The Role of Boards in Shaping Leadership and Culture in Local Authority Trading Companies

In the evolving landscape of public service delivery, Local Authority Trading Companies (LATCOs) have become pivotal vehicles for innovation, commerciality, and community impact. Yet, attracting and nurturing the right talent remains a challenge for many and is fundamental to success. At the heart of every thriving LATCO is a high-performing Board that translates the council’s vision and purpose into reality through clear strategic direction and the careful cultivation of a culture that supports those in LATCOs to flourish and apply their expertise effectively.

What is your purpose in establishing a LATCO?
Every organisation, especially those operating in the hybrid space between public good and commercial rigour, must be clear on its unique proposition. What is its purpose? And what is the council aiming to achieve in setting up a LATCO? The answer to this question is the golden thread that connects shareholder ambition with the strategic direction of the company, the business plan, the organisation’s culture, and the people who will ultimately make it a success. It is a question that needs revisiting as the organisation evolves and as political and economic forces affect the environment in which the company operates.

When shareholders, Boards, and leadership teams articulate a compelling answer to this question, it becomes the ‘golden thread’ running through vision, strategy, and daily decisions. It sets the conditions that underpin recruitment, retention, and culture. As several LATCO leaders have shared with me, clarity of purpose and mission isn’t just a nice-to-have; it’s a necessity for aligning staff, stakeholders, and shareholders behind a shared ambition.

Culture Eats Strategy for Breakfast: The Board’s Role
The Board’s influence on culture cannot be overstated. Culture is often described as ‘what happens when no one is looking’—the unspoken norms that shape how people behave, collaborate, and make decisions. For LATCOs, the Board’s role is to model and monitor the cultural attributes that will drive long-term success, not just short-term results. To manage the interface between the company and shareholder, to be an ambassador for the place, the council, and the company, and crucially, to provide independent scrutiny and challenge on performance against the vision and business plan. This is not solely the role of the shareholder; it is a shared endeavour to create the conditions and culture that allow the company to thrive.

From our experience of working with LATCOs across the country, the foundations for success are:

• Clarity of purpose: Shareholders and the Board must ensure that the company’s mission is both compelling and understood at every level of the respective organisations. This clarity links vision with tactical plans and the seemingly small choices made by teams every day.
• Building trust and maturing relationships: Time, continuity, and proximity with the council shareholder are key. Boards can help foster trust by creating transparent governance structures and maintaining open lines of communication. At the heart of the best-performing LATCOs are trust, transparency, and clearly defined expectations and accountability.
• Embedding commercial thinking without losing social purpose: The most successful LATCOs find ways to balance commercial discipline with civic impact. Boards must champion cultures where commercial skills are seen as a means to deliver greater public good, not as ends in themselves. It requires the ability to apply commercial expertise within the governance frameworks of the company and council, and to be motivated by the challenge of unlocking public value even in the face of adversity. The role of the Board is to foster this culture and ensure the executive remains sighted on the vision and purpose of the company and its alignment with the shareholder.
• Finding the right balance of autonomy and oversight: Companies need enough freedom to operate commercially, but not so much that they lose sight of their public service ethos or political realities. The Board’s oversight helps maintain this equilibrium and is predicated on the strength of the relationship and trust between shareholder and Board.
• Transparency and open governance: Providing visibility of key information to Boards, councillors, and teams builds confidence and ensures everyone is pulling in the same direction.
• Courage to say “no”: Cultural maturity involves stepping back from initiatives that don’t stack up. The Board has a duty to support and sometimes enforce these tough decisions as legally bound custodians of the company. Without the strength of the relationship between company and council, the ability to do this is limited and again highlights the importance of trust, particularly the role of the Chair in creating these conditions.

Standing Out and Attracting the Right People
With a clear culture and purpose established, the focus shifts to recruitment—another domain where the Board’s leadership is vital. In a crowded recruitment market, standing out requires more than a competitive salary. Whether recruiting for Executive or Non-Executive positions, candidates want to know: What is the ambition of the company? What does success look like? What freedoms and constraints exist within the governance structure? How ‘arms-length’ is the company from the council, and what does that mean for day-to-day life?

The recruitment experience should reflect the culture you are aiming to build. Boards must ensure that the process is transparent, inclusive, and aligned with the organisation’s values. This includes clarity about the type of person being sought, not just in terms of skills and experience, but also cultural fit and ‘cultural add’. It is not enough to assume that commercial expertise always resides in the private sector or that public sector backgrounds are less valuable. The best Boards look beyond these binaries, focusing on passion, purpose, and alignment with the company’s mission.

In stating the vital role of the Board, it highlights the careful consideration required around Board remuneration in attracting the right talent to lead a LATCO forward. While it is not the sole determining factor, it will affect the diversity and breadth of the candidate field as people weigh the balance of their portfolio or their ability to commit to a position alongside their day job.

The Board’s Ongoing Stewardship
Success in a LATCO context is rarely the result of one-off decisions. It is the product of ongoing stewardship by the Board and shareholder, ensuring that:

• The vision, purpose, and strategy are regularly revisited and communicated.
• There is access to the right skills at Board and Executive level, with diversity of thought and experience actively sought.
• The culture nurtured by the Board is one where people can thrive, feel valued, and are empowered to deliver.
• Performance is monitored not just in financial terms, but through the lens of social impact and long-term organisational health.
• Succession Planning: As the company evolves, so should the Board. The best Chairs and Boards will know when it’s right to bring in fresh thinking, different expertise, or when it’s time to step back and bring others in to lead the company forward.

The Board as Culture Champion
The LATCO journey is not a simple story of ‘private sector good, public sector bad’. As I have often observed, people on both sides of the fence can defy stereotypes. What matters most is clarity on vision, values, and the conditions needed for success. The Board’s role is to be both a guardian and a challenger: setting the tone, holding the organisation to account, and ensuring that the right environment exists for all to succeed.

In summary, Boards that invest in culture, clarity, and capability are the ones whose LATCOs will not just survive, but thrive over the long term.