By Mark Watson
How long does it take for a new director to form a view on the operation of the board they have just joined? It’s a question that was posed by the senior counsel assisting the banking royal commission to the Commonwealth Bank (CBA) Chair Catherine Livingstone yesterday. According to the Chair, you need to see a full cycle of the meetings and activities of the board. But if an organisation is on the ropes, can you afford to wait that long before you exercise your independent judgment and ask probing questions on issues that concern you at board meetings?
At Effective Governance, we regularly deal with boards that have poor induction programs. Yes, incoming directors will be handed a long list of their fiduciary and other duties (which they should know anyway!) and disjointed items of information and policies which they are expected to make some sense of.
Leading practice boards, by comparison, will ensure they have an up to date and comprehensive board handbook which contains all the essential information that the new director needs to know about their board. Leading practice organisations will also provide the new director with comprehensive briefs concerning all the key and “hot” issues facing the organisation and any legacy issues that may raise their head in the foreseeable future. A good model to follow is one that any senior public servant will be well aware of as they will have prepared a comprehensive suite of ministerial briefs for a new minister or on change of government. It’s a practice that Commissioner Hayne suggested yesterday that CBA might consider adopting. It’s also a practice that many other boards might consider adopting as well.