STEPPING UP TO THE PLATE
While the reasons and specifics for any organisation having to explain that something has gone wrong to its shareholders and stakeholders vary enormously and can be the fault of circumstances rather than mistakes being made, New Zealand organisations have had their fair share of things going awry over the years.
Just this year Fletcher Building has grappled with losses the company sustained in its Buildings + Interiors business and there have ructions at the Waikato DHB, and fall out at the Ministry of Transport over the actions of a convicted fraudster and the circumstances leading up to her conviction.
But Fletcher Building’s much respected chairman, Sir Ralph Norris, certainly stepped up to the plate over losses the company sustained and deserves kudos for his frankness and transparency.
In a letter to shareholders in September he stated that the board and management team took “absolute responsibility for this performance” and later in the letter that “the issues we experienced in B+I were the result of poor project and business unit governance and ineffective project management”.
Later in an earnings guidance in October he said that a “considerable amount of remedial action has taken place in the past year by the board, the executive team and the construction leadership team to address the issues we have experienced in our B+I business. We have improved business and project governance; improved systems and processes; improved the construction and commercial capability of the division; and introduced more commercial rigour around the bidding process.
“I strongly believe that these actions will address the issues we have experienced over the long term by ensuring our approach to bidding for, contracting and managing future projects is greatly enhanced. However, these measures will only go so far in altering the trajectory of our legacy projects that commenced some time ago.
“I want to offer my personal apology to our shareholders. Mistakes have been made and responsibility ultimately rests with the board. As we stated at our full year results briefings, we fully accept this responsibility.”
He had reminded shareholders in his earlier letter that Fletcher Building was not simply a construction company, and the performance of B+I was in stark contrast to the performance of the broader Fletcher Building portfolio and other businesses within the construction division.