Dr Erica Smyth talks to Tony Featherstone about the importance of people skills in the boardroom and about being a woman in the male-dominated world of resources.

    There is no shortage of commentary on the science of governance. Expert opinions on remuneration, reporting, disclosure and other technical issues abound. Far less information is available on the art of directorship: the ability to bring people together and draw out their best.

    Dr Erica Smyth FAICD embodies the science and art of directorship. As one of a few female geologists in the 1970s, she grew up with the science of minerals exploration. But it was her pioneering role in bringing companies, communities and governments together around projects that taught her the art.

    Smyth was included last year in a prestigious list of the world’s most inspiring women in mining. And, in 2010, she received the inaugural Lifetime Achievement Award from the WA Chamber of Minerals and Energy. The 62-year-old has been a trailblazer for women in mining and now in governance as one of the few women to chair an ASX-listed mining company.

    She chairs the uranium explorer Toro Energy and is a non-executive director of mining services group Emeco Holdings and the Australian Nuclear Science and Technology Organisation (ANSTO) (Twitter @ANSTO). In fact, she has chaired or been a director of almost two dozen listed companies, charities, industry bodies or government committees.

    Her portfolio of directorships had its origins in a humble country upbringing in Geraldton in WA. As a 20-something geologist, she recalls asking drillers at remote projects for help and often being the only woman in meetings or at the pub with her mining crew after work.

    After 12 years of geology, Smyth moved into the emerging field of issues management in the early 1990s, working on environment, native title and other community issues. Her understanding of mining technicalities and her ability to bring stakeholders together was in demand. At the time, resource companies were starting to engage more in community consultation and release social impact statements. They needed people like Smyth who could explain mining to a wider audience.

    Five years as corporate affairs manager for Woodside Petroleum gave Smyth a deep appreciation for the complexities of so-called soft issues. “We spend all this time thinking about engineering and science in mining, but issues such as the community, media and government relations are usually the most unpredictable and threatening,” she says. “The soft issues are always hardest to solve.”

    Although she did not realise it at the time, Smyth’s field work as a geologist and her corporate career in issues management was sound training for board roles. She learned to work with all types of people, listen to them, appreciate different perspectives and bring people together around complex and, at times, controversial projects.

    During our interview, Smyth emphasises the importance of people skills in directorship. One could mistake this as yet another leadership cliché or governance generality. But it is clear that she thinks deeply about how leaders interact with others and help groups achieve their best.

    She talks about the importance of actively listening to others, making eye contact, respecting all opinions, giving considered responses and always thanking people for their input. It worked when the young geologist had to ask a rough-and-ready drilling crew for help and it has been just as effective in boardrooms full of accomplished directors.

    In addition to being an obvious people person, Smyth enjoys mentoring up-and-comers, is an avid angler and a frequent traveller to exotic locations. Her next trip will be from Iceland to Greenland to Norway. She also loves a good movie, having chaired the WA screen industry funding body, ScreenWest (Twitter @ScreenWest), for six years.

    “I love the idea of technology and art coming together to make a great movie. I have always been interested in how you take something complex to a higher level through art,” she says.

    Perhaps that is the true test of all boards: blending the science and art of governance to create a better experience for all stakeholders.

    Here is an edited extract of Smyth’s interview with Company Director:

    Company Director (CD): By listed-company standards, Toro Energy has an unusual dynamic: a female chairman and a female managing director in Dr Vanessa Guthrie. Is it a different dynamic, especially in the male-dominated resources sector?

    Erica Smyth (ES): To be honest, I have not noticed any difference, possibly because I have been fortunate as a chairman to always work with good CEOs and managing directors, male and female. If the relationship between the chairman and CEO is strong, gender does not matter. That said, I have had easier conversations with Guthrie about people management issues, because the sub-text is better understood. Some men do not have such intuitive people-management skills, although they are usually aware of that limitation and are willing to listen.

    CD: What makes for an effective relationship between a chairman and CEO?

    ES: There has to be mutual respect and no surprises. The relationship works best when there is a high degree of transparency on both sides: the CEO welcomes tough questions from the board and values its input and support; and the board is capable of having very open conversations with the CEO and knows when the CEO wants it to get involved in an issue. A lot of CEOs have a lonelier existence than many realise. They cannot always discuss sensitive ideas with the executive team and look to the chairman to be that initial sounding board.

    CD: There has been important debate about the need to have more female directors on ASX-listed companies. Is the resource sector doing enough to encourage more female directors?

    ES: No. Too many smaller resource companies still wonder what all the fuss about gender diversity on boards is about. They think they don’t need female directors, have got by without them so far and believe there are not enough women directors in mining anyway. Of course, that is nonsense. There are many women who could add greatly to governance in the resources sector. That said, it is up to the business community to demonstrate to smaller mining companies that board diversity, both gender and cultural, adds a measurable advantage. Plenty of research shows that is the case. Investors need to hold mining companies to account and ask: “If there is a clear business case to have a diverse board, why is the company not adding value in this regard?”

    CD: You are regarded as one of the world’s most inspiring women in mining. What advice could you give other women in the mining sector who are considering moving from a management role and building a portfolio of directorships?

    ES: Think carefully about why you want to join a mining board and don’t underestimate what a different role directorship is compared to an executive career. Then identify all the committees, industry bodies and working groups you have been part of and the people from those groups you respect. It is very likely they will respect you too. Ask their advice about directorships that might suit you. It is about finding senior people who know you are hardworking, always well-prepared, ask good questions and work well with others and who are prepared to recommend you to other directors.

    CD: What was gender bias like in the resources sector when you started in the 1970s and how did you overcome it to build a distinguished career?

    ES: Strangely, gender was an advantage early in my career because my opinion got noticed. For good or bad, being the only woman in a room of 10 men meant you tended to be remembered and more people knew who you were then and for years to come. Things have improved for women, but progress is slow in resources and in most other sectors for that matter.

    CD: What are some of the challenges of moving from a highly technical role into governance, which requires a broad range of skills?

    ES: Although I worked as a geologist for more than a decade, I would never profess to be a great one. My big break came when mining companies in the 1990s had to engage much more with the community over environmental issues and native title, and deal a lot more with governments. I became an “approval” specialist at a time when mining companies were only just starting to do social impact studies and community consultations. I found that my people skills, and the ability to understand the technical language and make it accessible to a wider audience, was very useful. The experience of working with community, governments, mining companies and other stakeholders taught me how to consider issues from different perspectives and how to bring a range of very different people together over a complex issue. In some ways, it’s a lot like chairing a board. 

    CD: What are “people skills” and how can directors improve them?

    ES: Fundamentally, people skills are about active listening. Really listening to what someone has to say, thinking about what was said and genuinely thanking someone for their input. The reality is that you can’t do much on your own in business these days. Most things require working in teams, getting the best out of people and giving credit where it is due. Directors with good people skills also have a preparedness to ask people when they don’t know the answer, rather than pretend they do.

    CD: What is the hardest thing about chairing an emerging mining company?

    ES: It is being able to have a Plan A, Plan B and Plan C and shift between them appropriately as circumstances dictate. The board has to expect the unexpected and ensure the organisation has a plan and the capacity to deal with it. For example, Australian uranium companies had to reset their plans – and still are – when the Fukushima nuclear accident, associated with the tsunami, occurred in Japan in 2011.

    CD: Will we see more directors from outside the resources industry join the sector in coming years or is it essential to have the technical knowledge?

    ES: The last thing investors should want is a mining board stacked with geologists, geophysicists and engineers. That is an accident waiting to happen. Mining boards obviously need deep technical expertise and also broader skills in strategic planning, infrastructure, finance and human resources. Some mining boards miss the blazingly obvious because they are not sufficiently diverse. I have seen this happen with companies working in Africa which did not have sufficient cultural knowledge on the board and paid the price.

    CD: How does an Australian-based mining board satisfy itself that the company is behaving responsibly in developing nations?

    ES: That is a very difficult question. Dealing with issues in foreign countries in mining can take a huge amount of time. The board must be very confident the CFO understands how the company safeguards itself against bribery and corruption and is on top of how workers at the project are being paid, how contracts are awarded and the company’s dealings with government. It’s fine to devise and publish the company’s policy on bribery or corruption when operating in foreign countries, but I’m cynical about the effectiveness of policies alone. 

    CD: Is there a need for governance education that is highly tailored towards the mining sector?

    ES: Two areas could be addressed. First, there is not always enough understanding on boards of smaller mining companies about sovereign risks in overseas jurisdictions. More could be done to help directors think through key governance issues that can emerge in developing nations.
    The second issue is better understanding of capital management issues in early-stage mining companies. A range of incentives can be embedded in equity arrangements for founders, from free-carried interests in projects, to royalties and options. Sometimes, directors do not know what they don’t know, because they are not sufficiently skilled in delving into tenement and contractual obligations that can be triggered when smaller mining companies merge. It is a very important part of any director’s due diligence to understand what incentives were embedded when the company formed or grew.

    CD: How would you characterise the standard of governance in junior mining companies and have there been noticeable improvements?

    ES: The negative view of mining governance is unfair and too much of a generalisation. If anything, we have gone overboard with governance for small mining companies, expecting a tiny explorer to follow the same governance guidelines as a giant producer. Shareholders want juniors to spend their funds in the ground, to reduce exploration risk, not on unnecessary compliance. Too much reporting is required, particularly in remuneration. It is complete overkill.

    CD: How do you stand out as, say, a first-time director of a listed mining company and get that second or third board role?

    ES: Your fellow directors must value your input sufficiently high enough to recommend you to other people. As I said earlier, it starts with being well prepared and actively listening to what is being said around the board table. It requires a willingness to speak up when you don’t agree with something and to provide a considered opinion. When you do agree on something, you must absolutely get behind that decision and be part of the team that makes it happen. As other directors recognise your input and style, they become advocates for you.

    CD: You have a long background in corporate affairs. Should boards play a bigger role in driving their organisation’s corporate social responsibility agenda?

    ES: In mining, we often think of engineering and geology as hard issues and corporate affairs, government, media and community relations as soft issues. In my experience, the so-called soft issues are usually the hardest to resolve. They can be extremely unpredictable and run for years. For example, persuading a community that a mining project will add significant value can be much more complex than the science behind that project. Boards can and should do a better job understanding these issues as they often create significant volatility.

    CD: You have chaired, or been a director of, several charities or industry bodies over the years. What do you like most about not-for-profit governance?

    ES: For me, it is about being a good corporate citizen and finding causes I am passionate about. As a Type 1 diabetic, I’ve been interested in diabetes research for 40 years, so I had a natural interest in chairing the Diabetes Research Foundation of WA. I also love the idea of getting kids more interested in science so I chaired Scitech (WA’s interactive science centre) for five years.

    CD: What have been some of your biggest learnings about being an effective director?

    ES: The key learning is a willingness to challenge issues and ideas in the right way. A good executive team wants the board to challenge its thinking. A good board wants to probe and test management thinking, to jointly get the best outcome. A bad executive team sees the board as an inconvenience and feeds it as much paper as possible to make directors go away. A bad board can be so enamoured with the CEO that it ticks off everything put before it. You need to see the board and executive relationship as a strategic marriage built on trust and transparency, where both groups can test the boundaries while working effectively as one team.

    CD: What has been your most challenging experience as a director?

    ES: I was once on a board of an organisation under a board takeover, where it was not entirely clear who the major shareholders of the organisation were. A few key shareholders were based in strange island countries. It was a good lesson, particularly for boards of small companies, to be acutely aware of who is on the share register and what their intentions might be.

    CD: Can we expect to see you chair more listed-company boards in coming years?

    ES: I really enjoy directorship. Whether I chair other boards in coming years, or am a non-executive director, doesn’t matter that much. I like chairing boards, and also the freedom that comes with not always being the chair. My passion is about creating value, although not always monetary. I also love being on boards that help create knowledge wealth, in sectors such as technology, health and education.

    CD: You spent years in the field as a geologist and now spend most of your time in boardrooms. Do you miss being in the field, playing with rocks, and getting your hands dirty?

    ES: Not really. I enjoyed being a geologist, but found my calling when working with lots of different stakeholders on complex issues. It’s true that once you are a geologist, you can never consider yourself an ex-geologist. It is always part of you. Governing mining companies and travelling a lot means the geology is always around me and is something I notice and photograph.

    CD: How do you relax away from work?

    ES: I love to travel, fish, read books and go to the theatre. Mostly, I am a workaholic because I love my job. I also enjoy public speaking, mentoring people and interacting with others on boards and in industry. Most of all, I like being around interesting people.

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