Dr Lee Mathias, Chairman at Counties Manukau District Health Board, Chair Health Promotions Agency and Deputy Chair, Auckland District Health Board talks to Henri Eliot about healthcare governance.
What is the role of a board from your perspective?
The Board has 2 key roles, strategy and compliance, with about 75% of their time spent on strategy and about 25% on compliance. That distribution is rarely the case as traditionally directors have not had their focus on strategy and it is much easier to focus on compliance. Often that is because of the make-up of boards; in NZ we have traditionally loaded boards with accountants and lawyers who, quite rightly have a compliance focus , rather than directors with business experience especially entre/ intrapreneurial experience.
Of course, the board has a key role in the selection of the CEO and establishing the right incentives for the CEO.
What should worry directors in 2014?
All companies should be getting excited about finally having some real growth opportunities again but they will need to be careful not to let the wheels come off in their hurry to grow their business.
There will need to be some well placed risk management in relation to a potential change in government and therefore not as a mature approach to meeting the needs of business that New Zealand has experienced over the past 5 ½ years. It would be unfortunate if, having weathered the adverse effects of the GFC and being positioned well to cope with the Australian downturn, a different government ceases to support business and the economic growth the country needs.
Looking forward five years, do you think the board dynamic will change?
There is more and more in the governance literature which points to skill and personality based boards. The idea of not having any knowledge of a particular industry and that generic skills are good enough is declining. At the same time we know that personality mix and gender mix makes for better boards and a measurable impact on the bottom line. The increase in the numbers of women on boards will continue and this will have a positive effect on NZ business.
How should we best prepare the next generation board member for the future?
Good education and experience in the sector in which aspiring directors work, across the sector too. Better academic preparation in understanding what governance is, what the responsibilities and risks are, and providing opportunities for aspiring directors to experience the role. Some may find that, despite the kudos, it is just not for them. A key aspect of preparation is learning to work as a team, which is why women find board work quite natural. Understanding the roles that individual board members play is crucial, all boards need a chair who conduct the board’s activities, change agents, consensus builders, counsellors and challengers to make them functional. The board will be confident if all those characteristics are present.
What gives you the most sense of achievement on a board?
That targets are over achieved and the profit is greater than planned. The return to shareholders balanced with the sustainability of the company are the key drivers but at the end of the day we are in business to make maximise shareholder return.
Personal credibility is an important goal too. Most Chairs don’t require a lot of public reward it is more about knowing that the company/ organisation has done better under your leadership.
Turning back the clock, would you do anything different?
I probably would have got into business on my own account earlier in my career. My governance experience started in 1993 with a lot of sector knowledge and experience and little else. Being armed with an MBA was not really enough; some solid business experience would have been advantageous.
What do you read?
I am an avid participant in the Boards and Advisors Linkedin group which is managed by Dr Richard Leblanc whose work I have used in some of my academic work on governance. Such groups havd a huge advantage in terms of current thinking. The day of the text book is waning in favour of research literature and linkedin discussions.
Clayton Christensen and Michael Porter are still making significant contributions to the business of healthcare services.
I am also reading Malcolm Gladwell’s latest “What the dog saw” and to follow with “David and Goliath” to stimulate the alternative thinking part of my brain.
And of course this summer, I am reading The Luminaries by Eleanor Catton.
Final Word or comment?
Directors need to be savvy over the whole range of activities of the firm; you can’t ask the right questions if you are not informed, if you do not understand the situation. Understanding technology remains a big gap for many directors. Being a director/ board member is a job and it does need to be worked on all the time. Companies need different skill sets and personalities for different parts of the company lifecycle and as a director you need to be sensitive to the firm’s needs.
Henri Eliot is CEO Board Dynamics