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- Boards work best when directors are willing to ask uncomfortable questions, even if they feel obvious or uninformed.
- The biggest pressure in the room is reputational risk, especially when uncertainty risks splitting boards into factions and destabilising management.
- Strong boards encourage open debate but then commit fully to a decision without hindsight bias clouding judgement.
Our new At the table series explores how directors actually make decisions under pressure – and what only becomes visible once you’re inside the boardroom.
Few people have spent as much time at the apex of Australian corporate governance as John Mullen. As current chair of Qantas, Brambles and Treasury Wine Estates – and with past leadership roles spanning Telstra, DHL Express and the US National Foreign Trade Council – his tenure has been defined by complex, high-profile environments.
In our first interview of the series, Mullen unpacks the realities of boardroom resilience, sharing practical insights on how to maintain stability and strategic focus when a company is tested.
What’s one question directors should be more willing to ask at the table?
Probably the one you’re scared to ask in case it makes you look foolish or ignorant. Often, you can feel everybody else around the table seems to understand what the issue is, so you feel scared to appear as the only person who doesn’t. In reality, you’re unlikely to be alone. Being prepared to stick your neck out and ask is often helpful for the whole board.
Where does the real pressure in the boardroom come from when the stakes are high?
The pressure may be the time requirement to fix the issue, or it may be fear of losing your job as a director, but I’d say the most pressure comes from reputational risk. As one gets older and after one’s executive career is finished, the main thing left is reputation. Sometimes a director can be torn between the moral duty to stay and fix a problem, and the desire not to be associated with something that may sully their reputation – and therefore their future.
When uncertainty increases, how does that change how the board operates?
It depends on the type of uncertainty. If it’s around differing opinions as to how to address a major issue, then board harmony and culture can become fractured. This leads to the formation of opposing factions and creates great uncertainty for management. It’s critical to the smooth functioning of an organisation that directors don’t feel restricted in expressing their views, but at the end of the debate the board needs to come together and make a joint decision that everyone signs up to in substance and spirit. A divided board is corrosive and very unsettling to management.
What do new directors typically underestimate when they first encounter this type of decision?
If you’re a new board member, you may not be experienced enough to offer any meaningful contribution to the debate. This is fine. It isn’t a problem to just watch and listen. It’s worse to offer an opinion just to be seen to be contributing. Most directors take at least a year to really start to contribute in a meaningful way around complex subjects.
What separates clear judgement from hesitation or consensus drift?
That’s a hard one. A general principle is that it’s better to make a decision rather than dithering, so management can get on with implementing things. However, sometimes the decision is not clear-cut, and the board may need more information to make the decision. Or there may be other decisions or counterfactuals to be understood first. In that case, the board shouldn’t be afraid to defer a decision. But it’s critical that it makes it very clear why they’redoing so, what further steps will be needed and when, in order to make the decision. A deferred decision for the right reasons will always be better than just drifting and failing to make a decision because it’s too hard, or because no-one wants to face up to reality.
What tends to only become obvious after the decision has been made?
20:20 hindsight often brings clarity that wasn’t available when the decision was made! If that hindsight shows the decision was wrong, then there’s no point beating yourself up about it – provided the decision was made in good faith based on the information available at the time. Just learn from the error for the future, especially by analysing why better information wasn’t available at the time. Ask yourself whether there are lessons there to avoid making a similar mistake again.
What’s the most common misconception about how boards actually work?
Being on a board is a privilege and great responsibility, but it’s also hard work. Directors are sometimes accused of being asleep at the wheel or allowing management to get away with things. While that can and does happen occasionally, most directors are extremely diligent and spend a great deal of time trying to make the right decisions. We try to get the balance right between governance on the one hand, and motivating and encouraging management on the other. Directors must successfully juggle the multiple competing stakeholder pressures of customers, shareholders, employees, regulators and social licence.
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