Boardroom Conversations with Lisa Chung

Season 2 Episode 10 –  Lisa Chung: Advice for new directors, governance at PwC Australia, and why boards need a sense of humour

Lisa Chung AM FAICD is the chair of Australian Unity and the Front Project. She also has board roles with PwC Australia, AVJennings and the Foundation of the Art Gallery of NSW. We discuss: advice for new directors, governance at PwC Australia and lessons on being a successful chair. Plus, why boards need a sense of humour.

Transcript

BENNETT MASON

Hello and welcome to Boardroom Conversations, a podcast from the Australian Institute of Company Directors. I'm Bennett Mason and thanks very much for joining us. In each episode, we'll have candid conversations with some of Australia's top directors. We'll be delving into their backgrounds and discussing many of the key issues that boards are grappling with. Our guest this time is Lisa Chung, she's the chair of Australian Unity and the Front Project. Lisa also has board roles with a range of other organisations, including PwC Australia, AVJennings and the Foundation of the Art Gallery of New South Wales. Lisa was formerly the chair of the Benevolent Society and a partner at some top tier law firms. Lisa, thanks so much for joining us.

LISA CHUNG

A pleasure, Bennett.

BENNETT MASON

We like to begin the show by speaking with guests about their board careers. So, tell us what was your first board role? And what do you find, years later, so rewarding about being on boards?

LISA CHUNG

Well, my first board role was actually the Australian Institute of Management, which was a great first role to have because it was a very commercially oriented organisation. It was a membership organisation that ran a lot of management training, middle management level. And so, it was quite a big training business, but at the same time it served members. The board there was a super, super professional board, very experienced. Many of them had had, listed company experience, etc. So, it was a great place to start. But in its guise, it was a not-for-profit organisation. So that was my first role, and I think I was there for about four years, which was a terrific introduction to being a board director with lots of learning.

BENNETT MASON

And what is it that you like about board roles? What's so rewarding about being a director?

LISA CHUNG

Well, of course they're all different. So, you have enormous variety. But at its heart, I think it's about the opportunity to make a contribution to an organisation's success while also having the opportunity to grow and learn yourself. So, you get to broaden your knowledge and insights across different new sectors. You learn about new, enterprise models in real time. So, it's not a formal learning. You learn it in real time. And of course, what you learn in one place, you can apply in other places. And that's also quite rewarding.

BENNETT MASON

You talked about that variety of sectors. You've had board roles in all sorts of areas. Commercial property, outdoor advertising, the arts, charities, some very large organisations, some smaller organisations. How have you put together your board portfolio and do you intentionally try to seek out certain sectors or certain roles?

LISA CHUNG

As you've picked up, the opportunity for variety is enormous. So, that speaks to that. I'm not really a sector directed person. So, although my background in the law was in commercial property and infrastructure, so that has featured. I'm very attracted to enterprises where success is driven by its ability to, I guess, maximise the potential of its talent and/or where the services are for the benefit of people and their wellbeing. So that we will see is a theme. Then overlaid with my background in property, organisations which deal with the intersection where people meet place is what appeals most to me. So that's why you’ll see things like the arts, architecture, especially the creativity around those. Australian unity, which combines those. AV Jennings, this idea of community building, Urbis and PwC. So, they're the themes. So, they look very disparate. They look very varied. But actually, those are the themes that unite them.

BENNETT MASON

What factors do you consider when you're deciding whether to join a board or not? Are there particular risks or opportunities you weigh up?

LISA CHUNG

I think most of your listeners would understand the basic due diligence that you do around an organisation which, the AICD is terrific at supporting people in, understanding the financial circumstances, the history of that. So, I won't dwell on that because, I think that's reasonably well known. For me, though at a personal level, when I'm considering opportunities: the cultural fit, and the potential to quickly develop trust and relationships is absolutely critical. So, I think that's one of the most important things about the good operations of a board. Who the chair is and who the board colleagues are is critically important. And then layered on top of that. So, it’s a foundation. You start with that and then you build upon that, the effectiveness of the board itself with that platform is important and how well it works. Its working relationship with management. Then I consider what contribution do I think I can make, and does it match the chair’s and the other board members’ expectations? Is there congruence there? And the last question I always ask when I'm joining a board is, does your board have a sense of humour?  Very important.

BENNETT MASON

And is the answer normally yes, or no?

LISA CHUNG

They always say yes, but I've already assessed whether they have or haven't. And so, it's a good test, how they respond to my asking that question. So, I've already assessed whether they have or haven't.

BENNETT MASON

That's a good red flag, I'm sure.

LISA CHUNG

It is for me.

BENNETT MASON

Not a lot of directors would look for that particular red flag, but perhaps they should.

LISA CHUNG

I know, that's true. Not the boards that I've joined, but other people who I've spoken to about this find it a bit peculiar. But the boards that I sit on don't interestingly. So, they also value it. And it is really important, we can smile about it, we can laugh about it, but it is a really important cultural piece on a board.

And it can be used to great effect to alleviate some stress in a situation or build rapport. There are many ways you could use it, and it's a really important part. Life's too short otherwise.

BENNETT MASON

And I would guess that rapport is necessary in a board at all times, but particularly when you're dealing with a crisis, when you're dealing with extraordinary circumstances. Having that warmness, that sense of humour between directors must be really helpful sometimes?

LISA CHUNG

Well, it is. It can be a very binding thing. It's a question of: who you are getting in this boat with? Sometimes it's a leaky boat and you have to work out: can you survive in that leaky boat? With those people that, that you're about to commit to? So, it's a good device, I find.

BENNETT MASON

You talked about your first board role at the Institute of Management. That was obviously a few years ago. You're now an experienced director. What are some of the major changes that you've seen since you first became a board member? And on top of that, what issues are prominent now that maybe weren't at the forefront ten years ago, 15 years ago?

LISA CHUNG

There's just so much more expected of board directors now compared to 10 or 15 years ago.  I'm sure everybody knows that with whatever sector you're in, whether you're in a charitable sector or in ASX listed companies, etc. Every sector, every company has its own individual elements that have really lifted over that period. But some of the things that are, I guess, common to many of them, regulation is a huge factor now. And a lot of that has followed from market and sometimes ethical failures, which have been often governance failures as well. So, that's an enormous uplift in that, puts a lot of burden on directors that were not there before. When I say burden, I don't mean it in necessarily a bad way. It has just lifted the requirements of how board directors think about their role and their obligations, their duties. Investor expectations are obviously quite different, have lifted. Who your investors are. Why they invest in you and what they're expecting from you. Community standards are quite different now. So, there's a lot of debate about whether companies should engage in what people would describe as social issues. So, we know that that’s very much at the fore. And depends on who you are and what your rationale is for supporting particular issues or areas. Obviously, technology has been an enabler and has made things somewhat more efficient in some ways. But also, has created risk. So, you've got, for example, people talking about AI now as a great enabler versus the risk around cyber breaches. Both of those are so much in the foreground in every organisation. It's climate risks. And so many other things that have caused disruption in what we do. So, when I talk about disruption - for people who don't quite understand what that might look like, I go to an example which has got has nothing to do with anything I've ever done or any sector that I've ever worked in. But it's something that people can always - it always resonates with them. And that's the recorded music industry. So, when I was growing up, you would buy a single or you would buy the whole album on vinyl, and then you would play that. And what was actually marketed was actually decided by the record company. And what was played was decided, I think, by the radio stations. So, it was very much managed and controlled and what we ended up with came from there. Whereas now, you can publish your own music as a musician. You just buy one song, you can just borrow one song. So, it's a very, very fragmented market now which has its challenges. But also has great benefits. People listen to that example and then say: “Yes, I get what you mean about how things can be disrupted.” And I think that was, to my mind, one of the first that that was really obvious to consumers as to how that worked. So, I guess social media is a huge one as well. Everyone's got a megaphone now. So how does that impact your organisation? How do you maintain and safeguard the reputation of the organisation, where that’s the situation. That's a new risk and can be very difficult to manage. We're guardians of the reputation of an organisation. And so, there's much higher level of awareness that we have to have around community expectations. And just the rapid change of everything. We're living in the most rapidly changing times, I think. And so, there's never been a more challenging, challenging or interesting time to be a board director.

BENNETT MASON

You talked about those challenges, those risks, the regulatory burden - that's probably not getting any lighter any time soon. Do you worry sometimes that people might look at the job of being a board director and say: “Gee, that's just too hard?”

LISA CHUNG

I've heard people say that that is an issue. I can't say that I've actually firsthand seen it. But I can imagine how it would be the case. There are people who've done very, very well in their executive careers. So, there's possibly a small subset that might think of it this way. So, there are people who've done very, very well in their executive careers. They've made themselves financially secure. In days gone by, they might have thought about giving back in a way, by becoming a company director on one or two boards. These days, they might think that that's too big a risk and they could do other things. So, I think that might be a subset. But if you ask any of the recruiters, there's people knocking on their door every day, every minute, looking for board opportunities.

BENNETT MASON

You said earlier in our discussion that part of what you like about being a board member is growing and learning. What are some of those things that you've learnt as a director or as a person since taking on your first board role? And linked to that, is there anything you know now that you'd wish you'd known at the start of your board career?

LISA CHUNG

When you’re first joining a board, the advice I normally give to people is, you’ve usually gone through a process to be appointed to a board. So, people have assessed your skills, your background, your expertise, your fit, and you've joined the board. So, the best thing I can, the best advice I can offer to them is to say: join, listen, observe and learn as the first step. Don't feel that you have to jump in and talk and feel like you're making a contribution to prove that yourself worthy. You're worthy. You're there. So just relax and take it in. So that's the first piece of advice, I think. Probably the learning for me has been quite incredible. Just too much to identify one or more things. The wonderful thing is that in a situation where you have a few board roles that you're undertaking and, in my case, I do some other things as well. Might be a bit of coaching or it might be just some advisory panels that I sit on. Every single day is different. Your schedule changes. Every single day is different. You're doing something different. You're working with different people every day. And that's hugely stimulating. And because presumably you choose only the things that interest you, that you feel you can make a contribution to. So, you're doing what you want to do every single day. That's a huge privilege.

BENNETT MASON

Sounds pretty great. Lisa, I wanted to ask you about diversity because when you first entered boardrooms, you certainly would have been one of the very few women sitting around the table. We've seen improvements in gender diversity, although granted, there is still more work to be done. But we haven't seen significant changes to the racial or cultural diversity of boards. Why do you think that is, and how could the issue be addressed?

LISA CHUNG

Bennett, I think it's a really complex set of issues that every organisation grapples with. I've been thinking about it and talking about it for a long time. I've spent a lot of time mentoring or coaching people, usually of diverse backgrounds, but not just that. Many women as well, who want to overcome that. One of the things that I think is absolutely critical, if you're a board director in an organisation that wants to and feels that it will be in the company's best interest to improve its level of diversity, particularly at the board or within the organisation generally, there's hard yards to do before you can actually achieve that in a sustainable way. So, I always say inclusion has to come first. So quite often people talk about diversity and inclusion. Inclusion has to come first. And it is about an organisation or a board turning the mirror on itself and saying, how inclusive are we? And really go into some uncomfortable spaces to really think about that. Because unless you have done the work to consider how inclusive your board or your organisation is, you can recruit any number of people of diverse backgrounds. And it doesn't have to be cultural. There’s disabled, a whole manner of different types of diversity. Unless you've done that work, it's not sustainable. And there are so many examples of that. I'm sure listeners will be able to think of some themselves. So actually, the hard yards have to start before you think about how diversity is going to, how are you going to actually engage in that in your organisation. That's the first step. And then like most things that you want to change, you can't take your foot off the pedal. You have to keep the foot on the pedal and keep going forward. So that takes a lot of work. It's a type of cultural change within an organisation. And we all know that any cultural change takes a lot of effort and takes a long time to actually achieve in a sustainable way. At the same time, I think people who come from different, diverse backgrounds, and one of the things that people are starting to talk about is diversity of socio-economic background. So quite often they're actually a conflated issue. So, people might come from a culturally diverse background, but it's actually not the cultural diversity, which is potentially what might hold them back. It sometimes comes down to socio-economic issues as well. And the opportunities that they might have had around how to socially engage, etc. And so, a lot of the coaching that I've done, for people of cultural, diverse backgrounds, is to help them understand how culturally organisations, large organisations, usually in Australia, actually operate. How internal networks exist and are important for how those organisations operate.

So, there are many things that go into this. I've only scratched the surface, and I think it takes a lot to really understand how you, how an organisation might do it. Every organisation is different. But I have recently read the QBE, I'm not on that board, but I have read their inclusion... I think they call it “Inclusion for Diversity” policy. And it's a great read. So, shifts it away from the way that we've previously thought about it. So, I recommend that.

BENNETT MASON

You were speaking earlier about the importance of inclusion. How does a board member know if their organisation is inclusive or not? Are they metrics they can look at? Do you look at the demographics? What is it?

LISA CHUNG

Well, so if I use Australian Unity as an example. We've got a very diverse workforce. Our workforce is diverse in many different ways. We have people who work in funds management. We have people who work in financial services roles, and we have people who go and provide care services to our clients in their homes or in residential aged care homes. So, you can see that's hugely diverse. And within our workforce, whether they're in those care roles or whether they're in financial services roles, etc. Our workforce is very culturally diverse. So, you can see that, and you can listen to that, and you can hear that, and you can engage in that. How that then translates into the availability of career opportunities, etc. is something that we, you, would think about how to statistically manage that. I think is a very sensitive area and not everybody is comfortable talking about that or disclosing that information. So, it's how you overcome that. But I think you don't have to get down to every last number of people. You can assess that in a more generalised way, I think, to get yourself on the road and then work out how you take it to the next stage. Because it's a very it's a very long road and it's probably never going to be ending. It just keeps going.

BENNETT MASON

You said a moment ago that you were the chair of Australian Unity, and you've also been the chair at the Benevolent Society, which is Australia's oldest charity. What do you think makes for an effective and successful chair? There's many different ways of interpreting that role, but what works for you?

LISA CHUNG

When I first became the chair of the Benevolent Society, or when I was the chair elect, my predecessor, Sam Weis, recommended I do the AICD chairs course and that was great advice. And I took that program with Graham Bradley, he was running it. And Graham said in the program, if you take nothing else away from this program, remember that the chair always speaks last. And that is a mantra that I live by. Because I think it's absolutely true. The other thing about a chair is, a recruiter once said to me that, because we had had a discussion about whether lawyers are popular or not popular as board members, and I had been a lawyer.

BENNETT MASON

Popular or not popular, just more broadly in society?

LISA CHUNG

True. That's true. But then the recruiter offered this insight, that those of us who had been in leadership or management roles in particularly law firms, but other professional services firms, she said often end up in the chair. Because the skills that you develop in those roles in professional services, namely managing peers, managing sometimes people much more senior than you. Building consensus and creating a collegiate and collaborative decision-making environment, whilst also inviting challenge and debate, were similar skills that are needed for both the chair. Over the years I've realised that that's probably true.

BENNETT MASON

You mentioned that advice from Graham Bradley. The chair always speaks last. I don't want you to betray the confidence of your boardrooms, but what are some of the things that you say last at your board meetings?

LISA CHUNG

Well, I've been a board member where the chair doesn't know about that mantra. And usually, it's okay. Usually, it's fine because the environment or the relationship between the people at the table are fine. But we do know, and we've heard of instances where the chair is a very dominating personality. And it can be a real problem then. Because that then just sets the tone of the debate and then other directors around the table say: “Oh, well, it's no point my saying anything because we're already at the point of where we supposed to end up.” So, it is critically important, I think, for the chair to orchestrate and draw out from board members all of their views and to facilitate that debate and discussion. The chair's role then, is to, as a director, to also offer a view. But then also to summarise and bring together where the board collectively has got to. And if it's not in a place of consensus, then to really facilitate how you build that consensus to a point where you can all live with how you're going to go forward. And that doesn't necessarily mean that everyone votes in favour of something or against something. Sometimes you just accept that. But at the end of the day, you've got to take it to its conclusion in one way or the other.

BENNETT MASON

Do you have any advice on building consensus boards? Obviously, you have to deal with some pretty thorny issues sometimes. I imagine it can get pretty heated, even when everyone does have a sense of humour. So, what do you do as a as a chair, as a board member, to help bring that consensus together?

LISA CHUNG

If you're wondering how to do that at the time that it has to be done, then you're too late. It's like having any difficult conversation. They run these courses about how to have difficult conversations. All of the work on having a difficult conversation occurs months and years before you get to that difficult conversation. It's so much easier to have a difficult conversation or to facilitate a discussion around difficult issues if you have built a platform of trust and you've got a strong relationship with the person that you're speaking to. So, if they trust you, even if you're saying something to them that is very difficult, because you have got that platform, it makes all the difference. Whereas if you haven't got that, it's very difficult to make progress, I think. Because you’re floating in there, you're not doing it on a firm platform. So that's my advice. It is all about, people don't have to like you, but they have to trust and respect you in order for you to make progress, I think, in really challenging situations.

BENNETT MASON

Lisa, I wanted to ask about one of your new director roles, and this ties a little bit into what we were saying a moment ago on professional services firms. You somewhat recently joined the governance board of PwC Australia. That company has had some high-profile governance issues. Can you just describe for us what the role is there of the governance board now, and what are you trying to achieve?

LISA CHUNG

So, first of all, PwC is not a company. It's still a partnership. So, it's not subject to the same legislative requirements that incorporated bodies are. So that's the first thing to know. The world of professional services has always been where I feel that I'm most at home, where I can most make a contribution. It's my own background. I've never even worked in a listed company, so it's not something that I seek out. It's where I spent nearly all of my career. I understand the dynamics, the relationships, how important the history is, as between partners and others there. I understand how the culture has arisen, where it can change, where it goes. I understand mostly what motivates people to be there and to work together in a common set of endeavours. So, as I said earlier, where organisations, their success is reliant on fulfilling the potential of the talent within it, then that's really the space I love the most. I'm sure everybody's followed the trials and tribulations of what has happened at PwC. The firm has responded to the independent report that was carried out by Dr Switkowski with a document called “Commitments to Change”. That's been very well ventilated and publicised. One of the commitments to change, of which there are many, was to appoint, a first for a Big Four firm, an independent chair, and in addition, at least two other independent board members. And that was around lifting the governance in the firm. And the commitment is really to try and, to the extent relevant and possible, to follow the governance guidelines of the ASX. So that's the firm's stated objective with this. The firm is very committed to bringing this about. And those of us who've joined the board are very committed. And I guess we wouldn't be there if we didn't think they were committed as well. So, from my perspective though, if you're asking why I've decided to take this on? For a few reasons. The first is, PwC had always had my respect as an organisation. They had been auditors on many of the boards that I had served on, including the Benevolent Society and so on. In fact, most of my boards. But the independence test required that to be more than a year ago. So that's all complied with. I knew a lot of people there as a result, or I know a lot of people there as a result. I've served on not-for-profit boards with a number of their partners and have built great relationships with them. So, at that personal level, I had a connection. At a higher level, for our system to work, we're really reliant on the effectiveness of organisations like the Big Four. The assurance services in particular that they give, but beyond that as well. So, it's important that we don't just throw bricks at failures, but actually roll our sleeves up and say, how do we fix this? Because the way that our system operates, the way that our markets operate, are dependent on these being effective and delivering the best possible services and playing their role in our markets. So that's really the reasons why I thought that it would be a great challenge. I would have the opportunity to make a contribution in a space that I know well and also be on a journey, that I consider a great opportunity.

BENNETT MASON

As you said, you were a lawyer for much of your professional career. You became a partner. The law firms are, the big ones, for the most part, are partnerships. The Big Four are partnerships, the consultancy firms are partnerships. Do you think that model still works? Or are there advantages for some organisations in bringing on a board with independent directors?

LISA CHUNG

That's an interesting question, Bennett. I haven't been a partner of a firm for a long time. So other than coming in quite recently to PwC, I haven't really followed how they operate. Many of them are now international partnerships. So that, and I've never been a partner of an international partnership. So that that puts a new a new focus and element in play. But there is one view that partnerships were never, the partnership model at law, was never intended to apply to a partnership of a thousand people, even within Australia. So, to actually examine that and say: “Can it still apply? Even though it wasn't intended for that?” And if it wasn't, then if we want to keep the model, what changes, what improvements, what checks and balances do we need in the model to make it work for the modern day? Whether that's through scale and size or whether it's through a diversity of the services they provide. So, it took me actually quite a long time to appreciate the partnership model when I was actually a partner. But I think there is something special about being a partner of a professional services firm. There is a sense of joint effort. There is a camaraderie, a collegiality that is not replicated in other places, I think. Having said that, there are organisations that are actually incorporated but still operate on a partnership ethos, as I'll call it. And the two companies that I've sat on that were in professional services, Urbis and Warren & Mahoney, a firm of architects, they are both incorporated, but they still operate on a partnership ethos. So that is possible.

BENNETT MASON

We’re nearly out of time, Lisa. But I wanted to ask you about another area where you've been involved. You've had several board positions at arts organisations. The arts are obviously important to you. What is it that attracted you to board roles at arts organisations?

LISA CHUNG

It's such a privilege for someone like me who's come from a very corporate legal background. My family were not engaged in the arts. And to have the opportunity to engage with the arts as I had more time and then through that to be asked to sit on boards of arts organisations. It's been an enormous privilege and a great learning opportunity to meet with, to be friends with, to learn from people who've come from such a different background, who've got so much important contribution to make to us as a community, as a society. The whole creative energy that they bring and to actually hear them talk, watch them work. I can't speak highly enough about how engaging and positive that's been professionally, but also personally. So, I guess it's a become a great passion.

BENNETT MASON

Are there some governance issues that are unique to arts organisations? Or is there overlap with say, commercial property companies or charities or some of the other organisations where you've been a director?

LISA CHUNG

Well, they're all so different, Bennett. So, I was on the board of the Museum of Applied Arts and Sciences, which is a state-owned cultural institution. And so that's governed by an act of Parliament. Whereas now, I'm still on the board of Artspace, which is an independent not-for-profit. It does receive Commonwealth and state government grants, but it is an independent organisation. So, they operate quite differently. But at their heart, one of the things that is so, so important about any cultural institution, at their heart are the wonderful people who work in them and their commitment and their passion for what they do. It's really joyful to watch. And there's so much learning in that as to how they apply. So, there are common elements to it. But I think their governance models are very – they vary enormously depending on what they do, what area of the arts they're in. I've never been on a board for performing arts. All mine have been really around visual arts or in the case of the Museum of Applied Arts and Sciences, museum collections and so on.

BENNETT MASON

Lisa, we might wrap things there. But you've had some great advice for directors. So, thanks so much for joining us on Boardroom Conversations.

LISA CHUNG

Thanks for having me, Bennett.