Governance Matters Blog/News

  • In pursuit of faster, higher, stronger governance

    Sports Governance

    Anyone with even a passing interest in Australian sport will be aware of the ongoing bun-fight between the Australian Sports Commission (ASC) and the Australian Olympic Committee (AOC) when it comes to how well – or poorly – national sporting bodies are doing in terms of governance.

    And, more pertinently, what needs to be done about it.

    It all started after the less than stellar performance of our athletes at the London 2012 Olympics when governance reform of the various sporting codes – in the shape of the first set of Mandatory Sports Governance Principles – was mooted and subsequently introduced. read more

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  • If gender diversity is broke, fix it!

    It was Albert Einstein who once famously said that doing the same thing over and over again and expecting a different outcome was tantamount to insanity.

    And his sage words should be heeded in the gender diversity debate where, despite years of well-intentioned initiatives to close the gender gap on boards and achieve greater diversity, only marginal improvements have been achieved – especially given the time, effort and money ploughed into these programs.

    In fact, in a strictly business context, returns on investment of this nature would soon see companies out of existence.

    This is why I found a recent article on companydirectors.com.au so informative.
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  • Ton up…and time to reflect before we bat on

    Bring out the cake, light the candles, pop the champagne and charge your glasses.

    That’s what we’re doing at Governance Matters this week as we toast a significant milestone – this being our 100th blog – and celebrate a longevity that tells me from your feedback that what we’re sharing is resonating and, in its own way, playing a part in us becoming better leaders, directors and, ultimately, people.

    While reflecting on this, I happened to come across the key findings of a comprehensive 10-year study into great executives and what they have in common and I thought it timely to set aside the cake and bubbles for just a moment and share them with you.
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  • A new age of enlightenment for boards

    Getting in the heads of the younger generation, talking in a language they speak and generally honing in on all those hot buttons that get them charged up, passionate, excited and engaged seems to be a perennial moan among people of our generation.

    And, doubtless, the generations before, when confronted by we baby-boomers back in our salad days…and before our time too, probably all the way back to when Adam was a boy.

    What’s more, it’s a challenge that goes way beyond the confines of the dinner table or social circuit discussions of the more mature generation and is increasingly being played out at board level, both in the corporate and not-for-profit sectors.
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  • Howzat – a representative board that works well

    We all know that representative boards bring challenges related to partisanship but they pale into insignificance when compared with the troubles that arise when the representatives don’t enjoy equal status at the boardroom table.

    Just ask the International Cricket Council (ICC) who, about three years back, allowed something of a coup d’état – orchestrated by the so-called ‘Big Three’ of India, England and Australia – to occur.

    They would stand alone, above and more important than the other seven full members, presumably as beacons of benevolence.
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  • Adding a touch of spice to annual reports

    You may recall that a good few blogs back, we touched on the great work a UK-based organisation, Eden Project, has done in consistently producing stimulating, refreshing and inviting annual reports.

    And with annual report preparation season in Australia less than six months away it’s timely for listed companies, government organisations and not-for-profits to turn their thoughts to the 2016/17 annual report. So I thought I’d stress there are annual reports – and then there are annual reports!

    Sadly most tend to follow a rather bland model that does little more than tick all the statutory compliance boxes.
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  • Time to take a giant leap on the strategy front

    Picking up on where we left off last time, may I start by saying that when we talk strategy these days, there’s a desperate need for us to take a giant leap.

    Gone are the days of incremental change…the world changes rapidly and we must change with it.

    A risk averse and compliant board tends to pull away from a risk-taking mindset.

    And while strategy doesn’t always work out, boards need to have the integrity to invest in this.
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  • Finbar raises the bar on risk and innovation

    A recent blog, entitled ‘Success Comes from Seeing Ourselves as Others See Us’ and delving into board self-assessment certainly resonated with one of our readers.

    So much so that he took time out to respond, initially with a short, sharp and succinct “nice article” and subsequently with some pertinent thoughts I think are well worth sharing.

    You’ll recall the original blog argued the importance of self-assessment while warning against undertaking this exercise simply because it has become rather de rigueur to do so.
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  • DGA launch signals new era in data governance

    You may have seen a report earlier this month about the establishment of a new independent body tasked with setting industry standards around data.

    You may have noted, too, how important a focus is being placed on the new group, with its head none other than the highly respected former chair of the Australian Competition and Consumer Commission (ACCC), Graeme Samuel; and the launch being told that “setting industry standards for the use, collection and application of data is something that cannot be avoided much longer”.

    This is a significant moment for those of us who operate in the governance space as the formation of the new body, Data Governance Australia – or DGA – is overdue recognition that data and its handling is now very much a governance matter.

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  • Asia’s shining stars in corporate governance

    Okay, here’s a little quiz I suspect you’ll find rather interesting…

    The latest Corporate Governance Watch 2016 findings for Asia have just been released, with rankings provided for the 12 key Asia-Pacific markets and over 1,000 companies operating across the region.

    Can you name the companies, preferably in alphabetical order?

    Just kidding, what I’d like to know is who you think came out tops, who took silver, who grabbed the last remaining spot on the podium and who picked up the dreaded wooden spoon?
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  • Success comes with seeing ourselves as others see us

    The famous Scottish poet and lyricist Robbie Burns is probably best known for penning the words of “Auld Lang Syne”, cheerfully muttered and spluttered at numerous New Year’s parties around the world.

    What, you might well ask, has this to do with governance?  Well, the man also known as the Bard of Ayreshire happened to write another poem entitled “To a Louse” which carried the immortal line “O would some power the giftie gie us to see ourselves as others see us.”

    And I guess that’s where governance – and we at Governance Matters – comes in, with our Board Skill Set and Diversity Assessment.

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  • Best practice board paper retention in the electronic age

    A client recently asked for advice on best practice when it comes to the retention of board papers.

    I had to compose myself to provide the answer as my head filled with images of the silly things people have scrawled in the margins of their hard copy papers and filed them, only for the scribbles to return at a later date to haunt them!

    Yes, I’m pretty sure we all have some scary stories to share – and I’ll do so a little later – but for now, let’s consider what constitutes best practice.
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  • Adding ‘foresight’ to ‘oversight’ responsibilities – Part 2

    Welcome back.

    Our next trend that needs to be on board agendas is thinking the unthinkable. Astute and visionary boards will consider what’s out there, even potentially out there, that could seriously destroy their hitherto successful business model. They will keep this question in their collective heads day in and day out, forever examining the landscape and quizzing the shifting sands.

    And when new marvels like Uber and airbnb suddenly present themselves, as if out of nowhere, you’ll have considered the impacts of such entrants and devised plans and strategies to deal with their presence.
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  • Adding ‘foresight’ to ‘oversight’ responsibilities – Part 1

    KPMG’s respected 2016 Global CEO Outlook landed on my desk not that long ago and while it’s packed with interesting information, perhaps most striking was the finding that close on half of all global CEOs expect their companies to transform into a significantly different entity in the next three years.

    Of course, this presents opportunities, along with challenges and even threats, the most significant challenge for boards being trying to navigate between their ongoing ‘oversight’ or supervisory role and their increasing responsibility to provide ‘foresight’ when it comes to expectation and likelihood in a murky future littered with unknowns.

    That’s where strategy, that perennial that must forever and a day be on the board’s agenda, comes in…and, with it, being visionary. And we know that the more diverse a board is in its make-up, the more visionary its strategy is likely to be and, in turn, the more prepared and successful the company can expect to be.

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  • Boards are no place for sectarian sentiments

    You’ll recall our last blog touched on the first of new British PM Theresa May’s two targets for a corporate governance overhaul – that of making shareholder votes on pay binding.

    We now shift our focus to the second, and equally, ‘un-Conservative’ thrust that’s generally more aligned with the trade union movement… getting employees on to company boards.

    Ms May may have lost the plot on this one, though. That’s my humble opinion.
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  • When a binding vote shouldn’t be a bind for boards

    New British PM Theresa May has hardly got her feet under the desk at 10 Downing Street and already she’s sending out signals that she’s committed to a corporate governance overhaul – making shareholder votes on pay binding and getting employees onto company boards her two main thrusts.

    And while it sounds more like the words we’d expect from Labour leader (well, at least he is at the time of writing) Jeremy Corbyn, these sentiments are to be welcomed.

    Let’s take a closer look at the first issue, that of giving shareholders a binding vote on executive remuneration, this week, before turning to the employee representative matter next time.
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  • Taking committees to task

    As mentioned in Part I of our discussion on types of committees versus task forces, the key differences are longevity and composition.

    Governance committees are permanent structures, made up of board members, there to advise the board in an ongoing capacity. The board might also create shorter-term task forces – bodies like a building committee to oversee the construction of a new building. These task forces will typically comprise a mix of board members and external industry experts. They will then disband once the project is over.

    There is, however, one exception!
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  • Committees designing horses key to board governance

    We’re all familiar with the analogy that a camel is a horse designed by a committee.

    It’s a rather unflattering comment on the ineffectiveness that can arise when too many people with conflicting opinions need to arrive at a decision that, by definition, will reek of compromise.

    Which is why the composition of committees – and, indeed, their close relations, task forces – is so important to a board fulfilling its primary governance function of wise and considered decision-making. The board needs the help, input and assistance from various committees to allow it to do just that.
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  • We nominate for greater independence

    There’s an inescapable truth – or what Al Gore might have branded an ‘inconvenient truth’ – that when the best skilled and equipped are in charge, the chances of everything running like a well-oiled machine are greatly enhanced.

    And we’ll only get these when factors like impartiality and objectivity take centre stage and bias, prejudice and self-interest are pushed to the wings and beyond!

    Which brings me to the vital role the nominations’ committee plays in increasing the chances of an organisation – be it a not-for-profit or a commercial entity – purring along smoothly.
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  • Effective board papers….it’s as simple as E=mc2!

    It was a very smart person who said something along the lines of “if you can’t explain it in simple terms, chances are you don’t understand it yourself”.

    That smart person was Albert Einstein – and I’m delighted to be able to concur with him, certainly when it comes to the preparation of board papers from management.

    My golden rule, especially when we’re dealing with those matters seeking a decision from the board, is for management (that’s you!) to think of the board members as 12-year-olds (no offence!) when writing up the papers.
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  • Hanging ten on the technology wave of communication

    Bob Dylan famously sang – some would argue barked – about ‘the times they are a’ changing’ and that’s pretty much the anthem boards need to adopt when it comes to communicating with their shareholders.

    Quite simply, the traditional way is no longer the way.  It’s not cutting the mustard, the technology has moved ahead and research trends tell us all we need to know about the appeal of the time-honoured Annual General Meeting (AGM).

    So why do we find most boards still holding the traditional annual gig for shareholders in a traditional way?
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  • A trio of tips so you don’t trip up on your journey to a Board

    There’s a certain allure about serving on a board and it’s not hard to understand why. There’s the status, the professional development it offers, that special access to other influential business leaders and, of course, a warmth that comes from ‘giving something back’, especially when you’re sharing your talents with the not-for profit sector.

    And while the motivators may be many, there are just three stages you need to cover off on if you’re to end up at the right company, on the right board. Let’s call them my trio of tips…

    They cover what to do in preparation, what to do to make the approach and those things to consider before saying yes.
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  • The ABCCC of Director Selection – Part 2

    Picking up from where we left off last time while discussing the 11 key dimensions of character, as argued by a team of academics at Western University’s Ivey Business School in Canada in their “Leadership on Trial: A Manifesto for Leadership Development” research, coming in at number five is humility.

    Like humanity before it, humility is paramount as without it, directors are incapable of learning from others. Or, indeed, from their own mistakes.

    Then there is temperance, in essence the ability to remain calm while all about you are in a flat panic.  Sadly, it is seldom top-of-mind…until some almost overwhelming risk blows up in the organisation’s face and its true value in the very fibre of directors becomes imperative.
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  • The ABCCC of Director Selection

    I had an interesting piece sent to me just recently, an exercise conducted by a research team from the Ivey Business School at Canada’s Western University that delves into the key criteria boards should consider when assessing and appointing anyone to a leadership position, including a director.

    Entitled “Leadership on Trial: A Manifesto for Leadership Development”, the comprehensive paper identifies competencies, commitment and character as the three most important measures. It goes on to argue that of the three Cs, character is both the most important and most difficult to assess.

    Competencies, of course, matter. Like commitment to the position and the organisation, they are pretty much givens as they define what a person is capable of.
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  • When ethical behaviour sits comfortably alongside financial performance

    ESG may sound like just another TLA (that’s three letter acronym) but it’s one that’s making quite a noise on the corporate governance landscape. And it’s poised to get a whole lot louder in the months ahead.

    So listen up…

    ESG, of course, stands for environment, social and governance…and the good news is it is requiring boards – particularly those in trustee positions – to shift their thinking from bottom line to triple bottom line.
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  • The Seven Deadly Sins of Board Papers

    A singular specimen of the scientific class of Aves contained within the boundaries of the upper prehensile is roughly equivalent to the double inventory of that item within a low-spreading thicket.

    Huh?

    Simply put, that’s “a bird in the hand is worth two in the bush”.

    And simply put again, such verbose and rambling language fills one of the spots in what I call The Seven Deadly Sins of Board Papers.
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  • The shifting sands of auditing should send signal to boards

    You might recall back in mid-2015 we chatted about the Australian Securities and Investments Commission – or ASIC – and its push to make it easier to prosecute company executives and directors for overseeing poor business culture that leads to very poor business performance.

    We spoke then of it representing a seismic shift on the governance landscape and it’s good to learn that the rumblings continue, this time in the corridors of some of the world’s most prestigious accounting firms.

    Just recently, KPMG announced that it has broken with a century-long tradition of hiring only accounting and economics graduates for its auditing section by taking on 42 graduates in this area who boast none of these qualifications. Rather, they come with what are termed “soft skills” – in areas such as mathematics, IT, social science…and even counter terrorism.

    What’s more, KPMG anticipates that one-third of its almost 400 audit graduate intake this year will have no accounting background.
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  • Bean there, counted that…

    When I was approached recently to be part of a panel discussion on a board’s expectation of its Chief Financial Officer – or CFO – I thought: that’s easy enough.

    But in preparing for the event, it dawned on me just how dramatically the CFO’s role has changed over the past decade, so dramatic, in fact, that I thought it worth sharing with you.

    Back then, a short 10 years ago, your average CFO was predominantly concerned with budgeting, accounting, the financial statements and the considerable paperwork that accompanies all these important activities.
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  • Bells set to toll for independent schools governance

    If there’s one thing in Australia that’s almost as certain as death and taxes, it’s that what happens in one state or territory, particularly in the area of governance, is bound to send ripples into all others.

    Which is why the recent announcement by the New South Wales government of increased requirements for non-government – or independent – schools should get the bells ringing across this educational sector, in every nook and cranny of the country.
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  • People power on the rise as history repeats itself

    There I was, trundling along in the car the other day when an interview on Radio National pricked my interest.

    There was this chap chatting to Fran Kelly about co-operatives as a modern – and paradoxically, a rather old – answer to the growing trend of governments and businesses exiting from certain services.

    He was saying citizens are increasingly coming together to take ownership of the problem or challenge and to do something for themselves.
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  • This time, the joke is on me!

    You will recall we had a look at some lighter moments in the boardroom, those generated by the chair and directors, in last week’s blog.

    It’s now time to bring our blog program for 2015 to a close and, as promised, we’ll end with the joke being fairly and squarely on me…

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  • It’s the silly season so time for a little light relief!

    Yes, governance has something of a reputation for being a little dry, but believe me, there’s humour aplenty in the boardrooms of Australia, some of it generated by the members and directors, others by yours truly when consulting to boards.

    And as most of it is unintentional, it only adds to the hilarity.

    So, with the silly season on our doorstep, I thought we’d end the year on a lighter note by getting into the seasonal mood and closing with a two-blog series on boardroom comedy.

    In the first blog, I’ll recall some of the funnies I’ve heard in my line of work and just to balance the ledger, I’ll devote the second to a few of my stumbles.

    Here goes…
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  • Taxing Times 2 – The Lore

    The law behind us, let’s turn our attention to the lore and explore those changes afoot that are being driven largely by a growing global sense of fairness and the notion of good corporate citizenship.

    Generally speaking, modern society holds the view that as a company benefits from the people and places where it operates, it should give something back.

    Today, there’s very much a social contract to trade in a fair and community-minded manner in every jurisdiction where you happen to operate. And if you don’t, you run a very serious and potentially devastating risk to your reputation.
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  • Taxing Times 1 – The Law

    Tax and the taxing times it can potentially cause boards is something I’d like to look at over the next two blogs, spending some time on tax law and some time on tax lore!

    Let’s start with the law, particularly the international implications of the various tax regimes across the different jurisdictions and the veritable tightrope boards sometimes need to walk to keep everything kosher with people like the USA’s Inland Revenue Service (IRS) and our Australian Taxation Office (ATO)…both understandably keen for their legally entitled slice of the tax pie!

    For most boards of small Australian companies, there’s not too much to concern themselves with. After all, beyond the GST, providing for long service leave and perhaps attending to the odd acquisition, that’s generally as far as it goes.
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  • Five simple steps to social media nirvana

    Hi, Talia Hagon here again, to conclude our two-part social media soiree.

    Okay, we’ve agreed that a social media strategy that feeds into the overarching corporate strategy is a vital component of the modern organisation. We’ve also accepted that the board must ensure that social media and the social media strategy gets the high priority it deserves if they’re to fulfil their primary role of charting a successful course for the company.

    So what next? What are the most important things to consider before you launch your organisation into the dynamic world of social media? read more

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  • Radio Interview on ABC Adelaide with Ian Henscke on how ICAC findings and governance are connected

    Our Managing Director, Kate Costello talks with ABC Adelaide’s Ian Henschke on the topic of how ICAC findings and governance are connected.

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  • When it comes to social media, the greatest risk is….

    Social media – two words that excite so many but fill others with white knuckle trepidation…and as many of the latter seem to find themselves sitting around the boardroom tables of corporate Australia, Kate Costello has asked me to share my social media thoughts with you.

    My name is Talia Hagon and social media is my business. It brings me into contact with countless board members and directors and a startling observation is that many don’t have an understanding of or passion for the digital world.

    So in a two-part blog, I’ll explain why boards should insist on their organisations having a social media strategy and conclude with what I believe are the mandatory elements of such a strategy.
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  • The Super Shake-Up Solution

    Regular followers of these blogs will recall that we ended last week on a contemplative note, pondering the dilemma facing not-for-profit super funds that might well have to change the make-up of their boards if proposed Federal Government legislation to improve governance in the sector gets through the Parliament.

    To recap, the dilemma was that while these funds have tended to perform better than their corporate cousins, arguably because of their ‘we’re here for our members’ rather than ‘we’re here to make money for our shareholders’ philosophy, they’ve also historically had weaknesses.

    So how do we retain those vital values while ensuring the boards have the requisite skills and diversity?
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  • The Super Shake-up Dilemma

    The Federal Government’s recently introduced Bill aimed at changing the governance landscape at non-profit superannuation funds, key among them that one-third of the directors are independents, as is the chairman, is to me a bit like the curate’s egg.

    It’s good in parts, which probably explains the raft of opinions on the subject.

    Banks like the model, unions don’t. But then powerful people like former Australian Workers Union boss and Australian Super director turned KPMG consultant Paul Howes likes it too, as does retiring SunSuper chief investment officer David Hartley.
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  • Our states and their states of mind

    I’ve often wondered whether we Australians are as parochial as we’re sometimes made out to be, whether our primary loyalty does indeed lie with our state, followed by our country. We’re said to be first and foremost South Aussies or Victorians, Tasmanians or New South Welshmen (and women!), Queenslanders or Western Australians – and let’s not forget our Territorian twins!

    If an email I received the other day is any indication, there’s more than a grain of truth in that assertion.

    You may recall a blog about two months back when I said the ability of a board to listen to stakeholders is perhaps the fundamental tenet of good governance – and it can be particularly tough, not to mention prickly, in federated member-based organisations where traditionally there’s a balancing act between listening to the regions and having functioning, national entities with effective boards characterised by impartiality and neutrality.
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  • Tapping into advisory boards is an intelligent move

    While there has been some debate around the importance or otherwise of advisory boards – and I guess the conclusion ultimately determines their value – there’s savvy aplenty in the general rule that getting added intelligence into the company can never be a bad thing.

    Intelligence, of course, is one of the key currencies that separates the great companies and organisations from the good ones (and the not-so-good ones!) and any vehicle that can serve as an astute sounding board and inject some high level thinking into the corporate conversation should be welcomed.

    As the name implies, the advisory board is there to provide advice, which can then be used to inform the decision.
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  • When ignorance can be anything but bliss

    We spoke last time about representative boards and the self-interest that can inflict them but equally disturbing is the role ignorance can play in both the creation and ongoing preservation of these boards.

    The ignorance, of course, seldom comes from the individuals who sit on these boards.

    Rather, it’s more likely to stem from the architects, those who establish them, often with little regard for how costly and ineffective the structure they are creating might be.
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  • What the ICC is doing is just not cricket!

    We’ve spoken about representative boards and the many challenges they face but as these seem to be akin to the gift that keeps giving, it’s timely to take another look.

    When we last explored the subject, we concluded that representative boards – those national or international boards made up of representatives from the member states or countries rather than people best qualified for the tasks at hand – invariably carry baggage.

    Self-interest and personal agendas immediately spring to mind. It’s very hard to think bigger picture when you’re answerable to your state or country.
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  • When the honeymoon’s over

    If there’s a truism in serving on a board, it’s that the smart money is on just about every one of us reaching our sell-by date and if we don’t read the signs, we can expect the dreaded tap on the shoulder.

    Hi, my name is Dr Marcia Hewitt and during a recent chat with Governance Matters’ Kate Costello, we got onto the subject of the shelf life of a board member – and more importantly, how one deals with the perfectly natural feelings of disappointment that come with having to leave a board when you don’t want to go.

    We threw a few thoughts around, before Kate thought it would be a good idea if I wrote a guest blog on the prickly issue.

    So here goes, with thanks to Kate for some wise counsel along the way…
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  • The good, the bad and the ugly of governance

    It’s got to the point these days while poring over the raw results of board performance evaluations that we look across at each other and instinctively begin to hum that instantly recognisable theme tune from the movie ‘The Good, the Bad and the Ugly’, because that’s precisely what this potpourri perennially presents.

    ‘We’ happen to be Mel and Sascha, aka ‘the ladies behind the throne’ at Governance Matters, and our years of backroom experience in examining unsanitised results has given us what we believe is an if not unique then certainly different perspective on board behaviour.

    We thought you’d be interested to learn what we’ve found to be the most common shortcomings of boards – and what’s surprising is not so much our list but the fact that these seemingly no-brainers make it onto the inventory in the first place!
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  • The ten steps to Federation nirvana

    As we’ve discussed in earlier blogs, the world of federated entities is complex in a governance sense, with regional baggage and partiality just two elements adding to an already tricky landscape.

    So I thought it timely and beneficial to devote some time to sharing what I believe are the 10 steps to success for federated entities in the not-for-profit sector.

    Firstly, there needs to be a common strategic direction, a plan for the entire country, with each entity’s strategic and annual plans aligning with the national direction and fitting in with the Australia-wide umbrella.
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  • How to tell the star CEO from the ‘disa-star’ CEO

    Every board, across all sectors, has as its most important job the selection of the CEO, hopefully a very good or exceptional CEO as they’re the stars you want, they’re the ones who produce current and future success for the entity.

    However, one of life’s little ironies tells us that often it’s the troubled organisations that have the ‘star’ CEOs and in my time I’ve seen too many examples of so-called star CEOs, overflowing with charisma, who have driven the entity into the ground.

    They’re either megalomaniacs or they push their own agenda which ends up failing or they’re profligate in spending money.

    So how do you know a real star from a disa-star?
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  • Too many CEOs a sure sign that something’s rotten

    It was Marcellus in Shakespeare’s ‘Hamlet’ who famously said ‘something is rotten in the state of Denmark’ and there’s a reason why he said ‘state of Denmark’ rather than just Denmark; he’s emphasising that all is not well in the very top echelons of the political hierarchy.

    Enough of my recollections of my school set works but this is not idle rambling… there’s a point to it.

    And it’s this…in the world of corporate governance, it’s true to say that when there has been CEO churn, there’s something foul and unpleasant at the top of the organisation, in its boardroom.
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  • Sense and sensibility of strategy sessions

    Our experience, through board evaluations we conduct, repeatedly tells us that more than 80 per cent of directors feel they don’t spend enough time on strategy or are as effective as they should be when it comes to setting strategic direction.

    That’s a startling – and scary – finding, especially as strategy and strategic direction is one of the primary functions of a board.

    What’s perhaps even more startling and scary is that boards, generally speaking, tend to continue to walk down the same ‘strategy path’ even when history tells them it’s not the cure-all, the magic bullet it’s made out to be.
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  • Listen up…here’s the primary tenet of good governance

    For most of us blessed with hearing, it’s probably true to say not too many of us are great listeners. Yes, we all hear, but do we really listen?

    I pose the question because in the world of good governance, perhaps the fundamental tenet, the beacon that stands head and shoulders above all others in this multi-faceted discipline is the board’s ability to listen – really listen – to its major stakeholders.

    The primary stakeholder is, of course, the owner or owners and shareholders of the entity or, in the not-for-profit world, the members.
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  • ASIC looks to get tough on corporate culture misfits

    When companies collapse and the extensive forensic investigations have been completed, there’s usually a common element lurking in all corporate collapses, in all countries, all over the world.

    A toxic corporate culture that has been allowed to fester.

    All of which makes the recent news out of Canberra that the corporate watchdog, the Australian Securities and Investments Commission – or ASIC – is pushing to make it easier to prosecute company executives and directors for overseeing poor corporate cultures that lead to poor outcomes for consumers.
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  • FIFA’s many own goals…..and our complicity

    There are few, if any, organisations on this planet that could have provided us with such a litany of case studies on how not to go about your business as our dear friends – or is that fiends? – at FIFA.

    Indeed, anyone who has followed FIFA’s history knows that they’re seldom far from controversy when it comes to business dealings and the organisation’s sorry governance track record. You could say they’re clearly in a league of their own when it comes to scoring own goals.

    Which begs the question…why did everyone sit around and do little or nothing until the US regulators started to investigate the organisation and found all was not as it should be?
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  • Getting antsy about ACNC governance standards

    It looks like the ACNC may well survive. On 24 June the Senate moved a motion calling on the Government to withdraw the ACNC Repeal Bill. Many see this as good news.

    The ACNC is widely applauded but, I have to say, I was disappointed in the set of governance standards realised by the ACNC last year.

    That mildly crude old Australian expression of being as useful as a one-legged man in an arse kicking contest came to mind when I first saw the documented standards.

    Now I’m not having a dig at the Commission, but…………

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  • It’s time to blow the whistle on negative connotations

    Whistleblowing.

    Now there’s a word to conjure up a raft of emotions, almost every single one of them negative.

    That’s quite ironic as I believe the term was coined back in the 1970s by US civic activist Ralph Nader to avoid the negative connotations associated with words like “informer” and “snitch” – and in the Australian vernacular, “dobber”.

    Before moving away from the semantics, may I just say how much I personally detest the word “whistleblower” as the act itself should be one overflowing with positivity and celebrating undeniable and admirable ethics.
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  • Bringing bad directors to book

    The world’s full of good and bad – good and bad foods, good and bad books, good and bad movies. The list is endless and somewhere in there you’re bound to find good and bad directors.

    As it’s the bad directors who threaten to disrupt the good workings of the board and, in turn, the entity they serve, it’s worth having a look at just some of the tell-tale signs of bad behaviour.

    But before we do, it’s best to consider what we can do about it, to turn it around for everyone’s benefit. After all, we’re all about finding solutions to issues and challenges, right?

    The short answer is: talk to the chair as it is their responsibility to lead an effective and functional board.

    And if the chair won’t address it and allows the bad behaviour or practice to continue, there’s your problem – a deeply deficient chair who needs replacing…and a reminder of the old proverb that a fish rots from the head.

    Let’s get back to bad behaviour.

    You may wish to start by asking yourself whether you have ever seen any of the following happening at board meetings…
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  • The reality of neutrality

    The famous Scottish poet, Robbie Burns, once wrote “Oh would some power the gift give us, to see ourselves as others see us” and that’s pretty apt advice when it comes to impartiality – in all walks of life, including the boardroom.

    We all like to think of ourselves as balanced, fair and neutral individuals and for the most part, most of us are. But there’s one area of governance where it gets tricky: our ability – or lack thereof – to look at something objectively when facing a decision that might negatively impact on us personally.

    Going back a good few years, I was involved with an 11-member board and it soon became abundantly clear that the evidence suggesting a board should never exceed nine members was spot on.
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  • When ABC stands for appallingly bad conduct….take two

    You’ll remember I ended last week’s blog on the subject of abject behaviour saying we’d need another blog to bring the theme to an end – and here it is.

    So let’s look at a few more examples before we close the chapter and look ahead to brighter days around the boardroom table.

    No session on boards going bad would be complete without mention of that perennial poison, conflict of interest. As with last week’s example, what makes this one particularly galling is that it is again committed by a legal professional, who should know better.
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  • When ABC stands for appallingly bad conduct….

    I thought I’d spend a couple of minutes today mulling over a few situations where the behaviour of a board member has done nothing positive for the organisation and its smooth functioning.

    Nada!

    And perhaps most disturbing is that it’s more often than not done without realising the negative implications and comes down to ignorance, hubris, nepotism or an inability to convert the intellectual into the practical – or any number of toxic cocktails of the three.
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  • Orica ‘explosion’ highlights payout pitfalls

    Corporate bullying has been in the news again lately, this time the incident at mining explosives supplier Orica in late March grabbing our attention in the media.

    But when the TV and radio news bulletins move on and the papers become tomorrow’s fish and chip wrappings, we’re left with the stark reminder that, if companies are to protect and retain their standing as good corporate citizens, the days of rewarding recalcitrants are well and truly over.

    Or at least they should be.

    If you’re not familiar with the details of the Orica explosion, I’ll recap briefly…
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  • Radio Interview on ABC Adelaide Mornings with Ian Henschke

    Listen as our Managing Director, Kate Costello talks to ABC Adelaide’s Ian Henschke about bullying on Boards.


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  • We are never too old to learn

    We’re coming to the end of our ‘Top 10 Steps to Being an Effective Director’ series of blogs and I sincerely hope it has been a learning journey.

    Which, conveniently, allows us to segue to our final topic – and that’s a desire to continue to learn, continue to improve.

    Research, empirical and anecdotal, has long highlighted the fact that we’re at our best when constantly engaged in personal and professional development. We’re never too old to learn and those directors who adhere to this truism are invariably at the top of their game.

    Continuous improvement for board members comes in two forms – personal evaluation and ongoing education.
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  • No women, no high!

    I’m just taking a momentary break in our ten part blog series on what makes a director effective because of recent Australian research…..

    I recall a number of years back and when the lonely female on one particular board, the chair was prone to saying things like “…let’s get the violins out…” whenever I raised gender issues or distributed articles on corporate diversity.

    Well, I’m sure he was well and truly rosin up the bow when respected new research was published just last month highlighting that those Australian companies with at least 25 per cent female boards perform more than seven per cent better than those with all-male boards.

    The research, by the Centre for Gender Economics and Innovation and Infinitas Asset Management, also found that while the level of gender diversity is “frustratingly low”, it is growing, with 63 companies in March 2015 achieving the 25 per cent threshold compared with just 15 in mid-2010.
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  • When abiding by the law alone is not enough

    It should come as no surprise that one of the key attributes of a good and effective board member is an unswerving commitment to ethical and fair behaviour.

    But that’s not as simple and as straightforward as it sounds, especially in a world where what’s lawful may be frowned upon by large sections of society and viewed in a particularly negative light.

    It demands of the modern director to be attuned to what’s going on, both when making judgement calls as an individual and as a member of the collective – the board.
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  • Tri is the trick to articulation and persuasiveness

    We’ve all come across them in our time, those individuals on boards who fail to be heard by their co-directors.

    There are those who simply can’t be heard because they’re as quiet as proverbial mice, seldom saying anything.  Then there are those who are so damn garrulous that they find it impossible to pause even at hefty punctuation points, their voices so constant that they soon become little more than background drones.

    In a word, both are dispensable – precisely because superior board members make an effective and positive contribution…and you can only do that when you’re articulate.  With articulation comes persuasiveness.
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  • Raise your glass to the cocktail of differing points of view!

    International governance expert Dr John Carver is on record as having said that just because you establish a group of intelligent, competent and caring individuals does not mean that as a group they’ll make intelligent, competent and caring decisions.

    He argues further that all too often it’s because we as human beings lack the courage to say what we really think, for a variety of reasons.

    And yet, it’s the cocktail of differing points of view – in life as much as around the boardroom table – that invariably leads to healthy and robust discussion and debate…and generally speaking, great decision-making.

    So what is it that prevents us from displaying this courage – and more importantly, how can we rediscover our mettle?
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  • Seven’s the magic number in achieving sound business judgement

    A recent survey in Britain revealed that when it comes to numerology, the number seven takes the cake.

    Perhaps it’s because the number appears regularly throughout cultures and history – there’s the seven ancient – and modern – wonders of the world, seven days of the week, seven circles of the universe, seven deadly sins and seven basic musical notes.

    And so much more, like the ‘The Seven Fs – Tactics to Improve Board Decision-Making’ I’ve recently compiled!
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  • With a sharp mind, you’re a cut above in the director stakes

    We all know that most board members are, more often than not, appointed on the basis of the specific skills or expertise they have in the sector in question, along with a strong reputation as a contributor at executive level.

    And while that’s likely to ensure the board is populated with good and competent people, it doesn’t necessarily take it to rarified heights.

    For that, you need directors with the aforementioned attributes plus a sharp, enquiring mind and an insatiable thirst for learning.

    That’s when you get directors who are a cut above…and in turn, a board that’s incisive in every sense.
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  • You don’t have a choice when it comes to care and diligence

    And another thing…..effective directors are careful and diligent.It may come as a bit of a shock and surprise to some of you, but being a diligent and conscientious board member is not a matter of personal choice. It’s a whole lot more serious than that…indeed, it is enshrined in our law. And another thing….effective directors are careful and diligent.

    Legally, the duty of a director is to display care and diligence at all times, to the extent that they exercise thoughtfulness and attentiveness in their role and have a reasonable grasp of the organisation’s financial position – after all, they physically sign off on the financials – and its operational aspects.

    Some may think that’s a rather ambiguous definition, one that’s open to interpretation, and there’s even an argument that we’re dealing in semantics here.

    So perhaps it’s best to clear the air and delve into the legal definition of ‘care and diligence’.
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  • Detailed inductions pivotal to understanding how the organisation works

    Effective board members understand how the organisation they are on the board of works. While there are doubtless many avenues to gaining an understanding of how an organisation works, few can be as imperative as a detailed and thorough induction process.

    And yet recent research tells us that a staggering 83 per cent of board members feel less than satisfied with what passed as ‘induction’ when they assumed their board positions.

    That’s pretty damn scary – and all I can say is that new board members should DEMAND an effective induction, one that’s more than a series of introductions and a copy of the minutes from the last year’s board meetings but rather, a well-planned process delivered in digestible servings over several months.
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  • When you know your role, the good times roll….

    Let’s get started on our Top 10 steps to being an effective director by tackling the first of these which, quite logically, is knowing what our role is and understanding what we’re there to do.

    There are two components to this, the first one is knowing what we as individuals are to do and the second comprehending our role as part of the collective, as a cog in the greater wheel that is the board team.

    The key to success, like many things, can be found in the detail – in other words, in the quality of the director role description provided.
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  • Talking Business with Alan Kohler on Qantas Radio

    Listen as our Managing Director, Kate Costello talks to Qantas Radio’s Alan Kohler about the importance of evaluating your board, individual directors and Chair.

    Click here

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  • A 10-step guide to being an effective director

    As I’m sure the vast majority of us wish to be the most effective board members we can be and make a positive and lasting contribution to the companies and organisations whose boards we serve on, I thought I’d share our findings on the characteristics needed to do just that.

    But before I do, perhaps it’s opportune to have a look at what the celebrated professor of corporate governance at the Kellogg Graduate School of Management at Northwestern University in Illinois, Robert Neuschel, said about the issue.

    More to the point, how his findings tally with those we’ve unearthed during our quarter century in the governance consulting arena – and hopefully allow us to arrive at a universal truth.
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  • We all love it when a plan comes together….

    I’m sure there are a good few of you who remember, fondly or otherwise, that 1980s action adventure TV series, The A-Team, and team leader ‘Hannibal’ Smith, who reminded us all too frequently that he loved it when a plan came together…

    Old Hannibal knew a thing or two about planning – and then working the plan. He knew that success was seldom a matter of chance and almost always came down to careful and methodical preparation.

    Similarly, successful boards appreciate that astute planning is the bedrock of their organisations’ success, so you can understand why it baffles me that there are still so many boards out there that continue to attend to planning for the new financial year in a manner that can only be described as piecemeal.
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  • The board’s policy when it comes to policy-making

    It is widely accepted as one of a board’s primary responsibilities – and it is also a rather straightforward task…which makes it all the more surprising that boards, generally speaking, seem to be so universally mediocre at it.

    ‘It’, of course, is the board’s vital role in policy-making and, more to the point, giving life to the policies, making them top-of-mind and integral to the company’s culture and behaviour.

    I’d like to highlight just two of the more common pitfalls in this regard and offer a few simple, tried-and-tested measures that are sure to remedy them.
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  • Bullying at the boardroom table

    When we experience or learn about bullying around the boardroom table, we’re often taken aback, shocked and disbelieving.

    Surely, we rationalise, these are intelligent adults, eminently capable of conducting themselves in a manner that’s well above that of the schoolyard tyrant? And surely they appreciate that bullying is simply not on, that it breaks just about every workplace health and safety regulation?

    The harsh reality, though, is that boards and boardrooms, just like everything else in our world, are pretty much a microcosm of life in general, filled with a cross section of people.
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  • Getting in with the “in cloud”

    Something I read the other day immediately had me hopping onto my old hobby horse and I instantly thought it beneficial to take you all along for the ride. So climb up…

    Yes, it’s the subject of just how vital, how non-negotiable it is for boards to act and operate at a strategic level, today, tomorrow and forever more. How essential it is for people in whatever their sector to be conscious of what is happening around them and, most importantly, how these developments could impact on the business and perhaps even threaten its very existence.
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  • When vested interests should be of no interest

    When board appointments are based on criteria other than skills, you’re just about guaranteeing that one of two things will happen – at best, you’ll deprive the board of a fighting chance to do the very best it can for the organisation in question; at worst, you’ll ensure that it will all end in tatters and tears.

    That boards still tend to select directors on other grounds suggests that the notion vexes some.

    But it is an inescapable truth…after all, logic tells us that when the best equipped (read skilled) are running the show, the chances of everything running smoothly are greatly enhanced.
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  • People – the staff of life in any organisation’s success

    It was just the other day that I picked up a newspaper with a wild and angry headline and equally indignant introduction about livid staff at one of the nation’s biggest public hospitals calling for crisis talks with the Health Director-General to voice their serious concerns about the activities of their board.

    It was certainly unhealthy stuff and a stark reminder that boards need to be as concerned with staff attitudes and values as they are with financial and other indicators of success.
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  • Workout: learning the keys to board life

    Article published in the Australian Business Review, 8 November, 2014
    by Verity Edwards

    Click Here

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  • Find time for strategy – or face a ticking time-bomb!

    It sometimes takes a change of environment to remind us that we don’t hold the mortgage on many of the prickly challenges we face in our board rooms, that they’re actually perennials, pretty much prevalent across the globe.

    It’s also a refreshing moment when it occurs – and I was fortunate enough to again experience it just a few weeks back while visiting Thailand to host a number of in-house sessions with boards of some of the country’s largest and most respected companies.
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  • Clever Strategies from canny chairs

    It’s always refreshing to come across individuals with an ability to view challenges or situations from a different perspective and arrive at altogether inspirational outcomes!

    These moments are all too rare and deserve to be celebrated so I thought I’d start the ball rolling by recalling just three examples where I think chairs have been particularly astute and their clever thinking has greatly benefitted their organisations.

    Whenever my thoughts drift to adroit accomplishments in the board room, I’m reminded of the approach of one particularly skilful chair to address the issue of a little, shall we say, slovenliness, among some of his board members.
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  • Culture’s at core of best practice risk management

    As every organisation knows, when you move in a strategic direction, your travelling companion is invariably risk.

    That’s the irrefutable ying and yang of the strategy process.

    But what the really successful organisations also know is that planning is but one of the elements required to effectively manage risk. They know only too well – and subscribe to – the truism that even the best laid plans of mice and men can, and often do, go awry.

    And they appreciate that the key piece in any organisation’s risk management puzzle is its culture. Get that right and you’re well on your way.
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  • Self-evaluation in DNA of every good or great board

    During my many years in governance, I’ve noted a number of traits that are perennials of every good board – and one that is deeply woven into their very fabric is a willingness to embrace board performance evaluation.

    Good boards are good leaders and good leaders lead by example, so they figure that if they’re evaluating the CEO, the CEO is evaluating the managers and so the evaluation waterfall cascades down through the organisation, why should they be exempt?

    They understand, too, that by looking at their own performance and being prepared to tell people about it, they’re sending a strong and powerful message: we’re not the repositories of all wisdom; rather we’re fallible human beings.
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  • If you need to ask the question, chances are there’s a conflict of interest

    You might recall that in an earlier blog I mentioned how often I’d been approached for advice on how to go about getting on a board. There’s another question that’s equally ubiquitous, only it comes from those already on boards – and it has to do with conflicts of interest and what they should do about them.

    My immediate response – and without knowing the full story – is always that if we have to ask the question, chances are there’s a conflict of interest. And wouldn’t it be better if we erred on the side of caution and did it properly?

    So what is ‘properly’?
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  • Path to Board Positions Paved with Honesty, Discipline and Hard Work

    News Release for THE AUSTRALIAN
    September 16, 2014

    Forget the glamour and prestige of a board position.

    Yes, it’s a great professional achievement, it opens up enormous opportunity and there are plenty of rewards, but getting onto a board – especially if you’re a novice – and then serving on it and doing it justice takes a lot of honesty, discipline, dedication and downright hard work.

    One of the country’s preeminent governance experts, Kate Costello, whose company, Governance Matters, has been at the forefront of improving corporate governance practices and board performance for more than two decades, believes too many people are captivated by the illusion of a board position being all about glamour.

    They pursue the post for the wrong reasons, they don’t fully understand the machinations of a board and they invariably become disillusioned when the mythical magic fails to materialise.
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  • A bingo board game with a twist

    I thought we might change tack a little this time round, have a little fun, play a little game – a board game, if you will! – and in the process, improve what we do as directors and contribute to the even smoother running of our boards.

    There’s also a fantastic prize on offer, so let’s get started.

    It’s quite simple, really and, for want of a better name, we will call it Boardroom Bingo. It is all about the importance of calendars and how they remind we humans – with our tendency to forget, especially in an increasingly hectic world – of what we have to do and when.
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  • Banish annual report boredom and blandness to the bin!

    It’s that time of year again, when annual reports are busily being compiled and prepared for a raft of listed and other entities.

    Some do it well but most, while ticking all the statutory requirement boxes, tend to churn out rather bland documents – and in the process, they’re missing a trick.

    Annual reports don’t have to be as dull as dishwater…they can be lively documents that, while covering off on all the fundamentals, also tell the corporate story in interesting and engaging ways.
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  • Do the due diligence before you say ‘yes’

    It’s a red letter day, you’ve got news that the board post you’ve been chasing has been offered to you – and every fibre in your body is yelling out telling you to say ‘yes’…and to say it now!

    After all, it’s the first board position offer you’ve received, you have worked tirelessly for it, your dream has been realised and you’re understandably thrilled at the news.

    Sadly, in many such cases, the enormous euphoria tends to trump judicious thinking and rational judgement.  It’s pretty much a case of jubilation bashing down the one door while discernment makes a hasty exit from another!

    I should know, I’ve been there and I’ve done that – and not without some regret.

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  • Getting on a board takes honesty, discipline and hard work

    If I had a dollar for every time someone sidled up to me and asked ‘So how do I get on a board?’ I’d be rolling about in a sea of green bank notes!

    Which, I guess, means I should be pretty adept at providing the answer – and that is, there is no magic bullet; rather, it’s a process that requires honesty, discipline and good old-fashioned hard work.

    The first step is to answer three questions:
    1. Do I really want this?
    2. If so, do I have what it takes?
    3. And if so, what’s the right board for me?
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  • Get inductions right and you’ll reap some serious rewards

    You’d think board inductions would rank highly when new directors are appointed. After all, the sooner they understand the workings of the organisation, the sooner they’ll be up to speed and making a valuable contribution.

    You’d be wrong, though, as there are still too many boards mired in the old-fashioned belief that people appointed to boards are so well-credentialed and experienced that they just slot in. All they need is access to a mountain of historical board papers and minutes before being sent off to peruse the material…and with a supposedly comforting ‘…if you have any questions, don’t be shy to ask.”
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  • You Can’t Manage What You Don’t Measure

    You’ll recall in our last blog we discussed strategic plans and ended by looking at a simple table that had just three headings – strategic goals, objectives and measures. We touched on the first two and concluded by saying the third was so important that it warranted a dedicated blog.

    Well, here it is…and we’re talking measures.

    There’s an old adage in business that you can’t manage what you don’t measure; that unless you’re able to measure something, you’re flying in the dark, not knowing where you’re going, whether you’re getting better or worse.
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  • Less is more with strategic planning

    While there’s broad consensus that the primary responsibility of a board is to set the strategic direction of the organisation and so assure its future success, the same cannot be said for how boards go about their strategic planning.

    There are those that attend to it during the annual board retreat, others that build it up over time and in close consultation with management; just as there are those that are favourably disposed towards hefty ‘quantity trumps quality’ documents that run to many tens of pages, others that prefer the tighter, more succinct approach.

    Personally – and based on my experience over many years – I’m a firm disciple of the consultative style and an advocate of the ‘less is more’ approach that delivers a strategic plan occupying all of two A4 pages!
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  • Thai corporate governance on march to world best practice

    My name is Rongruja Saicheua but you can call me Ronnie.

    I head up the new Governance Matters operation in Thailand and rather than bore you with my CV, I thought I’d tackle something I hope is far more interesting and perhaps even a little thought-provoking – corporate governance in Thailand and how it compares with Western practices.

    I’d say very well, even if it is a qualified ‘very well’.

    Yes, there are differences in the nature of our companies, most of which are either family owned or what we call SOEs – that’s State Owned Enterprises. But there are also a remarkable number of similarities and with Governance Matters now present in Bangkok, I’m sure these will soon become greater.
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  • Now There’s A Charitable Side To Pursuit Of Governance Best Practice

    News Release

    19 June 2014

    Time-pressed board members across Australia can now hone their governance skills while actively supporting a raft of worthy charities thanks to a generous initiative from Governance Matters and its ground-breaking Board Minded online subscription service.

    The world-first service, launched this year to provide subscriber boards and board members with convenient online access to governance-related educational and professional development materials, has Governance Matters donate $5 to charity each time a subscriber signs for one of its many topics.
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  • Consultancy Firm Opens Thai Office

    South Australian consultancy firm Governance Matters has opened an office in Bangkok, in the process becoming the first independent corporate governance consultancy to operate in south-east Asia, aside from Singapore.

    One of Thailand’s leading governance experts, Rongruja Saicheua, recently acquired a stake in the company and will head up the Thai operation.

    Founder and managing director Kate Costello said the opening of the Bangkok office will strengthen best practice corporate governance in one of the world’s fastest growing regions.

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  • Lifting ‘corporate governance’ above the world of weasel words

    I clearly remember reading Don Watson’s ‘Dictionary of Weasel Words’, in which he highlights all those government- and corporate-speak clichés that, carefully crafted to mislead or misinform, have crept into our lexicon at an increasingly alarming rate.

    I remember, too, being somewhat surprised to find the word ‘governance’ sitting alongside gems like ‘negative patient outcomes’ (read: you’re dead) and ‘downsizing’ (read: slashing employment).

    But the more I thought about it, the more it made perfect sense – the word ‘governance’ has become rather nebulous and is bandied about by many who don’t actually know what it means…it just sounds good and, more importantly, it makes the person uttering it sound knowledgeable.

    So what does it actually mean?
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  • The birth of boards – and who we have to thank

    Monty Python tragics will fondly remember the ‘What have the Romans ever done for us?’ moment in ‘The Life of Brian’ and the same can be asked of those we probably love to hate the most – the British.

    They gave us – in no particular order of importance – things like cricket, the steam locomotive, the jet engine, the telephone, the television, the postage stamp, the smallpox vaccine, bangers and mash…the list goes on.

    And we also have them to thank – or curse – for giving us boards.
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  • If there’s ‘an elephant in the (board)room’, let’s confront it!

    There’s an expression that’s become part of the corporate-speak lexicon in recent times and while I’m still now sure how it sits with me, I can say with a great deal of certainty that it pretty much sums up what I’d like to explore today.

    The elephant in the room…

    Yes, we’ve all heard it and understand it means that large, looming issue that we’re too frightened to address, that we choose rather to tiptoe around in meek fashion. Better still, we pretend it’s not even there.
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  • So What’s a Board’s Most Important Job?

    When I was asked recently to present a paper at a corporate governance symposium in Kuala Lumpur on ‘What is a Board’s most important job?’ it didn’t take me long to arrive at my answer and prepare my paper accordingly.

    It also had me thinking what answers others might proffer, so we decided to use social media to tap into the broader thinking – and here’s a sample of what came back…
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  • Great CEO performance assessment always a genuine two-way process

    If there’s one common thread running through all successful CEO performance assessments, it’s a genuine commitment to a transparent and two-way process, where the board and CEO agree on the key goals and measurements and the board then works with and supports the CEO in achieving the objectives.

    Thankfully, such practice is now commonplace in our commercial sector: sadly, it’s still pretty much the exception in our Not-For-Profit and Government organisations.

    Of course, in the commercial world CEO performance assessment is intrinsically linked to the CEO’s remuneration package. Indeed, it defines the package, determining not only the base salary and short-term incentives such as annual bonuses when targets are met, but dictating how a CEO will be rewarded – usually with share options – when achieving longer term objectives that drive company and shareholder value.

    And given that there’s so much riding on getting these three components right, it’s not surprising that boards of commercial companies have long understood the need to treat CEO assessment seriously.
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