People Risk (i.e. the uncertainty and potential for loss or failure caused by human behaviour or the decisions of employees) has been played out ad nauseam at the Banking Royal Commission. Overwhelmingly, the highlighted behaviour has been organisational culture allowing, in some cases encouraging, the pursuit of greed disguised as profit. Although it is acknowledged the regulators, ASIC and APRA, have not always sought to prosecute or seek remedial action consistent with general community expectations, neglect by boards with strict accountability for governing in the best interests of the organisation has not provided corporate Australia with a level of assurance that all boards are in control and protecting the interests of their shareholders and other key stakeholders.
By: Ian Doyle, Specialist Advisor – People Risk & Melissa Grundy, Senior Advisor Effective Governance, part of the HopgoodGanim Advisory Group
Why do boards get blindsided by corporate scandals? The answer may be corporate culture and People Risk…The role of the board has not been subjected to as much discussion and scrutiny over the past 10 years as it has in 2018. Between the corporate and prudential regulators, ASX, proxy advisors, investor representative bodies and the media there have never been more eyes critically examining the operation of boards.
Boards, like our cricketers, have exposed themselves to an expectation gap. That is, the difference between what the public, investors and stakeholders believe boards should be accountable for and what a board believes it is accountable? I argue there always was a gap – now it is being highlighted.
Article Two – How did we get here?The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has thrown the spotlight on corporate governance and culture at some of Australia’s largest and oldest companies. The almost daily acknowledgement of errors (or worse) by senior executives and CEOs for a litany of issues has exposed serious concerns, not only about how these companies are governed, but also about the people working for them. Against this backdrop, we have to ask ourselves how corporate Australia got into this position.
Article One – Setting the Scene.Headed by Commissioner Kenneth Hayne AC QC, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was established in 2017 to inquire into and report on misconduct in the banking, superannuation and financial services industries. The Commission was given the power to recommend changes to the Australian Government that is necessary to improve:
Better Boards Conference 2018: Customer-centric Governance — Driving Social Impact, 9 – 12 August, Adelaide Convention Centre
The Better Boards Conference is the premier governance and leadership conference for leaders of Australasia’s not-for-profit organisations. The 2018 conference theme, Customer-centric Governance — Driving Social Impact is focused on ensuring that directors, chief executive officers and executives have a variety of professional development opportunities including to:
Performance evaluation has become an important issue for boards, directors and the organisations they lead, and board evaluations are now commonplace for many boards. This is due to regulatory requirements for some boards as well as leading practice guidance, which recognise that there are performance benefits to organisations when their board is willing to engage in an open and honest appraisal of its own performance. However, where these evaluations are merely a routine or ‘tick-the-box’ exercise, the board will fail to address any performance issues faced by the board and individual directors such as dysfunctional boardroom dynamics.
In accordance with their fiduciary duties to the organisation, directors have a responsibility to implement good governance. The board is expected to operate collegially. Each director brings to the boardroom their own particular skills, knowledge and experience, and has a duty to apply that skills, knowledge and experience. An effective board seeks to stimulate the flow of ideas, identify key issues, consider alternatives and make informed decisions.
Each year brings with it new corporate governance challenges and opportunities for Australian organisations, and 2017 was no exception. For 2017, the focus on corporate governance has been driven by high profile regulatory actions against leading companies, corporate scandals, shareholder class actions and increased scrutiny of executive remuneration.
An advisory board is a good choice where the family owners or the company need ongoing professional advice and contacts. This is especially the case when their own statutory boards of directors comprise only family members and perhaps a few non-family senior managers from the company. Nonetheless, establishing an advisory board is a major step for any family business. For those family businesses that are considering it, or those that have already done so, it is worthwhile discussing the value an effective board of advisers can bring.