How diverse is your pension trustee board?

The importance of diversity on a trustee board

A pension scheme trustee board is responsible for doing many different things - often much more than many other boards or corporate roles. Therefore, to be successful as a trustee board, you need a variety of skills and experience. You also need people from a range of demographic backgrounds, to represent different member perspectives, and with a range of different behavioural tendencies or ways of working. These are our three lenses to look at diversity: skills, demographics and thinking.

Each lens is critically important when it comes to the job of being a pension scheme trustee. But what might it mean if a subset of these characteristics are over- or under-represented in your own trustee board? In this article, we’ll focus on the lens of behavioral diversity, using the Saville Wave ‘Work Roles™’ model to explore what gaps, abundances or ‘blind spots’ might mean when it comes to the typical activity of a trustee board.

A word on psychometric models

In our view, you can only properly and reliably understand behavioural tendencies and preferences via a psychometric model – individual judgement and industry or role stereotypes can be too blunt, inaccurate or frankly inflammatory. But there’s an important point around choosing the right psychometric model — for us, that’s one that’s highly predictive of behaviours, focuses on behaviours in a professional (not social) setting and is sufficiently nuanced and granular to permit practical and targeted insights. Saville Work Roles™ delivers in each of these three areas:

The validity of the assessments

• The validity of the assessments gives an indication of how reliable the results are as a predictor of behaviours, i.e. if someone was to take the assessment multiple times, would their results be broadly similar?
• The Saville Wave model has been awarded the prestigious Gold Standard by the British Psychological society, due to it’s very high validity score. It is used across many sectors and countries and data is continually aggregated to strengthen the validity even further.

The context in which the results apply

• Different assessments apply to different settings and contexts. Whereas some assessments provide a holistic view of personality, others are exclusively focused on a specific context, e.g. the workplace.
• The Work Roles assessment focuses on how individuals prefer to work in a workplace setting specifically, rather than a personal or social setting. By better understanding how people prefer to operate in a work context, they can better understand the impact they have in carrying out their job of work.

The level of nuance to draw out insights and practicalities

• Different models vary in their complexity and granularity and offer different types of insights. Similarly, some models are focused on how practical takeaways can be drawn from results whereas others are more abstract in nature.
• There are 8 distinct Work Roles in the model which allows for a high level of nuance, through understanding the behaviours associated with the different combinations of the most and least preferred roles. The insights are very practical in nature, allowing the participants to quickly identify strengths, gaps and possible mitigations.

Under our preferred approach, trustees (together with, if helpful, their executive and advisory teams), complete a short psychometric questionnaire, which then generates individual reports for the individuals themselves to digest, and allows us to compile a ‘group profile’ of most and least preferred behavioural preferences.

It’s critical to say that there is no ‘good’ or ‘bad’ Work Role™ – each of the roles contributes to a team in an important and different way and all play a part in success. Similarly, the assessment is a measure of preference rather than capability — it doesn’t tell us if an individual is or isn’t capable of certain behaviours, but it may indicate which behaviours take the most or the least energy for them, depending on how they naturally prefer to work.

The 8 Work Roles

The results of the Work Roles™ assessment are grounded in thousands of data points from a series of relevant comparator groups — and effectively tell us that people naturally prefer to work in 8 different ways:

1. The Analysts: Analysts solve problems by using their knowledge and skills to break down and evaluate information. They are logical, like to look at all options, and want to find the right answer.
2. The Innovator: Innovators take a creative approach to problem solving and often focus on and develop long-term strategies — they tend to offer more unconventional insights.
3. The Relator: Relators are very people-oriented — they interact confidently, communicate effectively and are likely to make a positive impression on others.
4. The Assertor: Assertors readily take control of situations — they give clear direction, are purposeful in decision making and coordinate and empower others effectively.
5. The Optimist: Optimists tend to be resilient, calm under pressure, and positive. They can help to keep morale high, especially in a crisis.
6. The Supporter: Supporters are the ultimate team player — they are likely to understand the needs and feelings of others, establish rapport easily and prefer a team-oriented approach.
7. The Finisher: Finishers focus on completing tasks to a high standard and have strong attention to detail — they tend to be meticulous and check things thoroughly.
8. The Striver: Strivers push to achieve ambitious results — they are often highly enterprising and competitive and tend to identify and seize opportunities.

The job of a pension trustee

You may recognise yourself or some of your fellow trustees in the above descriptions. Completing the assessment gives you many insights about your preferences and what this might mean.

For now, let’s turn to how these preferences might show up in the role of a pension scheme trustee. Let’s take three examples:

Example 1: Operating an effective risk management system

TPR’s General Code demands we ‘kick the tyres’ on the risk management system that’s in place, to ensure that it’s complete, codified, up to date and engaging (see our recent article on learning from different sectors when it comes to pensions risk management here). Tasks include monitoring risks and ensuring controls are effective, scanning the horizon for evaluating the threat of new risks, and considering scenarios in which different risks might move together to the detriment of the scheme. We need Analysts who like to investigate the possible effects and ways to reduce these risks.

We need Finishers who naturally meticulously check every detail to make sure nothing has been missed and drive the discipline to embed these mitigations. But perhaps less obvious is the critical role of an Innovator here. We need Innovators to be willing to look around the corners at what risks might be coming our way, proactively anticipating and offering more unconventional approaches to managing highly complex risks. People with these preferences will do this naturally and well. Without them, we may miss significant risks before it’s too late. We may also miss out on the ability to look at and manage risks in different and better ways.

Example 2: Negotiating a funding agreement, buy-in deal or surplus distribution agreement

With an improvement in funding positions for many schemes, funding negotiations may be less protracted than in recent history. However, in approaching a transaction or agreeing other arrangements with a sponsoring employer, we can see the beneficial impact of certain behavioural preferences (or potential blind spots if they are absent). For example, we need Strivers to push us to achieve the best outcomes on behalf of members and spot opportunities to realise these outcomes in negotiations. We need Relators to interact confidently and communicate effectively with sponsors, building a constructive relationship for the future. And equally critically, we need Optimists to remain calm under pressure, be resilient in the face of challenging discussions and focus on the enormous positive impact that could come from the right deal.

Example 3: Making a discretionary award decision about member death benefits

As anyone who’s been a trustee for any length of time will know, decisions about the award of death benefits for members can quickly become extremely difficult, with sometimes complex family situations, competing claims and understandably high emotions. In this situation, our Supporters are key – their empathy and ability to understand and inhabit the different stakeholder perspectives ensures the decision is grounded in the real lives of those involved. Equally, we need Assertors to help us ensure a decision is reached, even in the face of complexity where it may feel like there is no single right answer. Analysts can help here, through assimilating the many data and input threads to drive the decision.

Understanding that we have an absence of individuals with naturally complementary preferences in these roles might lead us to re-shuffle roles or even recruit, or it might prompt us to introduce other mitigations such as bringing in external perspectives, introducing structural prompts e.g. within agendas or chairing practices, or suggesting training, awareness or oversight – the options for mitigating responses are myriad, but only if first we have spotted (and socialised) the gap, abundance or blind spot.

Through reflection on behavioural preferences, we can also distil important, sometimes profound, insights on the group dynamic itself – who speaks up, whether the board is comfortable with conflict, the time and space allowed for discussion, the willingness to make decisions – all feed into the effectiveness of decisions that are made throughout meetings.

So how do we go about understanding what our own preferences are and what the distribution of behavioural preferences might be on our own trustee boards and sub-committees? Where are our own gaps and abundances, and potential blind spots? And once we know what they are, what do we do with that information?

A board effectiveness workshop

To help trustees answer these questions, we run effectiveness workshops, with the purpose of helping the board create a deeper understanding of how they can work even better together as a group, through a clearer understanding of how they each prefer to work individually.

We introduce the theory behind the importance of diversity in high performing groups and the Work Roles™ model itself, before working through a series of interactive exercises that prompt the group to reflect on their individual results, consider the strengths of each Work Role™ and potential points of tension between them, and then, most importantly, explore the overall makeup of the trustee board preferences and what this means for the activities they undertake.

The group come away from the session better equipped to work together through understanding their fellow trustee preferences and with a series of practical takeaways they and we have generated for what they might start, stop and continue doing and how they can solve for any significant gaps.

Driving sustainable, positive change

The workshops we’ve run have never failed to be both fun and useful. But to be truly valuable, they must deliver lasting change. To do this, it is important that the workshop is not treated as a ‘one-off’ activity, but rather continues to live and offer benefits and sustainable change moving forward.

We’ve got a whole host of exciting ideas around how to keep the change alive, but as a starting point, the trustee board can use the knowledge and language of the framework to call out the need to dial up or dial down different perspectives as situations require them, and – we hope – continue to identify ways to continually improve. Often, gratifyingly, we hear that the vocabulary introduced by the workshop and model (innovators, finishers, relators, etc.) continues to be used months or even years later by boards and wider teams to this effect.

What’s next for trustee boards

To ensure that your pension trustee board is well-equipped to represent the diverse views and needs of its members, consider reaching out to us. Our expertise can help you get a better understanding of your board’s diversity, recognise the gaps and decide on any mitigations.

A board with a wide range of skills, experiences, demographic backgrounds and behavioural preferences is crucial for effective decision-making and risk management. Contact WTW today to learn how we can assist you in driving sustainable, positive change for your pension scheme.