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Con­trast that with the track record of “board whis­per­ers”: chairs with a rep­u­ta­tion for get­ting dys­func­tional boards and CEOs on track. Ex­am­ples in­clude Ori­gin En­ergy chair Gor­don Cairns, who has re­ha­bil­i­tated the Wool­worths board, and Com­mon­wealth Bank chair Cather­ine Liv­ing­stone, who steered Tel­stra back from the bel­li­cose era un­der chair Don­ald McGauchie and CEO Sol Tru­jillo. So what makes the difff­fer­ence? Build­ing a good, work­ing board doesn’t re­quire Mensa mem­ber­ship but it is an in­ex­act sci­ence: part art, part psy­chol­ogy and lots of dis­ci­pline.

Jane Bridge, the man­ag­ing di­rec­tor of con­sul­tancy Board­room Part­ners, says the high-per­form­ing boards she has worked with over 20 years share three char­ac­ter­is­tics: a di­ver­sity of per­spec­tives cou­pled with a shared com­mit­ment to the or­gan­i­sa­tion’s goals; skills and ex­pe­ri­ence rel­e­vant to the task at hand, with di­rec­tors know­ing and ap­pre­ci­at­ing what their fel­lows bring; and a chair who can com­mu­ni­cate and del­e­gate and has the re­spect of the board and the CEO. “Other things help,” she adds, “but I’ve never seen a great board that didn’t dis­play these three.” Bridge says the most efff­fec­tive boards have no more than 10 mem­bers (or­gan­i­sa­tional psy­chol­o­gists gen­er­ally rec­om­mend fi­five to nine), who are in­tel­lec­tu­ally cu­ri­ous and ded­i­cate “about three times the time al­lo­cated to board meet­ings”.

Ac­cord­ing to for­mer banker Har­ri­son Young, a di­rec­tor of the Com­mon­wealth Bank, the task of the board goes beyond hir­ing and fi­fir­ing the CEO to mak­ing “ap­ple­sand-or­anges de­ci­sions”: dif­fif­fi­cult judge­ment calls on com­pet­ing pri­or­i­ties and risks. He likens a great board to get­ting the right group for a din­ner party (but mak­ing sure no-one hangs around the table too long or over­does the pinot noir).

In his ex­pe­ri­ence, di­rec­tors need to tick mul­ti­ple boxes on the “skills ma­trix” be­cause boards al­ways need more skills and ex­pe­ri­ence than there are seats. “You want peo­ple who are difff­fer­ent, skilled and pro­fes­sional – and it’s al­most mag­i­cal how they in­ter­act,” he says. “Peo­ple bounce things offff one an­other. And an aw­ful lot de­pends on a shrewd chair who has an un­der­stand­ing of peo­ple dy­nam­ics and lead­er­ship abil­ity.”

First among equals, the chair is the con­duc­tor. “Get the right chair and things get fi­fixed,” says a for­mer se­nior di­rec­tor. “Bad chairs equal bad boards.” COR­PO­RATE boards have long been a rite of pas­sage to so­cial sta­tus and in­flflu­ence and offf­fer a lu­cra­tive post-re­tire­ment ca­reer path for a se­lect net­work of for­mer CEOs, CFOs and ad­vis­ers who’ve sur­vived the slip­pery pole of cor­po­rate pol­i­tics, risk and am­bi­tion. (Think of three re­cently re­tired CEOs – Wes­farm­ers’ Richard Goy­der, AMP’s Craig Dunn and Ori­gin En­ergy’s Grant King – who’ve all gone that route.)

On av­er­age, di­rec­tors are paid fees rang­ing from $93,000 to $258,000 a year – and more than $623,000 for chair­ing a top 50 ASXlisted com­pany – ac­cord­ing to re­mu­ner­a­tion con­sul­tants Egan As­so­ci­ates. Fees for chair­ing a big bank or a BHP ap­proach $1 mil­lion. Typ­i­cally, an ASX-listed com­pany di­rec­tor is a white man from an An­glo-Aus­tralian back­ground, aged 60 to 64, or if they’re a chair, 65 to 69. Fe­male ASX com­pany di­rec­tors tend to be younger, aged 55 to 59.

But pres­sure is build­ing to bust open these long-im­pen­e­tra­ble net­works. El­iz­a­beth Proust, chair of Nestlé Aus­tralia and the Aus­tralian In­sti­tute of Com­pany Di­rec­tors (AICD), says the best boards look beyond their ten­ure and guard against group­think. “They’re look­ing at the dis­rup­tions and ask­ing, ‘What do we need around the table and in the ex­ec­u­tive team?’ [Oth­er­wise] they’re go­ing to be over­taken by faster-mov­ing com­pa­nies.”

Boards can’t af­ford to be com­pla­cent, she says. “That’s why get­ting the best chair and di­rec­tors around the board­room table – not just in gen­der and back­ground but how they think – is re­ally im­por­tant. It used to be, ‘We need an ac­coun­tant to chair the au­dit and risk com­mit­tee, and a lawyer and a for­mer CEO.’ Not enough at­ten­tion was paid to broader di­ver­sity: are they strate­gic thinkers? Are they in­de­pen­dent-minded?”

Proust says that while a third of board roles are filled through search firms, net­works are still im­por­tant. “You have to en­sure that your own net­works and those of oth­ers are as di­verse as they can be. The old days of the men’s club as the net­work are be­hind us.”

Cai Kjaer, co-founder and CEO of net­work data anal­y­sis fi­firm Swoop An­a­lyt­ics, says di­rec­tors who have di­verse net­works are vi­tal for fu­ture-fi­fit boards. These nat­u­ral “con­nec­tors” carry in­flu­ence that goes far beyond their boards and open chan­nels for col­lab­o­ra­tion and com­mu­nity re­la­tion­ships.

Proust uses the AICD board re­newal and its in­creas­ingly efff­fec­tive pub­lic ad­vo­cacy as an ex­am­ple of what it looks like when a board func­tions well. Its 12-mem­ber board meets six times a year, has a 50:50 gen­der split and keeps a skills ma­trix of cur­rent ex­pe­ri­ence and fu­ture re­quire­ments. Last year, af­ter a gap in dig­i­tal skills and eth­nic di­ver­sity was iden­ti­fi­fied, IT spe­cial­ist Kee Wong joined the board. There are an­nual board per­for­mance re­views and lim­its on ten­ure (up to six years for a di­rec­tor and nine years for a chair).

Proust says she works to make the board efff­fec­tive through reg­u­lar check-ins, one-onone dis­cus­sions and meet­ing time de­voted to dis­cussing “how we’re go­ing and what we can do bet­ter”. Per­for­mance re­views are essen­tial.

Di­ver­sity of views is fi fine “but in the end, you’re play­ing in the team game”, says Proust. “The chair has to be able to har­ness all those difff­fer­ent ten­sions – in­clud­ing the al­pha personalities – and make sure ev­ery­one gets be­hind the de­ci­sion.”

It’s one of those things that’s done qui­etly. “When you hear about dis­putes, that’s when you know an or­gan­i­sa­tion is in trou­ble,” says Proust. “When there are fac­tions and infi f ight­ing and no con­sen­sus about strat­egy, that leads to a fo­cus on process and com­pli­ance rather than the in­dus­try. You need a strong chair be­cause some­times they need to move against a di­rec­tor or two who might be part of the prob­lem.”

Di­vi­sion on a board can be dis­as­trous. In 2015, the Wool­worths board was in dis­agree­ment over the choice of CEO and en­tered a pe­riod of infi f ight­ing, while profi fits slid and in­vestor stand­ing bot­tomed. At the end of that year, Gor­don Cairns re­placed Ralph Wa­ters as chair then re­freshed the board and hired new CEO Brad Ban­ducci.

Ahead of the com­pany’s AGM last year, Cairns found him­self be­ing ques­tioned on Twit­ter by a fund man­ager, who asked how many di­rec­tors used so­cial me­dia such as Face­book, In­sta­gram, Snapchat and Twit­ter, pur­chased goods through Ama­ or reg­u­larly shopped at the com­pany’s stores.

It’s a sign of chang­ing times. “In years gone by, di­rec­tors were largely in­vis­i­ble be­hind the cor­po­rate veil,” says Kirstin Fer­gu­son, who is on ASX-listed pri­vate and govern­ment boards, in­clud­ing the ABC. “That’s disappearing with scru­tiny via so­cial me­dia. Gov­er­nance, risk, strat­egy, fi­fi­nan­cial over­sight – those tra­di­tional skills are not go­ing to dis­ap­pear but the speed we need to work at will change.”

THERE’S now an in­creas­ingly im­pa­tient and ca­pa­ble group of aspir­ing di­rec­tors who are keen to dis­rupt a board­room model that, as Cairns puts it, is largely “male, pale and stale”.

Since 2010, the AICD Chair’s Men­tor­ing Pro­gram has matched 250 fe­male mentees with sea­soned chairs and di­rec­tors. At last count, more than a quar­ter of new ASX-listed


IT’ S NOT ABOUT‘ OUT WITH THE OLD AND IN WITH THE NEW ’. IT’ S ABOUT ADDING THE NEW. PAU L SMI T H Co-founder of the Fu­ture Di­rec­tors In­sti­tute

com­pany di­rec­tors had come from this pool. Some who’ve gone through the pro­gram have quickly found them­selves in de­mand, in­clud­ing for­mer Best & Less CEO Holly Kramer (now on the boards of Wool­worths, Aus­tralia Post and AMP) and for­mer Ran­dom House Aus­tralia and New Zealand CEO Margie Seale (who is on four ASX boards: Tel­stra, Ram­say Health Care, Bank of Queens­land and Scen­tre Group). An­other, Ilana Atlas, was men­tored by ANZ chair David Gon­ski and rapidly ap­pointed to three of his boards. Re­cently, she re­placed him as chair of Coca-Cola Amatil.

Un­der the pro­gram, for­mer pub­lisher Ma­rina Go, chair of Wests Tigers NRL club and Of­fif­fice Brands, was men­tored last year by En­er­gyAus­tralia chair Gra­ham Bradley, for­mer chair of Stock­land. Go says Bradley set out to make as many in­tro­duc­tions as he could. Within a month, she joined Au­tosports Group ahead of its ASX fl float in late 2016. Her sec­ond large role, on the board of En­er­gyAus­tralia, was a year in the mak­ing.

The Fu­ture Di­rec­tors In­sti­tute aims to equip gen Xers and Yers for the board­room and help boards fif ill gaps in youth and dig­i­tal think­ing. “It’s not about ‘out with the old and in with the new’,” says co-founder and en­tre­pre­neur Paul Smith. “It’s about adding the new.”

With mil­len­ni­als fore­cast to ac­count for 75 per cent of the work­force by 2025, ad­vo­cates for more youth and dig­i­tal smarts on boards say these per­spec­tives are nec­es­sary for ba­sic risk mit­i­ga­tion. Holly Ran­som, who, at 27, is Port Ade­laide Foot­ball Club’s youngest-ever di­rec­tor, says boards can gain in­sights and learn from younger peo­ple and vice versa.

Other ways boards are bring­ing in new blood are shadow boards (where a group of young em­ploy­ees tack­les a prob­lem and re­ports back to the board on how they would solve it) and the board ob­server pro­gram (where a young aspir­ing di­rec­tor sits in for a year to get a feel for what’s re­quired, while the board gets a more youth­ful out­look). In the re­cent AICD re­search re­port From

Blind Spots to Sweet Spot, Robert Kay and Chris Gold­spink of In­cept Labs sug­gest that the mag­ni­tude and speed of dis­rup­tion across mul­ti­ple spheres (so­cial, tech­no­log­i­cal, fi­fi­nan­cial, en­vi­ron­men­tal, po­lit­i­cal) brings the po­ten­tial for mul­ti­ple blind spots. Above all, re­silience must be­come a core sur­vival skill squarely in the re­mit of com­pany gov­er­nance.

El­iz­a­beth Bryan, chair of In­sur­ance Aus­tralia Group, told the Aus­tralian Gov­er­nance Sum­mit in March that boards will have to guide their com­pa­nies through rad­i­cal changes in their ex­ter­nal en­vi­ron­ment, or­gan­i­sa­tional struc­ture, man­age­ment and even the ser­vices they pro­vide. Quot­ing from Joshua Cooper Ramo’s The Sev­enth Sense: Power, For­tune and Sur­vival in the Age of Net­works, she said: “We need to un­der­stand that we are not liv­ing at a nor­mal mo­ment.” Not a nor­mal mo­ment but a test­ing new norm. Are we ready?

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