

and a long tradition of research has studied the factors contributing to board effectiveness

(Boivie et al.,2016;Forbes and Milliken, 1999;Hambrick et al.,2015). Boards are

essentially decision-making groups whose members are collectively and individually

responsible for two key roles. First, theyare necessary to keeping managerial self-interest in

check (Fama and Jensen, 1983;Useem and Zelleke, 2006). Second, they ensure the

company has an effective strategy in place (Bailey and Peck, 2013;Pugliese et al.,2009).

With boards increasingly perceived as “dynamic social systems” (Lorsch, 2017,p.2),

researchers are increasingly studying how board dynamics, interactions and processes

shape directors’ execution of their role sets (Bailey and Peck, 2013;Bezemer et al.,2018;

Heemskerk, 2019;Ingley and Van der Walt,2003;Sur, 2014).

Whereas previous research has extensively examined the role, power and influence of key

organizational actors in the boardroom, such as the chief executive officer (CEO), chief

Stefan Peij is based at the

Governance University,

Doorn, The Netherlands.

Pieter-Jan Bezemer is

based at the Faculty of

Business and Law, Edith

Cowan University,

Joondalup, Australia.

Received 10 June 2020

Revised 2 November 2020

7 January 2021

Accepted 7 January 2021

The authors gratefully

acknowledge the helpful

comments from the Associate

Editor, Prof. Rene

´Schmidpeter,

and the anonymous reviewers,

and are grateful to Koen

Castenmiller for his excellent

support in making this research

study happen. A special thank

you goes to Gavin Nicholson

and Sten Langmann for their

feedback on earlier versions of

the manuscript.

DOI 10.1108/CG-06-2020-0226 VOL. 21 NO. 5 2021, pp. 815-830, ©Emerald Publishing Limited, ISSN 1472-0701 jCORPORATE GOVERNANCE jPAGE 815

financial officer (CFO), board chair and directors (Bezemer et al., 2018;Kakabadse et al.,

2006;Kanadlı et al., 2020;Krause et al.,2016;Uhde et al.,2017;Withers and Fitza, 2017),

another actor with a potentially significant impact on board decision-making has received

scant attention to date: the company secretary (Kakabadse et al.,2016,2017;McNulty and

Stewart, 2015;Peij et al.,2015;Trubshaw, 2018). This oversight is somewhat surprising, as

qualitative research suggests that the company secretary can be an “invisible leader”

(Kakabadse et al., 2017, p. 243) who has a significant organizational impact. The company

secretary connects organizational decision-makers, oversees and manages information

processes in and around the boardroom and ensures company compliance with statutory

and legislative demands (Erismann-Peyer et al.,2008;Fuzi et al.,2019;Kakabadse et al.,

2016,2017). Nascent database research supports such a potential positive performance

effect (Nowland et al.,2020;Wang et al.,2019;Xing et al., 2019).

Whereas studies have been hinting at a growing influence of the company secretary in

board decision-making and the governance of corporations (Erismann-Peyer et al.,2008;

Kakabadse et al.,2016,2017), scholars and practitioners have also noted the (heightened)

challenges that contemporary company secretaries face (McKenzie, 2019;Peij, 2017;Peij

et al., 2015;Trubshaw, 2018). With the function moving away from a purely administrative

one toward a more strategic one,the required minimum technical, business and social skills

have increased (Erismann-Peyer et al., 2008;McKenzie, 2019;Rees, 2019). Moreover,

studies have noted that companysecretaries often operate in the space between the board

and management (McNulty and Stewart, 2015;Peij et al., 2015;Trubshaw, 2018), requiring

them to navigate sometimes conflicting demands. Furthermore, the legislative environment

has become more complex, with the ramifications of noncompliance increasing for

companies and decision-makers. On top of that, the company secretary function itself is

legislatively often less well-defined around the globe (Kakabadse et al.,2017;Nizaeva and

Uyar, 2017;Peij et al.,2015), thus creating ambiguity around the specific role company

secretaries are required to fulfill.

Given these (recent) developments surrounding the position of the company secretary and

our limited understanding of the critical challenges that company secretaries experience at

the coalface of board decision-making, our guiding research questions in this study were

focused on the following three related topics:

1. What are the key challenges company secretaries face in their job?

2. What are the key factors contributing to these challenges? and

3. Which interventions could help to address these challenges?

We qualitatively explored these questions in the Dutch context by analyzing the responses

provided by nearly 300 company secretaries across two survey waves in 2014 and 2019.

Our results indicate that thetop-3 experienced challenges are as follows:

䊏time pressure;

䊏working for multiple organizational bodies; and

䊏difficulties around the obtaining and processing of information.

Company secretaries indicated that these challenges both limit their job effectiveness (i.e.

meeting deadlines, completing tasks and delivering quality work) and undermine their

personal health (i.e. high stress levels and a distorted work-life balance). Resolving these

issues appears feasible yet complicated, given the myriad of social and structural factors

involved.

These results provide two key insights. First, our in-depth qualitative analysis of three key

challenges experienced by company secretaries highlights the complexities surrounding

the important support company secretaries provide in the governance of organizations.

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