Q&A with Andrew Ferrier from CEO of Fonterra to Governance
Andrew Ferrier, former Chief Executive of Fonterra talks to Henri Eliot.
Andrew Ferrier is an experienced global business executive, having run companies in Canada, the United States and New Zealand for over 18 years.
Andrew now runs his own Investment business, CANZ Capital Ltd, with investments in New Zealand and Canada. He is Chair of the NZTE Board, sits on the Council of the University of Auckland, and is a Board member of Orion Health in Auckland, Bunge Limited in White Plains, New York, and a few other private, advisory and not for profit Boards in Canada, the USA and New Zealand.
What is the role of a board from your perspective?
The Board is responsible for the Governance of the organisation. In this regard, a Board’s first responsibility is to hire an excellent CEO. The Board then needs to be satisfied that there is a robust people development and succession plan. The Board needs to sign off on the strategy of the organisation (with a degree of input into the strategy), and to ensure that the organisation has appropriate controls in place to manage all aspects of risk. Boards also need to track the CEO performance which traditionally they have not been good at doing until something goes wrong.
What are the biggest challenges companies face in respect to effective governance?
Ensuring the right skills on the Board. A Board needs to have the right mix of talent to ensure it governs an organisation appropriately. A good Board will have done an assessment of the cross-section of skills required for effective Directors for that organisation, and mapped the required skills against the actual skills of the Directors. The Board needs a development plan for Directors to enhance their skills. In bringing in new Directors, the Board will have regard to any gaps in required skills. In the past, boards were a networking club and appointment was simply based on who knew whom as opposed to an assessment of skill set through a rigorous selection process.
I also get anecdotal evidence in New Zealand that a number of Boards struggle with the line between Management and Governance.
Looking forward 5 years, how do you think the board dynamic will change?
Boards will be more diverse, and the appointment of Directors will increasingly be on merit rather than, in some cases, just appointing prominent people. I think Boards will increasingly get better at governance and less involved in management.
Boards will also continue to embrace the use of technology. For example, virtual meetings will complement face-face board meetings especially where boards have international directors.
Should CEO or senior executive serve on other company boards?
This has evolved more quickly in the US and Canada. Personally I made a mistake in that respect looking back at my time as CEO of Fonterra. I should have served on another companies boards which would have allowed me to se how another organization works. It would have given me another set of tools for my day job. In the end, time permitting I would recommend that CEO’s serve on one other company board during.
What is your opinion or perspective on corporate governance in New Zealand?
I covered this to some degree above- I do think many Boards are set up here to be too involved in management. It shows up in the frequency of Board meetings as one indicator. It is not uncommon in NZ to see 9-12 Board meeting per year. In North America, depending on the sector, it is more like 5-7 Board meetings, and for much larger and more complex organisations.
What do you like to read? (Business Publications from newspapers to magazines)
Mostly on line- Wall Street Journal, Financial Times, The Globe and Mail (Toronto), sometimes the Economist, a few other newspapers. In addition, I have contacts all over the world who regularly send me links to interesting articles from the business and political world.
What do you do for fun?
I play tennis, ice hockey (of course as a Montreal Canadian fan). I enjoy skiing, tramping and fishing.
Turning back the clock, what would you have done differently in your life?
Not a hell of a lot. I would have stressed less. Living in the moment is important to me and I am very proud of how much time I spend with my family.
Final word or comment on corporate governance?
A Board is a high performing team. And it should be a bit of fun too.
Henri Eliot is chief executive of Board Dynamics, a consultancy company which provides strategic advice to directors and boards throughout New Zealand and Australia.