Penny Bingham-Hall, a non-executive director of six boards, says managing community expectations should be a priority for directors after the banking Royal Commission.
A challenge for non-executive directors, especially since the revelations in the banking Royal Commission, is knowing whether the management team is doing the right thing and behaving in a way acceptable to the general community.
Penny Bingham-Hall, a professional non-executive director of six companies, says being a good non-executive director is asking yourself, âIs this the right way to go? Is this going to be in the best interests of the people who weâre looking to for those customers, or is it going to impact employees.â
However, she cautions about overreacting to the findings of the banking Royal Commission.
âItâs important to take it on board and learn the lessons, but not all of the things that have happened in the financial services sector are relevant to other sectors,â she says. âThe important thing is keeping balance in terms of the role of the non-executive and the executive.â
Bingham-Hall doesnât think the fundamental role of the non-executive director has changed.
âI think all directors just need to assure themselves theyâre spending enough time to really understand the company, to make the decisions weâre being asked to make,â she says. âIâm not sure that has changed.â
However, community expectations are now higher and the fallout of the banking Royal Commission has generated a lot of debate on whether companies are acting in the best interests of all the stakeholders, not just shareholders.
But just what are community expectations?
Bingham-Hall, who is on the board of Fortescue Metals Group, Macquarie Specialised Asset Management Limited, DEXUS Property group, Taronga Conservation Society Australia, Port Authority of NSW, and Bluescope Steel, sees it as common sense. She claims if you are operating in the best interests of all stakeholders, that will be beneficial to shareholders in the long term.
However, she sees greater expectations from the investor community and the broad community around environmental and social issues. âDirectors need to be across that and aware of where their companies have an impact on the environment and on social issues, and have a robust debate with management about how weâre handling them,â she says.
âAs a director, itâs important you continue to learn and stay abreast of community expectations. Theyâve changed dramatically in the time Iâve been in business, and itâs important youâre out there looking at what the community expects from your company.â Bingham-Hall was in her 20s when she started work with the technical services group at Leighton, the international contractor now called CIMIC Group, after studying industrial design.
She worked in the area for a few years but decided it wasnât for her as it was too micro. However, she found the business side fun.
Along the way she worked with Wal King. When he became CEO, she worked on the successful bid to build The Star casino in Sydney, outmanoeuvring the late media and gaming magnate Kerry Packer.
She ended up in corporate affairs to lift the companyâs game in dealing with media and government, and then went on to manage investor relations.
âI got the opportunity to do that for a number of years, which was a great way to learn about the business and understand the investment community and what their issues are,â she says.
This experience shaped her director career.
âI like companies that do things, build things, create things,â she says. âI really enjoyed the mix of how you get financial performance, what the long-term strategy is, and how you get people motivated to deliver that.
âIâve always liked the financial side of things, but I also find it fascinating about the strategic direction of the company, and the corporate culture, which is very targetable at the moment. And how you get the best out of people.
Itâs problem solving and, in a funny way, doing something like industrial design is all about problem solving.â
Bingham-Hall says it is sometimes difficult sitting on the other side of the table after being a senior executive. âThe thing I enjoy most about the boards Iâm on is when we do a strategy session with the management team,â she says.
âI love the interaction of looking at the market, the competitors, what your short-term objectives are, and how you balance short-term shareholder requirements with long-term investment needs, with the human resources side of things and how we get the right people to do them.
âAnd then when youâre a non-executive director on a number of companies, youâre looking at different industries, different companies and doing things differently. I find that fascinating.â
For directors, liability and risks have amplified in the past year or so, according to Bingham-Hall. This is why itâs important to make sure the board you join has confidence in the management team.
âThere is a degree of trust when youâre a non-executive director,â she says. âYouâre not walking the corridors of the company every day of the week. You are part-time, and you need to feel confident that the management team is driving the right way.
âItâs your job as a board to appoint the CEO, and youâve got to be confident youâve got a CEO who has the right culture and the right values.â
Bingham-Hall agrees that being on the board of companies across different sectors is an intellectual challenge.
However, this also gives a broad perspective of how businesses operate.
âSome issues, such as safety â a number of companies Iâm involved with have high risk environments and safety of people is the number one priority â you learn from different industries and different companies about how they approach that,â she says.
A key skill for directors is challenging management in a constructive way, she says.
âWhere Iâve seen boards operate really well is when you walk out of a board meeting and the CEO turns to you and says, âWow, that was a really good discussion and I possibly wouldnât have thought of some of those issues that were raisedâ.â
Some board meetings feel like youâre just ticking boxes, she says. But the good ones leave you feeling like, âWow, I think we really contributed there, weâve really got management to think about things a bit differently.â
Bingham-Hall says the game of finding a board role is changing. âThere is a much greater focus on diversity and accepting that being an ex-CEO and ex-CFO is not necessarily the only skill you need on a board,â she says.
âBut if you come from at least C-Suite executive level in a big ASX-listed company, then youâre more likely to be considered than someone from a non ASX-listed background. That certainly gives you a bit of a head start.â
Aspiring directors should think through what their skills are and where they may be applied.
âAnd then it comes down to networking, to knowing who are the key recruiters, and also having a network of directors and chairmen, or at least having the opportunity to talk to some of them to see where they think your skills could be best applied,â she says.
Penny Bingham-Hall will be speaking at the upcoming Australian Governance Summit, 4â5 March. More information here.Â
How Busy Is Too Busy?
A hot topic in the wake of the banking Royal Commission is how many boards are too many, and how does a busy director stay on top of issues. When Penny Bingham-Hall gets pinged by a company looking for a director, among the first questions she asks are: what are you looking for in a director? And why are you interested in talking to me?
âI think youâve got to be comfortable that your values are going to be in sync with those of the company,â she says. âWhen you sign up as a director, assuming all things go well, and you like them and they like you, youâre there for the best part of 10 years.â
She says it often comes down to a cultural fit with the board and doing due diligence on the management team.
As a non-executive director of six companies, Bingham-Hall hasnât added up how many board and committee meetings she attends in a year, but agrees it is a lot. She also chairs remuneration committees, is on risk committees and a range of others.
There are times of year, particularly February and August, when it gets hectic.
âSometimes Iâm working seven days a week,â she says. âYou do get a concentration around the peak times when youâve got financial results and remuneration reports.â
Bingham-Hall has a simple method to keep track of the details of the six boards sheâs on. She keeps a separate notebook for each.
âThat can be helpful because when youâre working on electronic copies, the notations tend to go in time. Itâs useful just to bring out the key issues that you may want to raise in a meeting.â
Latest news
Already a member?
Login to view this content