Fit for purpose?

Tuesday, 26 September 2017

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    Two high-profile Australian organisations in the glare of the public spotlight show the dilemmas for boards in managing risks and ensuring their governance model is ft for purpose in 2017.


    In the wake of Austrac’s allegations of multiple money laundering breaches, the Commonwealth Bank board now has an independent inquiry from APRA, an ASIC investigation and a shareholder class action to navigate — and a new CEO to appoint. Commonwealth Bank chair Catherine Livingstone AO FAICD, acknowledged the ultimate collective responsibility of the board, the CEO and the group executives. The bank is funding the APRA prudential inquiry into governance, culture and accountability at CBA, which is expected to report in six months.

    After months of bitter infighting, the Australian Olympic Committee (AOC) opted for an independent review of its organisation, which exposed a dysfunctional culture marked by favouritism, unfairness and fear.

    Longstanding AOC president John Coates AC and new CEO Matt Carroll agreed to implement the review’s 17 recommendations and released The Ethics Centre report in full. Coates then publicly disavowed himself of any responsibility for the issues. “I’m the president, I’m not the senior leader being criticised,” he told a press conference.

    The quality of individual judgement, when faced with the need to make the right decision... determines the character and culture of an organisation.

    Meena Thuraisingham GAICD

    Meena Thuraisingham GAICD, an organisational psychologist and principal at advisory practice BoardQ, says instruments of governance are only as effective as the way they are practised. “Worryingly, the more rules you create, the more people are lulled into a false sense of security. They rely on the existence of the rules and fail to think more deeply about what is right and the role personal behaviour plays. It is ultimately the quality of individual judgement, when faced with the need to make the right decision, which determines the character and culture of an organisation. A leader’s ability to judge well is key. This can be developed so that leaders can ask who a decision will hurt or benefit, and how.”

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