Corporate globalisation means boards and directors are increasingly required to attend meetings overseas to gain an understanding of the companies they govern, so full commitment is vital, writes Domini Stuart.
Before accepting your next board role, you may need to think carefully about how much time you are prepared to spend out of the country.
“The world is globalising and this means opportunities are now global,” says Diane Smith-Gander FAICD, chairman of Transfield Services and a director of Wesfarmers.
“Australian businesses are going to have to go out and grab these opportunities, and that means the board must be prepared to get on a plane, too. When you’re about to go into a new geography, there’s no substitute for kicking the tyres.”
Once a company achieves a global footprint, overseas meetings could become a matter of course, she adds.
“Transfield’s industries are cyclical by nature. To reduce the risk of being exposed to those cycles we diversify geographically.
“That strategy only works if those businesses have critical mass and, if a business has critical mass, you must visit it,” she says.
In order to govern effectively, a board needs to understand every business it oversees and the environment in which it operates.
“When you hold a board meeting on site you have an opportunity to meet and hear from local employees, clients and other stakeholders, and also to socialise with them,” says David Willis MAICD, director of the Bank of Queensland, Inter Flour Holdings and the Parcel Direct Group. “You inevitably come away with a much broader view of the company, its context and its people. The trip can also strengthen your relationship with the overseas team by demonstrating that the whole board has an interest in their business.”
Some boards use overseas board meetings as an opportunity to build their knowledge in specific areas.
“If you want to know more about digital developments, social media and IT, for example, you might hold a meeting somewhere considered to be ‘leading edge’, such as Silicon Valley or Mumbai,” Willis continues.
Aligning the board
The process of planning an overseas board meeting can be an important exercise in itself. “Deciding on the location, then discussing the kinds of things we want to do, is a good way of making sure we’re on the same page in terms of what’s important, the risks and where opportunities lie,” says Smith-Gander.
Travelling together can then strengthen the alignment at the same time as helping directors to gain knowledge and experience.
“When we go to the US with Transfield we start the visit together then, after a few days, split up into pairs to visit other businesses,” Smith-Gander continues. “We think carefully about who to put together so that that our directors are not only getting to know each other better, they’re also gaining a different perspective and up-skilling each other as part of the process.”
Reducing the burden
GHD is a professional services company that operates globally. Board meetings help to acquaint directors with the various markets and their people, and as three of its directors are based in North America, they are scheduled to spread the burden of travel and keep it to a minimum for everyone on the board.
“We have just three face-to-face meetings a year and one of those is held in North America,” says chairman Russell Board FAICD. “In the past, we have held meetings in South East Asia, China, New Zealand and the UK but, generally, we have the other two in Australia.”
Another three meetings are held “point-to-point” using videoconferencing facilities in two locations, one on the west coast of America and the other on the east coast of Australia, so that directors do not have to cross the Pacific Ocean.
“The point-to-point meetings last for the equivalent of one day but we split them over two days to accommodate the different time zones,” says Board.
Videoconferencing reduces travel time but Board also sees a significant downside. “Point to point meetings work as well as they can for us because we always alternate them with face-to-face meetings, but I still think getting together just three times a year is a major challenge for our board,” says Board. “The relationships and trust you need around the board table take time to develop and, ideally, I would like to have the whole board in one room at least one more time each year.”
Cost and time were considerations in deciding against such a move, but Board’s main concern is the directors’ health.
“We are committed to health and safety throughout the organisation and there’s no question that frequent long-haul flights can take an enormous physical and emotional toll,” he says. “Our schedule is certainly a compromise but, when all of the factors are taken into account, it’s the one that works best for us.”
Time to reflect
Experience is a good teacher when it comes to meeting offshore. “The more of these meetings you’ve been to, the less likely you are to come back feeling that you have wasted opportunities,” says Smith-Gander. “The first time round, I recommend that the company secretary, CEO and chairman talk to experienced counterparts in other companies.”
Danger of overload
One common mistake is cramming too much into the trip. “It’s important to build enough time into the schedule for directors to recharge their batteries, reflect and share their insights while they’re still fresh in their mind,” Smith-Gander continues. “If you’re just running from one meeting to the next, you won’t get maximum value out of the trip.”
Both Transfield and Wesfarmers schedule overseas meetings almost two years in advance. “They’re part of the board’s routine and I think directors generally approach them with a great deal of enthusiasm,” says Smith-Gander.
“You might have that moment of regret as you step on to the plane and realise you’ve got 15 hours to Dallas but, in general, you’re going to see a part of the business you’re responsible for governing, you’ll be in a different environment, you will probably have local experts coming in to brief you – why would you not be excited to go?”
However, many directors sit on a number of boards and as more Australian companies acquire offshore partners or subsidiaries, even one or two overseas meetings a year with each one could become untenable.
“In my experience, most directors don’t seek the travel but rather are motivated by the interests of the company and its shareholders,” says Willis.
“Overseas trips can be tiring and time-consuming and, unless you’re retired, difficult to accommodate. It is certainly something directors need to think about carefully before joining the board of any company with a global mindset.”
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