The questions are part of Aon’s work with behavioural science specialists Behave London to develop a suite of Trustee Effectiveness tools and techniques that will allow scheme trustees to improve the way they manage their workload and make decisions with greater confidence.
One of the main worries for trustees is their collective ability to make informed and timely decisions and to implement them effectively. Pension trustees are expected to make decisions on a range of topics, however they are unlikely to be as knowledgeable on every topic as the advisers who are presenting them with recommendations.
Susan Hoare, principal at Aon, said: “When talking with trustees, we often hear that when they meet with their advisers they might not feel in a position to ask challenging questions on every topic presented. For this reason, we have developed a set of questions for trustees so they can challenge the advice they are given. These are less about querying the technical detail of what they are told but more about using superior questioning techniques to provide them with the information to make an informed decision.
“The research undertaken with Behave London has helped us to identify the decision making biases we are looking to overcome. The ten questions, grouped into six different areas, will help pension trustees to understand the decisions they need to make, to test them and to assess how robust ideas are - all the way through to their completion.”
Susan Hoare continued: "As an example, using a devil's advocate lens and utilising ‘pre-mortem’ type questions (like question 6) can help trustees see the potential causes of what could go wrong in advance of making a decision."
Lesley Titcomb, chief executive at The Pensions Regulator, said: “The Pensions Regulator welcomes the development of tools like this, which provide ways for trustees to assess their current levels of governance and set targets for improvement. As part of our work on 21st Century Trusteeship we would like to encourage trustees to regularly assess their board effectiveness and we welcome initiatives developed by industry to support TPR’s drive to improve governance.”
Ten questions to help trustees challenge their advisers:
Understanding the decision
1. What is the rationale for the recommendation?
2. How would you articulate this decision to all your stakeholders?
Testing the decision and alternatives
3. Are there simpler or cheaper alternatives that obtain similar outcomes?
4. What are the alternatives and why have they been discounted?
Devil’s advocate lens
5. What are the consequences of not making a decision, now / next quarter / next year?
6. In 12 months’ time, everything has gone wrong, what are the possible causes?
Interaction with long term strategy
7. How does this fit with our long term plan?
8. What might this decision prevent us from doing now or in the future?
Implementation and project management
9. Who, how, what, when? (making concrete plans)
Measure of success
10. How do we measure the success of this decision, and by when?
The research with Behave London builds on the work of the Aon Trustee Checklist and is focused on looking at group decision-making biases. The research canvassed the opinions of over 120 trustees on what they feel are the most important items to cover in their role, particularly given the increasingly short time they have available to make decisions. Additionally, Behave London also tested over 300 members of the general public in order to identify how trustees differ in the way they make decisions once they have assumed their role with a pension scheme.
Other tools developed as a result of this research include:
• A Trustee Meeting Framework - to better utilise time spent at meetings,
• Behavioural Checklist for Chairing a Meeting - to create the right meeting environment tot promote effective decision making,
• The Meeting Organiser - to create structure and organisation and to manage progress between trustee meetings.
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