Dr William Whittaker, newly appointed CEO of the Institute of Directors in New Zealand talks to Henri Eliot about his perspectives on Corporate Governance and the year ahead for the Institute.
What is the role of the board, from your perspective?
The board has a defined leadership role which includes setting strategy for an organisation and providing the framework for a healthy organisational culture, including health and safety. I think the modern board is defined by its engagement with and relevance to the organisation it governs. That means working as an effective group, getting results and keenly balancing the governance/management dynamic. At the end of the day the board should be concerned with adding value. This is what shareholders expect, whether it is a high-growth start-up or an established firm. Similarly, public sector boards should be focused on ensuring conformance and providing improved value to the shareholder, which in this case is the public represented by the shareholding Minister.
How does the IoD lead the debate around change in the boardroom?
We’ve long been a commentator and advocate on director issues – but we are stepping up our thought leadership work considerably this year. Our 2014 leadership conference will focus on the issues directors are facing and the skills required to operate effectively. We have assembled an impressive line-up of presenters including David Gonski, recently appointed as Chairman of the ANZ and arguably Australia’s best known chairman; Joan Withers, one of New Zealand’s highest profile professional directors; Jamie Tuuta, Maori Trustee and Simon Walker, Director-General of the IoD UK. We are including ‘toolkit’ workshops such as risk management, health and safety responsibilities, measuring performance, safeguarding intellectual property and conducting business ethically.
In 2014 we will launch our new thought leadership hub to really take the lead on debate and issues most relevant to directors and New Zealand business. This will complement IoD resources such as The Four Pillars of Best Practice Governance, the Health and Safety Guideline (produced in collaboration with MBIE) and A Director’s Guide (in association with the FMA).
What are boards in New Zealand looking for in the next generation of directors?
Boards are becoming open to bringing on younger directors with promise. This is a good thing as it represents succession planning. We believe an apprenticeship mentality needs to be developed if directors are going to put the future of New Zealand business in safe hands. For the next generation it’s pretty clear to us that boards want increased diversity around the table and this means diversity of thought. Boards are looking to bring on people who can understand clients and consumers as well as meet the challenges of modern business such as disruptive change and technology. Again, it is all about relevance. Companies need boards with relevant diversity and compatibility in terms of skills, experience and perspective. In New Zealand, as elsewhere, we need to be aware of diversity and tap into the skills that different generations, ethnic groups and genders offer. Having said that there is no magic formula as all organisations are unique.
What are the most common problems in the boardroom?
Many of the common problems come down to boards that fail to evaluate themselves. Boards spend plenty of time working in the board but not enough on the board. If boards work together to understand their dynamic as a team they position themselves for better decision-making.
I’d add that the old ways of operating are changing and it’s not before time. For example, boards are becoming more focused on their knowledge building activities and introducing more rigour to appointments processes. If you as a director are reading this and you aren’t doing these things then, quite frankly, you are probably falling behind.
And from the above, there is a general consensus that greater diversity is required. The alternative is groupthink, which leads to poor risk appreciation and management. Companies that fail to adapt will fail.
What are the top three global trends we will see in the three years?
I am going to give you a bonus with four!
- Confidence is improving globally but we still see economic uncertainty dominating the minds of directors. The impact of the quantitative easing ‘taper’ in the USA is global whether a strong recovery emerges or not. I don’t think we have seen the last of the inequality debates.
- Globalisation is raising serious issues for all businesses about corruption and facilitation payments. Plenty of businesses are struggling with the boundaries around different practices in different economies. Maintaining the integrity of the supply chain is critical, and failure to do so can result in enormous reputational and brand damage as we have seen.
- Health and Safety is a major domestic issue for boards already but a key feature of this is global concerns for our export products and international reputation
- Technology and cyber security will increase in importance to business.
Henri Eliot is CEO of Board Dynamics