The Post Office is appointing postmasters to its board. Such progressive thinking is terribly rare

The state-owned company needs to improve relations with its franchisees after a devastating scandal, and this is a good move, writes James Moore

The Post Office is holding an election to its board from among its postmasters and postmistresses (Richard Lee Photography)

In just eight days, 8,000 postmasters and postmistresses, along with partners in regional chains, will for the first time be able to participate in an election that will see two of their number joining the state-owned company’s board. 

This is an all-too-rare example of progressive thinking in business, in which non-executive directors (Neds) are usually selected from a limited pool of candidates, seemingly on the basis that they’ll get on well with the chair and won’t rock the boat too much. 

This has led to the creation of a small class of people who sit on boards for a living. They’re mostly men, although women are more common than they were, and they mostly come from a very narrow range of backgrounds. They tend to look, and especially think, alike. 

To understand why the Post Office is doing something a bit different, you have to look back at some of its unhappy recent history, most notably the Horizon computer system scandal. 

Problems with Horizon, developed by Japanese company Fujitsu, led to the misreporting of financial information, often involving large sums. Sub-postmasters, as they used to be known, struggled to challenge errors because they were unable to access the necessary information. 

Dozens ended up being wrongly convicted of crimes, including theft, fraud and false accounting. A total of 47 appeals are now pending and the Post Office has said it will not challenge 44 of them. More may follow. 

A civil action, brought by more than 500 sub-postmasters, led to a £58m settlement. With significant challenges ahead, including changes to remuneration as a result of the ending of the Royal Mail’s monopoly, which will allow competitors such as DPD and Amazon to work with the Post Office, it has clearly had some work to do to repair its relations with the people on whom its business depends.

Nick Reed, the Post Office’s chief executive, and his colleagues seem alive to the issue, and the decision to reserve two seats on its board for what are, in effect, franchisees is a savvy move. 

Neds have various duties, including looking after the interests of the company as a whole and its shareholders (in this case the government). But appointing directors from within the ranks of postmasters should provide the Post Office board with the sort of perspective that’s been lacking. 

Big company directors will happily bend your ear about the amount of time they spend speaking with stakeholders: customers, employees, suppliers, etc. What’s become very obvious to me, though, having written about business for many years, is that the vast majority of directors don’t do much in the way of listening. They like to think that they do, but they mostly hear what they want to hear, and the way the companies they oversee often conduct themselves is reflective of that. 

A lack of perspective in the boardroom, and the tendency towards groupthink, helps to explain why they so often fall flat on their faces and end up in the midst of avoidable PR snafus and sometimes worse (see above).

Despite this, they vehemently oppose reforms that would allow a wider range of people into their club. The limited progress that has been made – the steady, if still too slow, improvement in the number of female directors would be one example – has only been achieved in the teeth of fierce opposition. 

It is still the case that only a handful of companies have employee directors. FirstGroup, the transport company, speaks highly of its experience in this area. After a scandal over worker treatment at its Derbyshire warehouse, Sports Direct, now called Frasers Group, followed suit.

This isn’t the same as having what the Post Office is pressing forward with. In both cases, however, the businesses concerned have accepted the need for something beyond a line-up of identikit Neds looking to pick up a nice portfolio of fees at the end of their frontline business careers. 

The Post Office’s move isn’t problem-free. While a majority of the six-strong shortlist, drawn up after a selection process, are non-white, there isn’t a single postmistress on it. The company says it has three women on its board, but that isn’t really the point. It also doesn’t yet have a director selected from among its 3,000 staff, but perhaps that’s something it could look at in future. 

Even so, it should still be commended, all the more so if this encourages a few more businesses to pull their heads out of the sand.