PhD: Stewardship of UK Pension Funds. Framing the Character of a New Trustee 17 th February 2012 Angela Pober.

PhD: Stewardship of UK Pension Funds.Framing the Character of a New Trustee17th February 2012Angela Pober

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The Research

What frame defines the characteristics of a new trustee to become an effective board member, and hence the board to be effective?

Research Question

The works of Ervin Goffman and frame analysis helps define ‘interaction’, as trustees interact with others occasionally and within incumbent rules and constitution which has not been explored and defined in previous research.

Basis of Methodology choice

The intention is to create a model of the frame(work) which determines the character of the trustee over time.

Specific Aim

Pension deficits and media speculation on the sustainability of schemes means that trustees must make effective long term decisions.

As a non-executive director (Trustee) of a statutory Local Government Pension Scheme I was a new trustee 3 years ago and remember my own experience.

Personal Interest

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What is a Pension?

• A pension is a sum of money paid regularly as a retirement benefit.

• It is deferred pay.• Working people build up pension entitlements during their

working lives by making contributions and sometimes getting employer’s contributions.

• As a result, they receive a regular income when they retire.

Background

Pensions Trusteeship

Research

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Pensions in the UK are losing members

• In 2009, there were 8.7 million active members of occupational pension schemes with two or more members in the UK, of whom

• 3.3 million were in the private sector and 5.4 million in the public sector • In the private sector, 39 per cent of male employees and 28 per cent of

female employees belonged to an employer-sponsored pension scheme in 2010, compared with 52 per cent and 37 per cent respectively in 1997.

• In the public sector, male employee membership was unchanged between 1997 and 2010, at 87 per cent, while female employee membership rose from 75 per cent to 82 per cent

• Employee membership of private sector defined benefit (as opposed to defined contribution) pension schemes fell from 34 per cent in 1997 to 11 per cent in 2010; they are being close.

Source: http://www.statistics.gov.uk/hub/economy/personal-finances/pensions

Background


Research

http://www.statistics.gov.uk/hub/economy/personal-finances/pensions

http://www.statistics.gov.uk/hub/economy/personal-finances/pensions

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Other research questions could focus on the difference between public sector and private sector board member interaction; the topics being discussed at board meetings; or the appropriateness of the trustee model based on outcomes (years) after board decisions are taken.

Background


Research

As Private sector funds close and no new money comes in, trustees need to focus on having enough money to pay out until the last pensioner dies

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• Sheep: return property of same number and in good health

• Laws: Trust laws, Pensions Acts: 1/3 Member Nominated Trustees

• Regulation: tPR guidance, K&U, data, turn around times

• Careers: portfolios of Chairs and committees• Honorary and esteem• Board/Panel/Committee membership vs attendance

What is Trusteeship: a summary

Background


Research

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Roles on the Trustee Board?

Trustees

Chair of Performance Committee

Chair of Investment Committee

Chair of Remuneration

Committee

Chair of Audit Committee

CHAIRMAN

Investment Advisor(s)

Actuary

CEO/Head of Pensions

HR

Admin/Finance

Legal Advisor

Boarc Boarc

Executive

Secretary to The Board of TrusteesSecretary to The Board of Trustees

Company Nominated

Trustees

Member Nominated

Trustees

Paid Advisors

Investment

Background


Research

Constitution

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The Pensions Regulator expects each trustee to have taken the Toolkit within 6 months to demonstrate ‘knowledge and understanding’.

Background


Research

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The Research Plan• The plan goes from Oct 2010 out to 2014• Effort is in ensuring the data gathering method is monitored and administered• Writing up is an on-going activity• The plan will develop as the methods become more familiar and the recruits are on-boarded• This is a three year data gathering exercise• Qualitative longitudinal study with quantitative assistance from Expert Choice decision making software

1st Year 2nd Year 3rd Year

Oct-

Jan

Feb-

May

June-

Sept

Oct-

Jan

Feb-

May

June-

Sept

Oct-

Jan

Feb-

May

June-

Sept

Field Study

Literature Research

Review of Decisions

1st Draft

2nd Draft

Final Draft

Background

Plan Lit Review

ResearchMethodology &

MethodsFrame

Analysis Tool Next Steps

• Areas coveredo Stewardship Theoryo Agency Theoryo Governance: Corporate and Pensions,

institutionso Board behaviouro Trustees (Pensions)o Decision making: group and individual;

groupthinko Group dynamics: in & out-groupo Sense makingo Organisational Learning etco Knowledge and thinkingo Embeddednesso Influence

Key Papers/Books from:• Stiles & Taylor, Davis, Shoorman & Donaldson• Meckling & Jensen, Sappington• Keith Ambachtsheer, Fiona Stewart and Juan

Yermo. Thomas Clarke, J Solomon, B Garratt• Kakabadse(s), R Pozen, J Miller, A Strauss• Gordon Clark, Johanna Weststar and Anil

Verma, Hendrik P. van Dalen et al, O Mitchell• Robert Tattersall, Irving Janis, Roger J.

Volkema and Ronald H. Gorman• Milch et al, Ryan and Bogart, Castano et al• Kurtz & Snowdon, M Reis Louis• Herbert Simon, Chris Agyris• Karl Popper, Ayn Rand• Brian Uzzi, Mark Granovetter• Edgar H Schein

The Literature Review

KEY LEARNING: downloading lots of ‘stuff’ gave an illusion of progress but focus should have been on previous research in pensions arena to help inform the methodology and choices of methods to use rather than information to help analyse the data yet to be gathered.

Background

Plan Lit Review


MethodsFrame


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• Current research studies trustee competence, cognitive skills and decision making but has an investment only focus and is conducted outside of the board room and ‘tested’

• Also assumes a trustee is ‘oven ready’ and does not differentiate between fresher trustees and career trustees

• I will study the participant’s journey as a new and developing trustee in their natural setting, without influencing/directing their thinking and hence their journey within the frame

• Researching what is the perception of the new trustee of their own journey, what actually happens as ‘stewardship in action’ and also compare this experience to the literature which cites a version of what should happen

• Key question – how to determine the frame within which a Trustee’s character is developed

Eventually the Literature Gap emerged as a method gap and lack of differentiation in trustee population when ‘testing’ them

Background

Plan Lit Review


MethodsFrame


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Methodology: this gap, and the constraint of time, influenced the interlinked research design

Background

Plan Lit Review

ResearchMethodology

& MethodsFrame


2010

Qua

ntita

tive

2011 2012

Qua

litati

ve

Expert opinion on the frame: Triage/check

Personally observing the frame in action

Longitudinal Study: capture the experience of a brand new trustee

Today

Lite

ratu

re

Revi

ew Wide Search: Governance

Q4

2013

Serendipity: Networking for recruitment

Previous research

Dev

ices

Meths

MPhil to PhD conversion

Frame Analysis Relevance to Node-

coding

KCL Training

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3/Q4

Explore tools: nVivo, End Note, Livescribe, Expert Choice

PhD Website

Methods: where 3 methods, possibly another 2, use data from one method to inform the basis of the next method and then continues in parallel

Background

Plan Lit Review

ResearchMethodology

& MethodsFrame


2011

Qua

ntita

tive

Q4 Q1 Q2 Q2 Q3 Q4Q3 Q4 Q1

2012 2013

Qua

litati

ve

25x Elite interviews

5x Board observations

9xNew Trustee narratives via emails for 2 years1 3 4 5 6 7 8

New Trustee Concluding Interview2A

C

B

Today

Participant focus session

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Empirical, qualitative, longitudinal study, Grounded Theory, naturalistic, compared to Normative

KnowledgeLearningUnder/over socialisedMotivationIntent

EmbeddednessIn Group Out GroupGroup ThinkSense makingDecision makingBoardroom behavioursInstitutional norms

KnowledgeSense making

M1 2 hours+ to 2 daysBefore During After

M2Before During After

Gap 3 months

Interview/voted in

M3

Papers

Form preliminary views/ decisionPotential contribution

Presentations

InteractionConversationVoting

‘Training’

NA

Their realised personal outcome

Work-day jobConferencesMeetingsMagazinesNews

Trustee K&U at 6 month pointNew Trustee

Induction??

The Research Methodology was built around when Board meetings happen

Background

Plan Lit Review

ResearchMethodology

& MethodsFrame


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The participants in the 3 methods come from the following board roles

Trustees

Chair of Performance Committee

Chair of Investment Committee

Chair of Remuneration

Committee

Chair of Audit Committee

CHAIRMAN

Investment Advisor(s)

Actuary

CEO/Head of Pensions

HR

Admin/Finance

Legal Advisor

Boarc Boarc

Executive

Secretary to The Board of TrusteesSecretary to The Board of Trustees

Company Nominated

Trustees

Member Nominated

Trustees

Paid Advisors

Investment

Background

Plan Lit Review

ResearchMethodology

& MethodsFrame


6/9 of Method 1 New Trustee

emailers3/9 of Method 1

New Trustee emailers

Method 3 Board Observations

Method 2 Elite Interviewees

Others

RecruitersJournalists

Authors

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Frame Analysis is:• "I assume that definitions of a situation are built up in accordance with principals

of organization which govern events […] and our subjective involvement in them; frame is the word I use to refer to such of these basic elements as I am able to identify.“ (Goffman 1974)

• "Frames are principles of selection, emphasis and presentation composed of little tacit theories about what exists, what happens, and what matters.“ (Gitlin 1980)

• frames are basic cognitive structures which guide the perception and representation of reality

• which parts of reality become noticed?• what are the behavioral effects of different framings?• what frames does the participant articulate and what framing is going on (eg

journalists frame to deceive an audience)?

• Goffman, Erving. 1974. Frame Analysis: An Essay on the Organization of Experience. New York, NY et al.: Harper & Row. • Gitlin, Todd. 1980. The Whole World Is Watching: Mass Media in the Making and Unmaking of the New Left. Berkeley, CA,

Los Angeles, CA & London, U.K.: University of California Press.

Background

Plan Lit Review


MethodsFrame


http://www.ccsr.ac.uk/methods/publications/frameanalysis/





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Time in Quarters1 2 3 4 5 6 7 8

Frame Analysis based on a horizontal and vertical analysis of the data

Background

Plan Lit Review


MethodsFrame


New Trustee Participant

1

2

3

4

5

6

7

8

9

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New Trustee narrative (Method 1) is be coded and Expert Choice will be used as the tool in the Elite Interviews (Method 2) to compare the importance of the criteria which are articulating the frame

Illustrative screen shots of Elite Interview tool taken from Expert Choice Figure 1 Narrative Analysis – major categories

Background

Plan Lit Review


MethodsFrame


Each of the 3 areas influencing the frame of the Trustee have criteria important to their execution

Figure 2 Subcategories from analysis of new trustee submissions: pre-meeting activity

Background

Plan Lit Review


MethodsFrame


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Expert Choice drives the Elite interview. The Elite is asked to compare pairs to determine importance; the Elites will also be asked to provide their own list for pairwise comparison. Meaning the new trustee defined pairs are asked of all Elites but the data is triaged with the Elites’ version of ‘characteristics’ and framing.

Figure 5 Each (sub)category compared in pairs

Background

Plan Lit Review


MethodsFrame


The Expert Choice table is now complete, all pairs compared, each Elite response is added and averaged to get the cohorts’ view and the output is used, along with the additional new trustee narratives for board observations

Figure 6 Completed (illustrative) Pair-wise Comparison

Background

Plan Lit Review


MethodsFrame


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Expert Choice also produces graphical representation of the data. Figure 12 Example of various types of data displays from Expert Choice

Background

Plan Lit Review


MethodsFrame


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Finally, the research is currently…..

• Just received the 2nd of 2 Ethics Committeee approvals for how the Board Observations are to be executed. Note: everyone at the Board Meeting must sign a consent form meaning about 10-20 forms per meeting

• Booking the Elites chosen from serendipity encounters (another Ethics form), networking, personal contacts. Start end of April to do about 30 by end of 2012

• Run one rehearsal/pilot on the Expert Choice Elite interview process

• Start assessing which boards may allow access to being observed to complete the triage of data. Finish these by middle of 2013

• Write up remaining findings

Background

Plan Lit Review


MethodsFrame


Questions?

PhD: Stewardship of UK Pension Funds. Framing the Character of a New Trustee 17 th February 2012 Angela Pober.

Documents

trustee board

public sector

new trustee

pension entitlements

research questions

trustee model

previous research

cent of male employees