In her first interview since 2006, former James Hardie chairman Meredith Hellicar speaks to Tony Featherstone about her return to corporate governance and new-found passion for executive mentoring and counselling.
Meredith Hellicar FAICD had been a prominent company director, one of few women to chair an S&P/ASX 100 company and was increasingly influential in Australian business.
But in 2009, she and six other non-executive directors of James Hardie Industries were found by the New South Wales Supreme Court to have approved an ASX announcement that was misleading.
Today, Hellicar chairs private transport company BagTrans and is a principal at mentoring firm Merryck & Co, where she has a growing practice supporting CEOs and senior executives to enhance their leadership and business performance.
Hellicar wants to rebuild her board portfolio and believes she can again make a significant governance contribution.
Media reports that hastily described the Hardie case as “drawing a line through Hellicar’s career” underestimated her quiet determination and her regard in the governance community.
Several high-profile directors testified about Hellicar’s character during the 2009 Hardie case in the NSW Supreme Court, describing her as a hardworking, honest and diligent director.
She reluctantly agreed to this interview after it was suggested by former colleagues who do not want to see her governance talents wasted.
Asked if she, herself, would appoint a previously banned company director, Hellicar says: “I personally would be prepared to run the gauntlet of some media attention because the benefits of having an experienced, resilient, contributing director, over a long period of time, far outweigh any short-lived controversy.”
She adds: “[The James Hardie judgment] was a civil penalty that related to a single board meeting in 2001. I have served on the boards of around 20 companies for over 20 years, operating in 10 different industry sectors and four continents. I believe there are real benefits from having directors who have a bit of scar tissue and who have learned and grown from a range of challenging board experiences.”
Directors often talk about the need to govern companies in good and bad times, but only a fraction have experienced the range of circumstances Hellicar has and have been prepared to risk a long and successful career – and their personal reputations – to safeguard shareholder interests.
Hellicar did not want to dwell on her Hardie experience for this interview. She may be best known for chairing Hardie, but she says the depth and breadth of her governance experience extends well beyond governing the building materials company.
She wants to move on and is looking forward to the next chapter in her executive mentoring career and to hopefully taking on more directorships. Other than to absorb the learnings, she sees no point looking backwards when much is still ahead.
During her disqualification as a director, Hellicar found a new passion for mentoring executives and directors and also completed a Master’s degree in counselling. She wakes early on Fridays to spend four hours as a Lifeline Australia counsellor.
In some ways, Hellicar’s interest in helping people through counselling is at odds with her media persona. At times, she appeared cold and distant in news photographs during the Hardie crisis. Her reluctance to comment in the media for years added to these perceptions.
In person, Hellicar is friendly, confident and upbeat. She jokes that she still cannot persuade her husband and daughter to attend the ballet and professes a passion for the Sydney Swans, despite having grown up in Melbourne and supporting St Kilda.
Here is an edited extract of her Company Director interview:
Company Director (CD): Let’s start with the present rather than the past. How are you and what have you been doing since your ban as a company director ended last year?
Meredith Hellicar (HC): I am really well. I have had a very busy year, having continued to build up my mentoring practice through Merryck & Co, where I specialise in helping CEOs, other executives and directors improve their performance. I have continued my voluntary work, completed another Master’s degree and have taken up chairmanship of a private company [BagTrans], which is on a strong growth trajectory.
CD: Do you want to rebuild your governance career?
MH: Yes. While my mentoring career is stimulating, I would also like to rebuild my portfolio of directorships and make use of the governance skills, experience and learnings I acquired over many years with directorships and chairmanships.
CD: What extra skills and life experience would you bring to a boardroom table now, compared with five years ago?
MH: There are the obvious learnings from the Hardie case and the less visible learnings about how boards can operate at their best in complex situations. I have served on an array of boards and encountered a lot of difficult situations. Those experiences have helped me hone my ability to detect emerging issues and ferret out and question underlying assumptions.
CD: Have you been sounded out by any boards about possible directorships?
MH: It is starting to happen, which is nice, but I intend to keep up the executive mentoring as well because it’s a really useful way to contribute to company performance and enhance a CEO’s leadership skills.
CD: If you were chairman of an ASX 100 company today, would you nominate someone to the board who was previously banned as a company director?
MH: I can see a number of circumstances where I would. First and foremost, the director would need to have the depth of experience and skills as a company director. Second, I would look at his or her personal attributes, such as honesty and integrity, and what other directors say about him or her. I would look at the circumstances of any banning order, whether it was a civil or criminal matter, and how long ago it was. I would take into account the opinions of current directors on the board and those of shareholders. I personally would be prepared to run the gauntlet of some media attention because the benefits of having an experienced, resilient, contributing director, to the benefit of the company over a long period of time, far outweigh any short-lived controversy.
CD: If you were nominated for a prominent directorship, what would you hope the chairman would say to shareholders who have to approve your appointment?
MH: I would hope the chairman would point out that I am not defined by the Hardie experience, having led or been a part of a range of boards that have encountered differing operational and strategic circumstances. I would hope shareholders would be told I stepped up (to chair Hardie), solve the issue and stay the course. And that I maintained strong shareholder support both personally and for the company throughout that time.
CD: There are lots of negative media stories about the Hardie case. But your career has been much broader and deeper than the focus of those stories. What are some of the experiences you have been part of as a director of which you are most proud, including as a former chairman of Hardie?
MH: A prominent one was joining the reinvigorated AMP board in early 2003 after it had some disastrous investments in the UK. Being an AMP director during its recovery phase was a tremendously rewarding experience, with a great group of directors and executives. In terms of James Hardie, its entry into the US, with a real market-disrupting strategy, has been a fabulous success. The board was very much a driver and supporter of that strategy in its early days.
CD: What advice would you give someone doing due diligence to join a board?
MH: Obviously, you have to examine the accounts, the regulatory filings, and definitely meet the company’s auditors in private. Most important is judging the leadership team in the company and on its board, and their ability to develop as well as deliver a coherent and sustainable business strategy. The risk you are ultimately taking on is about people. You have to stand back and ask: Are these people I can really invest in and trust? And how can I add value to them?
CD: What advice would you give a director facing a crisis and under attack, who might be tempted to quit the board and walk away?
MH: Everybody is different, but I would urge directors to stay the course. It is in times of real trouble that the talents and skills of directors – and their mettle – are most needed.
During a crisis, ensure you are fully informed. A wise chairman once told me that bad news is not like wine; it does not get better with age. Ensure information flows incredibly quickly and that you can rely on the soundness of the judgement of the people providing information and advice to the board.
I would also encourage boards to communicate fully with all stakeholders during a crisis: ensure employees, customers, the community and politicians are aware of what you are doing. All too often, directors hunker down to try to get a solution and create a vacuum [of information].
Also, stick to solutions that will be good for the company and its stakeholders in the long term. In a pressured environment, it can be tempting to go for the short-term fix, but you have to ensure you fix the underlying problem.
Finally, keep as much of the business as possible insulated from the crisis. The last thing you want is for the business to lose significant momentum during a crisis.
CD: Dealing with a crisis does have personal and professional effects. How have you dealt with those?
MH: On a personal level, I savoured the support of family, friends and colleagues. The strength of their support, and even the support of strangers, was marvellous.
Professionally, I was gratified by the support I received from my fellow directors on other boards and it was important as a director to continue to contribute effectively to those boards.
More recently, utilising my skills through mentoring and also obtaining another Master’s degree have been very rewarding.
CD: We always hear about the many positives of directorship. Do you believe directors, generally, underestimate the significant legal, financial and professional risks of directorship, and are underprepared for worst-case scenarios?
MH: Yes, they can underestimate the personal risks, but thank goodness for that because we would not have so many good directors willing to take on the role. Being a director is a demanding job. It demands your brain power, knowledge, energy and experience. You must be prepared to put in a lot of work. It is not a lifestyle choice, but very much a career choice. You have to be passionate about good governance and good strategy, and believe in your ability to influence business outcomes.
As far as preparing for worst-case scenarios is concerned, directors need to be able to fight the natural inclination human beings have to screen out messages that do not reaffirm their world view, or overemphasise those that do.
The key skill is being willing to entertain others’ ideas and views and being able to critically evaluate the underlying assumptions of the information you are being given, or conclusions you are drawing.
CD: What is your perspective on how governance has evolved in recent years?
MH: The global financial crisis (GFC) has had an interesting effect in Australia. Obviously, there has been a tendency to introduce more regulation and ensure more information is produced, which is an understandable response, although it does not necessarily lead to better-informed shareholders. Companies and directors have had to ensure extra compliance is embedded into their organisations and the corporate culture, along with ongoing regard for sustainable environment, economic and social outcomes.
A positive effect of the GFC has been to refocus boards more on corporate strategy. With lower economic growth forecast in Australia, where companies get their future revenue is becoming a much bigger question for boards.
Companies that have been through rounds of cost-cutting and restructuring are focusing more on growth, which in turn is encouraging boards to focus more on strategies for sustainable future growth, including, most importantly, on productivity improvements that are absolutely vital. There is a rebalancing under way between the board’s focus on compliance and a renewed focus on risk, and between a focus on cost cutting and a renewed focus on corporate strategy and growth.
CD: You did interesting research for the Business Council of Australia (BCA) in November last year on increasing the number of women in senior executive positions. Is gender diversity in Australian boardrooms progressing quickly enough? And, do we need quotas?
MH: No and no. The BCA made a fabulous commitment to have 50 per cent of executive positions held by women within 10 years, which is an eminently achievable target. ASX guidelines on diversity are having an effect, but nearly a quarter of ASX 200 companies still do not have a female director, and the rate of female board appointments slowed last year. Perhaps boards could adopt a similar target to the BCA, which would be a good initiative.
CD: What advice would you give an emerging female director who is, perhaps, in line management or the professions, and sees a future career in directorship?
MH: Don’t leave your executive career too early. Some women leave out of frustration over the barriers to their progression in executive life, and think directorship is another way forward. That is not a reason for taking up a board position. You will be a better director if you have had a deep and varied career, preferably in the most senior levels in the executive ranks or the professions, and can bring genuine real-world experience to the boardroom. Be very realistic about what you can offer a board and do serious due diligence. Start to think like a director rather than an executive and aim to have a portfolio of roles that can provide a cross-fertilisation of ideas. And, never view directorship as a lifestyle choice.
CD: You have done some good work on not-for-profit (NFP) boards in the past. Would you like to get involved in NFP governance again?
MH: The NFP sector has always been part of my life. When I wasn’t able to do that through governance, I transferred my energy and participation to the coalface. I have enjoyed being much more hands-on doing voluntary work, particularly at Lifeline. If my skills can help the NFP sector in other ways, then yes, I am open to other NFP roles.
CD: What do you enjoy most about being on boards?
MH: Undoubtedly, the collegiality of being part of a very intelligent and stimulating group of people, who have a common goal of enhancing the organisation’s performance in all its dimensions and who work well together. Nothing beats a great discussion with the board and executive team about strategy.
CD: How do you relax away from work?
MH: My family loves the theatre and movies. I read novels, am a passionate supporter of the Sydney Swans and have run with the same group of friends and had coffee with them every Sunday morning for 10 years. More recently, we have taken up stand-up paddle boarding. My instructor keeps telling me to keep my eye on the horizon, have good peripheral vision to maintain balance and be ready at all times for unexpected turbulence. I can’t help think it’s a good metaphor for directorship.
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