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Specialist Advisers to the Boards of Australia
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The Tone at the Top - Boardroom Partners Lunch Series: Innovative Disruption in the Boardroom

At the last boardroom lunch discussion held in April 2014, Sandra Hook discussed the challenges and opportunities presented by ‘digital disruption’. Sandra had terrific real life case studies in three areas we could all relate to – the music industry, Television and the world of print – newspapers and magazines.


While our guests were from very different backgrounds and industries, all could relate to the massive shifts and need for adaptive thinking required at board level to stay abreast of, never mind ahead of, the technology tsumani.


As a CEO and senior executive with News for many years, Sandra offered some considered ‘lessons’ from her own experience that translate well to all our client boards represented at the lunch. For a copy of the slides click here.

 

Reflections on Being a Director on a Government Owned Corporation Board

On 16 October 2008, Michael Lambert, Non Executive Director on Energy Australia, NSW State Superannuation Board, Queensland Racing Ltd, Racing Services Australia, the Asylum Seekers Centre and the Sax Institute presented an informed view about the challenges and opportunities of sitting on a commercialised government owned board.

Michael talked about the great changes over the past 20 years in government ownership and the move to bring commercial skills onto boards, particularly those operating under Corporations Law and with a requirement to pay a dividend to the state Treasury.  As an ex-Head of NSW Treasury, Michael was well placed to give his own insights into the requirements of board membership and offered his own reflections on the main differences from the private sector.  These differences were notably the single shareholder; the complexity of reporting; the restricted mandate and defined charter; the capital structure and lack of access to the debt and equity markets as well as other dimensions relating to the appointment, remuneration and performance of board members.

Guests included those with government board experience and those aspiring to it, and there was much lively discussion within the group before we closed the event after coffee and all headed back to work.

Look out for details of our next event, and thanks to all those who came for making this so interesting and apologies to those who missed out.

 

How to Specify What You Need in a New Director

A most successful event was enjoyed by all who attended our boardroom lunch on 27 March, 2008. Chairmen and directors of diverse listed and unlisted organisations offered their views on what was critical to boards selecting a non-executive director (NED).

First speaker was our Managing Partner, Jane Bridge who has provided advice and input to hundreds of board searches across Australia, for over 10 years. Jane spoke about some of the best and worst of these as background to a discussion around what a successful search and recruitment process involves.  She also talked about the ‘easy’ aspects of developing a specification and some of those which were harder to define or relating to ‘style’ and ‘culture’.

Barbara Ward, Chairman of Country Energy then spoke, sharing her wealth of experience sitting on various public, private and government boards. Barbara has searched for candidates and been a candidate herself so could speak with authority from ‘both sides’.

The majority of guests agreed that there was no shortage of talent in the pool of available NED’s but directors were being more selective in their choice of boards and some were concerned about director liability.

On the whole our guests concluded unfavourable board experiences were associated with:

  • family owned companies where emotional influence can compromise good decision-making.
  • Government boards because of their vulnerability to interventions not in the organisation’s interest.
  • boards where the CEO has great influence in the selection process and where the board is disengaged.
  • boards which lack a defined timetable and don’t a have a clear idea of the desired selection criteria.
  • overseas based companies which are restricted in decision-making.
  • a ‘boys club’ selection process where skills and background are vetoed over personal interests and hobbies.

Best search experiences cited were with:

  • companies in IPO mode which needed to assemble a full board of new members.
  • top 50 companies which had Nomination Committees to invest the time to formulate the ideal requirements.
  • unlisted companies that didn’t have a board but had a clear vision for their future.
  • overseas companies which provided clarity when identifying specific key skills for an NED.

In conclusion Boardroom Partners distributed a checklist around the requirements of a search process. Click here to download a copy.

 

Boards and Independent Performance Evaluations – How and Why ?

Boardroom Partners hosted a round table seminar on 20 February 2008, which focussed on independent board reviews and why they assist boards to achieve their full performance potential. Key presenters were Jane Bridge, our Managing Partner and Bonnie Boezeman AO, Chairman of PayPal Australia, both of whom have worked with many boards over the years and experienced the benefits of reviews.

A majority of the attending guests were directors and chairs of organisations from diverse industry sectors (finance, health, media, entertainment, energy and government), and all were keen to share their experiences. Most agreed the following:

  • Independent board reviews help define the roles and responsibilities of the board and its members.
  • They provide a view of how the board is perceived when people outside the board such as external stakeholders and senior management are included.
  • Potential problems and conflicts are more readily identifiable – a “circuit breaker” device.
  • They set the tone for an organisation and enhance or restore shareholder confidence.
  • They align board practices with strategy and highlight how and where the board has made a difference.
  • Appointing an independent facilitator, even a trusted Chair from another company, achieves a more objective and transparent process.
  • A formal and tailored process is generally preferred to make the review relevant.
  • Regular reviews allow boards to benchmark their performance against previous years.
  • Keeping questions consistent from year to year facilitates benchmark comparisons but at the same everyone acknowledged the importance of expanding the review to accommodate a changing environment.

There was discussion around the various aspects of conducting a review (whether the board should be examined as a whole and/or look at individual contributions to encourage self assessment), the types of questionnaires used (electronic and/or otherwise), and the feedback process. There was also broad discussion about the key objectives for a review from different people, and some ideas were:

  • “member-elected” boards (eg some credit unions, super funds, health or union organisations) where board membership is a “given” and so reviews need to have a strong developmental/educational focus.
  • “growing” boards who want to know how to improve the way they operate and are interested in benchmark comparisons with “best” boards.
  • boards where reviews are an incorporated requirement in their charter - a compliance approach.
  • “not-for-profit” boards who tend to have limited time and resources available yet are often keen to learn.

All in all, our guests concurred that boards need to focus on a balance of skills regarding their composition rather than the appointment of directors through their own favoured and internal network. The general consensus was:

  • independent board performance evaluations are worthwhile;
  • anonymity can help dysfunctional boards achieve improvements;
  • boards can be reinvigorated;
  • they can better identify and resolve their issues;
  • they can achieve harmony and effectiveness.

 

Round Table Seminar 12 December 2007:

A Changing Profile Directors on ASX200 Boards

On 12 December 2007, Boardroom Partners hosted a most successful end of year Round Table Seminar 2007 with Dr Susan Tiffin, who presented the results of recent research conducted with directors of ASX 200 boards, who were fifty years of age and younger.

25% of the group of around 100 of these ‘young directors’ participated in our research study. Issues included the decision to take up board positions; the appointment process; board effectiveness and the key governance challenges faced in the future. Key themes that emerged from the report included:

  • Young directors are broadly positive about their own futures, while all shared concerns about the ever changing environment (The risk: reward equation; workload and overall responsibilities)
  • Career paths for men and women under 50 are quite different – women are more likely to have been appointed through a search firm; men are more likely to have been appointed through more traditional routes – including their own networks, or appointment by virtue of being in a position that ‘owned’ a seat on the board.
  • Age is becoming part of the overall consideration of a ‘balanced board’.  Many participants believed that their ‘young’ age had been a factor in their appointment and that it had certainly not worked against them.
  • There was broad agreement that there is still room for improvement in overall board effectiveness – this includes the orientation process, director development and evaluation of directors.

Guests who were directors of boards from varied companies, contributed to an interactive and productive discussion and identified with our findings.  Our guests were in agreement with the research findings and offered the following comments based on their own experience:

  • A difference in approach by search firms when recruiting women and men.
  • A more vigorous and structured recruitment process would be preferred.
  • ‘The same old lists’ of candidates from search firms was acknowledged as an inhibitor to getting new (younger) talent onto Australian boards.
  • Induction and development processes were largely passive and still conducted on an ad-hoc basis.
  • Identifying conflicts of interest was an important decision making factor when appointing directors.
  • The workload of directors overall was manageable but increasing.
  • There was a positive view to staying on boards and an awareness of the risk factors involved.
  • Whilst the slow movement of directors off boards was acknowledged, consideration was also given to the risk of loss of talent from high frequency movement, particularly where corporate memory is important.
  • Time served should not be confused with contributions made.

Guests agreed that the most critical factors influencing their decision about an offer of a board role were integrity, respect for, and calibre of the board. The majority also advocated the necessity of a Board Review process, age cap, transparent decision-making and succession planning in order to achieve the “right mix”. However with regard to more complex boards of large or international companies, they acknowledged accountability to be a major risk factor and believed this, together with disproportionate remuneration, to be disincentives to their accepting board positions.

For more information and to read about our ‘Changing Profile’ research paper in full, please click here.

As this has been a most popular series with limited seating, we recommend that you book in early to our next round of seminars which will continue in the New Year. We look forward to your participation.

 

Round Table Seminar Series Launched

On 7 November 2007, Boardroom Partners held its inaugural Round TableRound Table Seminar - Changes to the ASX Corporate Governance Guidelines  Seminar. Speaker Iain Thompson, a principal of Boardroom Partners and key expert in applied corporate governance, was joined by a number of directors and chairs from high profile companies to discuss the implications of the recent changes to the ASX Corporate Governance Council Guidelines.

On the whole, our participants agreed that the most important issues of responsible corporate governance were the independence of directors, board performance evaluations and shareholder approval. Views differed on the ideal length of tenure for directors and whether long tenure compromised director objectivity, relevance, independence and experience. However it was agreed that it was the board’s responsibility to assess the status of directors and identify and justify their independent and non-independent classification. Other ideas about improving board performance included reducing the size of boards, the acquisition of more experienced directors and the issuing of quarterly Committee reports as a prudent means of monitoring potential risk factors.

In summary of the revisions, all agreed the following:

  • The revised guidelines are clearer and better expressed. Companies are encouraged to apply them to their own circumstances rather than follow a prescribed format.
  • It is up to the Board to determine the independence of Directors. If on the information disclosed, a non-executive director is not independent, the Board is required to explain on the “if not, why not” principle.
  • Material risks have to be identified and addressed. Those include non-financial risks.
  • Board performance evaluation is now the usual practice but the techniques of evaluation do not seem to be as highly developed as is the case for executive performance.
  • In the case of performance evaluation and risk management, companies are required only to confirm that a proper process is in place. They are not obliged to disclose details that may be confidential in nature.

The Round Table Seminar series continued on 12 December 2007 with a discussion lead by Susan Tiffin about the experiences of younger directors on ASX 200 boards.

 

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