It is about getting the right mix of skills and experience, and the right balance between collegiate spirit and constructive debate.
Belinda Hutchinson AM FAICD is Chancellor of the University of Sydney; a Director of AGL Energy, Australian Philanthropic Services, NSW State Library Foundation; and a Member Federal Government Financial Services Advisory Council, the Salvation Army Eastern Territory Advisory Board and the Australian Treasury Advisory Council. Belinda was previously Chairman of QBE Insurance Group and a Director of Telstra Corporation, Coles Myer, Crane Group, Energy Australia, TAB, Snowy Hydro Trading and Sydney Water.
1. WHAT DO YOU THINK DISTINGUISHES A “GREAT” BOARD FROM A “GOOD” BOARD?
It is about getting the right mix of skills and experience, and the right balance between collegiate spirit and constructive debate. It is about, in everything that the board is doing, having the performance of the board and organisation front of mind. It is about having a culture of continual improvement, including regular board reviews, which are honest and transparent, and where the board follows through on agreed outcomes.
2. WHAT ARE SOME OF THE LEVERS THAT YOU HAVE SEEN BOARDS USE EFFECTIVELY TO DRIVE ORGANISATIONAL PERFORMANCE?
The board can drive organisational performance by working with management to develop a strategy focused on sustainable value creation and then ensuring that the strategy is executed effectively. From a human resources perspective, it is important for the board to ensure that the organisation has the capacity to implement strategic goals. It is also important that performance metrics and executive remuneration are aligned with strategic goals.
Another lever to drive organisational performance is risk management. The board can facilitate innovation and channel productive behaviour by encouraging certain types of risk taking, while curtailing other types of risk.
3. WHAT DO YOU THINK ARE SOME OF THE MORE CHALLENGING ASPECTS OF BEING A BOARD CHAIR?
The role of the Chair is particularly challenging when there is conflict on the board. In that context it is up to the Chair to ensure that relations between board members and management are respectful, and to encourage contributions from all board members and constructive debate.
Challenging circumstances for an organisation also generally involve a heightened role for the Chair, e.g. during a hostile takeover, where there is intense media criticism of an organisation, where there is an underperforming CEO that needs to be removed, or where the external environment has deteriorated rapidly as during the Global Financial Crisis.
4. WHAT DO YOU THINK ARE SOME OF THE EMERGING CHALLENGES THAT BOARDS ARE LIKELY TO FACE OVER THE NEXT DECADE?
The pace of technological change presents a real challenge for boards and organisations as they strive to keep up with changing technologies, and understand the implications of changes for the organisation.
With increasing information flows and a lack of clarity around what constitutes good information, there’s a lot of “noise” – it can be difficult for the board to determine what it needs to know. Boards should understand the power of social media and organisations should adopt strategies to effectively communicate with stakeholders via this media.
Additionally, the risks to organisations are changing with technological advancements. In relation to cybersecurity, for example, directors and boards need to consider the way they transfer and store information, and connect and communicate with one another or within their organisations.
Further, the role of the board is evolving as community expectations of boards grow. Shareholder groups are increasingly seeking to engage directly with boards on a regular basis, and a wide range of stakeholders are placing competing demands on boards. The growth of the ESG movement also has significant implications for boards.
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