Association Governance Webinar

Vesna: Good morning, everyone. Welcome to AuSAE’s webinar. Today is the first webinar in the Governance Toolbox Series titled Working With Your Board. My name is Vesna. I’m an employee for Redback Conferencing and I’ll be your facilitator for today’s session.

I will now hand it over to Kate Ellis from Diligent who will introduce today’s presenter. We can all get started.

Kate: Thanks Vesna, and welcome to Diligent’s first seminar with the Australasian Society of Association Executives, a part of an ongoing series this year, and I’ll be your joint host today, and just a little bit about me, I’m the [marketer 00:00:32] here at Diligence. Just a little bit about Diligence, in case other people are wondering who we are. We were founded in 2001 and we provide governance software for boards and leadership teams. We currently have over 140 thousand users worldwide. To kick on the series, we’ve created material to help you navigate the complexities of governance within your association.

Now our host today is Damien Mitsch.

He’s currently the chief executive officer of the Australasian Podiatry Council. He’s also the director of the Australasian Society of Association Executives, he’s the chair of the National Primary Health Care Partnership, and the director of Allied Health Professions Australia. He’s a senior lecturer of the Clinical Leadership of Management at Montash University, and until recently, he’s also on the board of directors of Austin Health. Very busy guy at the moment. He’s been involved in governance health for many years watching over associations public and private sector health organisations and he runs his own Ace Care [inaudible 00:01:39]. He also holds an MBA and is a fellow of the Australian Institute’s company directors.

Today, he’s talking about governance from a CEO perspective. Now before I hand you over to Damien, I’ll just cover how the seminar will run today. We’ll be running fro a total of 60 minutes, which consists of a 45 minute presentation with survey questions throughout and a Q and A at the end, which you add through the chat box at the bottom left of your screen. Now I’d like to hand you over to Damien.

Damien: Good morning, everyone. Look, I thought I’d get kicked off with a really quick description of what governance is, and this is from the [I Six? 00:02:22] I didn’t invent this for myself. Just to make it really clear about what it is that I mean when I talk about governance. The framework of rules, relationships, systems, and processes within and by authority is exercised and controlled in corporations. I’ll come back to that again shortly because it is a really important description of what governance is and it’s unfortunately one of the things that I think is often misunderstood and that creates all sorts of problems for boards and particularly for CEOs, who are trying to work with volunteer boards often, and wondering why it is that they can’t quite get the results that they’re after.

We’ll just do a very quick poll, which you can see in front of you. Just wondering what your board seems to think the primary role is, so if I could get people to very quickly jump in and throw a response into that poll. Very quickly it’s emerging that decision making, monitoring, and adjusting strategies, supervising the CEOs seem to seem to be the key ones here.

While that’s going, I’ll jump on to the next slide. This is in the area that I jump on pretty quickly around boards and the way that they make decisions and how they exercise authority and control. One of the things that I would say is that one of the functions of board is to make decisions. There’s no question about that. However, making decisions isn’t the only job of the board, and making decisions isn’t the whole job of the board. To explain what I mean, essentially a board of directors can make any decision they want about anything in the organisations. So they could decide what toilet paper is going to go into the toilets on any kind of day. However, if I board was making that kind of decision on any measure, you’d look at them and say, “You’re not governing.” So how is it that we start to separate what is it that is governing and what is decision making, and ensure that the right types of decisions are being made at the right level of authority and control.

Here’s me hitting the down button to get the next slide. So decision making is not necessarily governance in itself, and that’s why it’s a bit confusing, because performance delegation, monitoring, understanding, and adjusting are all parts of the role of governance, but they sit quite separately to decision making in itself. When you come back to governance is the framework of rules, relationships, systems, processes within and by which authority is exercised and controlled in corporations and you start to think about that relationship with decision making, you start to come back to what I call the tools of governance. Decision making is just one. The tools of governance also include what are your strategies, what are your policies, how do you manage risk, and what tools do you use to manage risk and compliance. If your board is using just decision making broadly, and the decision making power to guide and direct the organisation, and they’re not thinking sensibly about how those decisions should be made and using what tools, the chances are you’ve just got a board that makes decisions randomly.

I’d say that quite a number of times, even in very good boards with very good governance systems, a director will pop a question on the table and the board will make a decision that drops straight into management, often unintentionally. If you’re sitting on the other end of that, it can get very frustrating, and difficult for CEOs, to manage because of the power relationship of the board verses the …

So probably my first tip in terms of managing governance from a CEO or management perspective is to start to focus on the tools of governance and to say to the board, “Which of the strategies do you want changed when you’re making this decisions? Which isn’t quite right to where you feel you need to make a decision in this area? What strategy are we going to adjust?” If it’s not that, what policy are we looking to adjust, and if it’s not that, what part of our risk framework do we want to adjust, and if it’s not that, what part of our compliance framework do we want to adjust? If it’s not one of those things, you wouldn’t change a strategy or a policy or a risk or a compliance measure around toilet paper, if would be nonsensical. As you come up in the level of decision making, you can still apply the same type of rationale. If boards aren’t adjusting a strategy, not adjusting a policy, not adjusting a risk or compliance, then the reality is that probably in the management to mind.

So beginning to have to manage this stuff, probably my first rule for boards is that authority and accountability must stay together. If you look at all the research around decision making, it points to the fact that if you separate authority and accountability, you’re in trouble. My example that I see often in associations around this one is conferences where the board will say, “Well, the conference is really important, and it carries a risk because we rely on this, and therefore we’re going to appoint a committee that reports to the board to run the conference.” Who’s really accountable for the budget and the outcome? The CEO. Automatically, the second they’ve done that, they’ve separated the authority, because the board has a committee that reports to it who will make decisions, and they will have implicit authority from the board to make those decisions, and the CEO being accountable for the outcome.

We then wonder why those committees get frustrated, because they get what they perceive to be an obstruction from the CEO around areas of management control and the CEO gets frustrated because they are constantly trying to reign in a committee that’s not responsible for the outcomes. And I’ve actually had somebody say to me at one point, “You have to understand. This is my reputation on the line,” and I had to say to the person, “Yes, and this is my job on the line. Now let’s sit down and get this together.” I argue that if you’re going to make a CEO accountable, you’ve got to give them the authority. Doesn’t mean you don’t need the expertise to be inputting into the management function, you often need the experts to tell you what kind of educational content, but you’ve got to keep that authority together.

The next one is be competent. Nothing will destroy a relationship between a CEO and a board quicker than a CEO who doesn’t say what they’re going to do and do what they’re going to say.

Be accountable, and this one’s a bit, it’s less simple than it looks on the side. If CEOs constantly constantly come out saying, that was a decision of the board, or they keep getting decisions from the board to reinforce what should be management decisions, and they should be standing up and saying, I made this decision because it was delegated to me, it was part of my delegations, it was my responsibility, I assessed the impact and risks, and I made a decision to do this thing. If the response from saying your management [inaudible 00:11:46] well it was a decision of the board, you can’t sit back and wonder why these said people turn up in your office saying I want to present to the board on this. And often the conversation is, “Well that is a management issue.” “Well, no, I know the board makes all the important decisions, because you keep telling me that the board made that decision that I didn’t like, and therefore I’ve got to get in front of the board.”

So being accountable in that context means that if management has to make a decision and its within the delegations, you can seek advice from the board, and I’ll get to that in a minute, but you’ve got to own those decisions and be prepared to stand up and defend them. If you can’t defend them, you probably should have gone about making it differently.

The role of committees I’m absolutely rigid on saying that there are governance committees, so the finance order and risks, nominations committee are all governance committees. The committees are formed to assist the board with the governance function. They’re not committees that are there for operational purposes. And I put conference committees in an operational committee capacity. Operational committees have to report through your CEO, otherwise you split that authority and accountability.

Governance committees shouldn’t be considering anything that’s not related to those governance tools. And if you can keep those lines really clear, then you start to hit in the right direction. I tend to have a rule that I don’t want anyone whose situated in the governance sitting on operational committees because it confuses things and the example I roll out is that I did have at one point a board member who sat on a conference committee who then wanted to have a conversation about the board about whether the dinner should be two courses or three, and I had to kill that off very quickly. The best way is to keep them separated. If you can’t then you need to be really clear with directors when they’re performing an operational role and that operational role reports though the governance layer, and when they’re governing, snd you’re got to be really brutal about saying, this operational thing is not governance and doesn’t belong in the board room. Some people people will struggle with that. Some directors really struggle.

So we’ve got another poll here. Let’s see. I believe my role in board relations is primarily … before we move on, I’ll give you a couple of seconds to fill that one out. This is a really tricky role and one that can have a profound impact. Interesting. Okay. So most people are saying that they’re in administration, a returning officer. [inaudible 00:15:04], which is interesting and almost nobody is an election manager. Which I’ll address in a second because this is in the area I think we as executives have a bigger role to play. So moving right along. On guiding elections let me be really clear if you get bad directors you will struggle to work with your board no matter what. Because bad directors can destroy you. And make your job Hell and terrible and woeful to do.

Few things I’ll say. One, elections are constitutionally bound. You can’t play with the constitution. You have to work with the constitution you’ve got. You should start thinking about a nominations committee now. If you can get a nominations committee to give all good, rational, sensible people, you can start to make sure that the people who come on to the board are are well-skilled and the right people to get on to a board.

Now, I’ll be really clear here about one key thing. It’s not for management to play in the political lair. I did get asked recently who I thought would make a good director on a board and I said, Oh, that’s not a matter for me to have a comment on and I was pushed thoroughly, firmly to name some names and I was very clear about saying any CEO who gets into the politics of who sits on boards is going to not survive as a CEO for very long. You have to be entirely agnostic about the people who come on because that’s not your choice and if you get into the politics, you become politicised and once you’re politicised, it’s game over. As a CEO you’ll find it really hard to operate.

So having a nominations committee allows you to sidestep that, but you’ve got a really big role to play in the process to make sure that the directors that end up on the board are the right ones. There’s a few steps in that process.

One, if your membership are your electors, that’s sometimes not he case, if you membership the electors, you’ve got to educate them on what the function of governance is. I keep saying to people governance is actually boring. It’s not exciting like running a conference. It’s a pretty boring gig if done well. And if done properly, so you’ve got to outline the job of governance and you’ve got to give that both to membership and to the people who thing would like to apply or put their hand up. If your nominees don’t understand the job of governance, then the wrong people will put their hand up, because they don’t understand it, and then when they get there, they will com to the table with the wrong impression of what they’re there to do. So the first thing I’d say if you’re running elections, make sure you’re briefing the potential candidates, make it’s really clear about what the job is and what it’s not.

[inaudible 00:18:51] In my case there’s no point in having a fantastic health practitioner who is the best clinician in the world but has no governance skills putting their hand up to be on the board. It’s counter productive and it leaves them sitting there unskilled and the default position for them to move to is where are they comfortable, and often they’ll be comfortable with what I’d call volunteering and committee work.

Get you forms, get your application and nomination forms laid out in such a way that you force the applicants to address skills, not just their profession or industry experience. Again, some people present fantastic CVs, but when you force them to address the sills of governance, they fall very short and that starts to outline the case that they might not be ready for that job. Get them to address conflicts of interest. Quite specifically because in an election process it’s much more difficult to manage conflicts of interest because if they’re elected by the members, God help you if you try to take them out of anything because of conflicts of interest. The worst thing you can do is leave unidentified conflicts of interest sitting there.

The last thing I’d encourage boards to think about and I do encourage people to think about is to include the capacity for your governance committee to review and for the company’s secretary to correct information like an undisclosed conflict of interest. Because I’ve seen too many elections where absolute misinformation and misstatements are made. Some of the biggest ones are where nominees openly say that they will seek to break the laws around collective bargaining. If I’m elected I will make sure that we negotiate and boycott this particular supplier. That sort of stuff needs to be called out because uniformed electors will, put people on boards based in misinformation if you let it get through. Now, this is all management driven. Your boards aren’t going to come up with this stuff on their own. They will need you to help them get there.

Induction. Again, many association boards and directors don’t understand the purpose of governance. The idea that it’s not a committee. The job of governance quite separate from the purpose. You’ve got to have some really clear statements around what the job is.

And the third area with that tends to fall flat is not a clear understanding of judiciary duty and that comes into play when you’ve got conflict of interest particularly. And there’s a lot of conflict of interest in association. I did an article really about competing against members in business. When members start running any type of organisation and then want to get on the board to help them run their own business. That kind of stuff needs to be dealt with very quickly. If you have a director coming in and they haven’t have a really solid induction, run both jointly by management and by the chair, or get someone external to do it if you don’t have the skill in house. Any director who goes into a boardroom without getting a good induction is going to be a nightmare in my view.

The various players in induction. You’ve got the board you you’ve got to explain the role of the board and the mechanism for them to make collective decisions. The best and the worst of directors comes out when they think they can call the office and individually direct. We know they can’t, but they often don’t realise that. I’ve had staff grilled on what their CVs were and why they were appointed by individuals in the past, and that kind of stuff has to be stomped on very quickly. The role of governance committee separate to operational committees you’ll see the role of individual directors the role of the president, which I’ll come to in a minute, the role of management, and the role of operational committees. If you’ve not covered all of those things in induction, then you’re losing someone to misunderstand the differences between them all, and it will be very difficult for them to operate.

We go into another poll really quickly. This one is about the role of president. The role of president is fairly crucial to a CEO. Get a bad president and you’ve got a problem. Okay, that’s good. There’s plenty of people saying sharing the board. A few people saying supervising the CEO, which we’ll get to in the second, the primary executive worries me, and organisation that has an executive chair and a CEO I think has real challenges. We’ll move on to the next slide and we’ll get into talking about the chair. I can’t reinforce this top point strongly enough, Don’t play politics. Okay? Who the chair is is not your concern. Who the directors are aren’t your concern, and any time we get into plying in that politics, why you’ll be in trouble. Which means that if you stop banking for one person for chair or another, you’re going to come unstuck at some point. Don’t set yourself up to have an aggressive chair, as I said, step into the role. Again, be accountable.

The third point. This is a bit of advice that I give to people. When your board makes decisions that frustrate you and when your chair makes decisions that frustrate you, the first thing you should say is look, I have a strong view on this, but I also have a vested view. Don’t believe me good advice.

I’ve used is successfully year and year out, and a great example was when a board sat down to work out some KPRs for me at one point and they walked out of the room and said, look, we’re going to use a 360 degree process to set your KPRs and I said to them, “Do you understand what you’re doing with that?” And I was pretty blunt about saying I was not happy about that concept and they said to me, “You have a problem with the 360 degree process, do you?” And I pointed out that I didn’t have a problem with the 360 degree process except that it’s not used in setting KPRs. I’m not saying that I am [inaudible 00:27:03] can’t imagine it’ll be successful. Rather than going in there and fighting the board to say this is dumb, I simply said to them “Please find someone who understand the setting of KPRs and ask their advice.” And of course within a week, they’d came to me and said “We made [inaudible 00:27:23] KPRs out of a straight plan,” and hallelujah I didn’t have to tell them that, and I didn’t have to fight the board on their decision, because that would have simply set me up against the board.

Some tools that I’m throwing around, meeting the expectations of the board. I’ve used my board in an advisory capacity regularly, and I think that any CEO who doesn’t is not using that as a resource terribly well. But you’ve got to be really clear on when you’re asking the board to advise you on a decision you need to make within you delegations. I’ve had many a conversation with chairs and boards where I’ve said look, “I appreciate you getting into board decision making mode, because that’s what boards will often do, however I’m asking your advice, because it’s not your decision.”

If when you ask advice you allow the board to make the decisions for you, and its a management decisions that you should have made under delegation, you’re in for a world of pain down the tracks. You really have to push back on boards and say look, on this one I’m going to ask your advice because I’m interested in it and I want to think about it as part of the decision making process, but under the delegations, this is my decision to make. You might be happy with the decision, you might not be happy with the decision, we can talk about that as a separate conversation, because I’m happy to be accountable for the decision, but it’s mine to make.

And if you can get into that rhythm of having a board that is really clear on when they’re offering advice and when they’re making decisions, its helps you to stay in that management domain and them in the board domain.

Having an annual plan, that cascades out of your strategic plan. Commit to things, and then by the end of the year, show them that you can tick them off is really important to trust and faith. If they don’t believe you, you can perform, then they won’t trust you, and if they don’t trust you, then you’re always going to have problems. Then get on and deliver it despite the distractions. That doesn’t mean that everything has to be completed on every plan, but if you’re not going to complete something, start to explain why during the year so it doesn’t come as a surprise. Use performance indicators. Budgets. This stuff is all pretty straightforward. You should know all of this stuff. Use your delegations, but make sure there are no surprises. It’s okay for the management to make decisions, but the board should never be surprised. They hate surprises.

Focus on deliverables as much as possible. You don’t want to be focused on the fluffy stuff of associations. Whose happy, whose not. You’ve got to be able to say, “During the course of the year, we promised to deliver these things, and we did.”

You should see a report. You see, a report is probably your primary communication tool with your board because it allows you to build a story over time. It doesn’t need to be a never ending document of many pages, but it does need to be really clear about giving the board a sense of what’s going on and a sense of what’s coming over the horizon.

Okay, this is a chart that I’ve drawn to try to help explain to people the relationship between a board, a chair or a president, and a CEO, because its one of the most misunderstood relationships that I see in associations, which is odd because it’s not misunderstood anywhere near as much in corporate Australia. You’ll see the board at the top, and we know that ultimately, the board acts as the collective, not as a group of individuals. So unless a decision is made by the board, it doesn’t carry the force of the board, and any director who wants to come to you in say “I want,” say “That’s great, take that to the board.” And again we’ll talk about various tools of governance.

The board delegates responsibility and accountability to two people. Usually. Sets of people, but two important ones in this context. Now you’ve got the president, and the president is a delegated role. It’s not a directing role. It’s a delegated role. So the board authorises the president to do certain things, not the other way around. They usually authorise the president to run the board meetings, they usually authorise the president to be the interface between the CEO and the board, and sometimes they’ll have authorisation delegated responsibility around being the spokesperson to the organisation. Equally, the board delegates to the CEO and importantly, that’s a board delegation to the CEO, not a board delegation to the president to the CEO. Which confuses some people. I’ve had interesting conversations with CEOs who have said, “No, I report to the president,” and when you try to talk this through, they’re absolutely adamant that they report to the president, not to the board, which sets up a really difficult relationship, particularly if you don’t get a great president.

By making it really clear that you’ve got a full delegation from the whole of the board to operate, that then allows your president or manage issue president in such a way that they understand that if you have a disagreement with the president, that’s a matter for the board for the board to resolve, not a matter of the president to say, “Well, you do what I tell you to,” because the CEO actually has some autonomy in this practice governance model. There is an accountability interface between the two. That’s because the board can’t be talking to the CEO as regularly as the president, and when it drops down below that, you’ve got the president’s role is primarily to do with those tools of governance and to be a figurehead for the organisation. However, the CEO still has a role in the executive leadership and has the purview of the management tools. Management tools being internal policies.

The budgets and all of the various tools that you would expect to see or to be using to run an organisation. Those don’t belong to the president. The president shouldn’t be sitting in performance reviews. The president shouldn’t be sitting in internal budget discussions. Those are not the tools of governance. Equally, the CEO and this is the mistake that I see. The CEO shouldn’t be tinkering with strategy, risk, and those matters that belong to the board. And you empathise with the external environment and both the CEO and the president will interface with the external environment on behalf of the board of the organisation. Feel free to throw in any questions if you’ve got them.

So working with the board you’ve got, my advice here is talk about governance. Make sure it’s on the agenda. Have tough conversations. You are the CEO. If you can’t go to your board and say “This is what I need from you so that I can run a high-performing team,” then you’ve got a problem. You need to step up to the plate. And you need to be pretty honest about that. Walking out of board rooms with wish-washy undefined decisions that leave you wondering if you’ve got the authority to do things or not, wondering what the intention of the board was or wasn’t, it just makes it very difficult to operate and you can’t manage a high-performing team if you can’t get clear decisions out of a board.

Now, there was a question here, “What do you do when the board refuses to allow you into the board meetings.” See that last point. Know when to cut and run. If the board is refusing to let you into board meetings, then I would say there is a fundamental breakdown in trust and/or a fundamental lack of understanding of what the role of a board and a CEO is. If you can’t … and the role of a CEO in a board meeting is as an advisor, so quite frankly any board that doesn’t want you in the board room clearly doesn’t value your advice, but ultimately, you’re not there to try and influence the board in one way or another.

You’re there to present the facts. Present the information. Present the risks, and then allow the board to weigh those things up and make a decision and one of the worst things you can do as a CEO is try to pitch and outcome because that’s what you want as opposed to providing the information and the risks and allowing the board to talk them through. The other worst thing you can do is not accepting that a board will often make decisions that you would have made differently, and as long as they’ve done so understanding the risks and having the right information, then as a CEO you’re not there to undermine that or not support it. You’re there to walk out of that room and say to your team, “Guys, we’ve got a job to do.” I think I’d be saying to a board, “Either I’m in the room or I think we probably need to find a new CEO.”

So that’s getting back down to that building trust. There’s some other questions that I’ll try and cover quickly in this area. “How it is to handle an individual nuisance director.” Ah ha, wonderful. I have a saying, and I will openly say that I stole if from Ian Meyer who was head of marketing for CPO Australia for many years, it simply goes, “To the president, you run the board, I run the business.” Really simple. If you have a rouge directors who is the president, if you have a rouge director that is impacting on my ability to operate as a CEO, then you need to sort that out. Because it’s your board to run. The board has delegated that responsibility to you and you need to step up and do it. And if that’s not happening, then you need to start to talk to other directors about saying, okay, somebody’s got to run the board, somebody got to run these behaviours, they should come out in the annual review, which we’ll talk about in a minute, but you’ve got to push that back on the president, because if you try to do it, you will come off as trying to win a feud with the board. If your president’s not capable, then you probably want to have that conversations.

I can honestly say I did make a person cry once because of the fact that I was frustrated by the fact that they weren’t managing the board, and that was having a profound impact on our ability to perform.

What should you do if the tradition that the CEO reports directly to the chair? Simply go back to this practice governance and start to point out that the president is a delegated position as is the CEO and they’re delegated with equal veracity, so do document those delegation and go back to the board and say, “Okay, well, this is how this needs to work because ultimately sa CEO, I’m accountable to you collectively not as individual. The president is an individual- not as a delegated role. Any decision that the president makes, unless its been, unless you care about those delegations, if the president is making a decision that impacts on management, they’ve crossed into the wrong space. I’d be starting to have that conversation fairly quickly.

Moving right along on questions. Some boards look very much to the CEO to leadership and advice. Is that wrong? Absolutely. The CEO is there to provide executive leadership. Run the business. And that is a leadership role. But your role of CEO is lead in the context of a strategic plan and a set of policies provided by the board. That you can go back to the board and say, “Here is my view.” But that’s your domain. You need to get your head around this, guys. And I push back against boards on this pretty firmly to say, “There are some things that are job and not mine. And there is a leadership piece in that that you guys have to step up and take.” If you start running the board, then you’re in trouble.

I’ve just had some advice that we should leave some of the Q and A to the end as well, because we’re just now getting to the point that we should be moving on, so I’ll scoot through this reasonably quickly.

And couple of things, recognise the cost of transparency and inaction. Transparency comes at a cost, okay? I’ve done a bit of research to try to work out whether there’s an optimal level of transparency and there is, and that optimal level is the maximum that you can provide at a reasonable cost that doesn’t generate additional unnecessary cost through a level of intrusiveness that is difficult to manage. So you’ve go to find the right level of transparency. So how much information you give to the board. It shouldn’t be everything. It shouldn’t be nothing. It should be enough to allow the board to be comfortable. Now, any board has a right to look at financial information. Directors don’t actually have a [inaudible 00:44:03] to crawl through organisations. They can only ask for information related to their proper purpose in terms of governing.

Talk priorities, not lists. I keep pushing back on people and saying, tell me your top three priorities. Don’t tell me thirty things you want done. We’ll focus on the top three. When one get’s done, we’ll add one. Associations will kill you otherwise.

Talk risk. Know the language of risk. Understand the business Australia standards on risk management and understand that it’s OK to take risk. It’s important for the CEO to be able to talk in that language, because if you can’t, the board won’t. Educate often. I encourage people to send off article to the whole board on a fairly regular basis on good governance. I’ve got a great one on why boards micromanage, it says it’s all about them, not you. Make the president accountable. The president has to run the board. Full stop. Wear you big boy or girl pants. You can’t be a wallflower in this game. You’ve got to be prepared when to speak up and when to cut and run. If you’ve got a dysfunctional board and you can’t get along with them, time to move on.

Engagement. Moving right along. Nearly 70% of CEOs spend more than 10 hours a month on board work. It’s more than 20 you’re about 30% more, it’s less than 10. You’ve got to recognise that that’s work and you’ve got to do it . You can’t ignore your board. You’ve got to be talking to them. You’re also going to be talking to individual directors, and often it doesn’t need to be about much, you can’t divide and conquer, and I’m not suggesting that you try and divide and conquer or any of that kind of stuff, but often it just about touching base and saying “People look, you know that thing you’re interested in, there’s enough data on that.” No surprises ever. Don’t ever surprise your board. Ge advice from your board regularly, because that way they know that you are making decisions and that you are interested in what they have to say. Do go to dinners and functions. A bright person wants you to meet that you … occurs at the dinner before, and if you’re not there, they’ll either talk with you if you’re there, or they’ll talk about you if you’re not.

Work with the chair. Focus on the job of governance. This is a round board evaluation. You have to put board evaluation on the table. Chances are, if its not there, if its not part of their annual cycle, they won’t do it. You’re going to have to keep raising the idea that the board should be evaluating its own performance against the job of governance. Not do we all get along and do we think we’re wonderful people, but did we actually achieve the job of governance. How do we know.

Try to get the board to assist the contribution to value relative to the cost. Tell them how much it costs to run board meetings here for you. Both your time, staff time, and the actual cost of flying people around. If you do that, because board meetings aren’t free, and yes we need them, but there’s a cost and you should be entitles, as an organisation, an equivalent value out of that board by allowing them to make good governance decisions.

Do have tough conversations with them. If you’re afraid of your board, then you need to deal with that.

Last poll. Actually second last poll, I think it is. Or no. Ah! There it is. How your document is currently distributed. Documents by email. Yeah, that’s pretty much answers that question. Oh, by courier! That’s impressive. I can’t image printing board papers these days. I just refuse to do it. Okay, it looks like more people have emailing, which does raise some security issues, particularly to sensitive information. No surprises that there are board portals, and typically 15% percent of people are using that by the look of it.

We’ll move right a long now to questions.

Kate: Can I chime in? I’ve got a number of questions already prepared in [inaudible 00:49:04] so I am just holding off from talking for couple a minute unless, and we’ll run through them.

Just stay with me.

So Velma is asking, “Some boards look very much to CEOs for leadership and advice. Is that wrong.”

Damien: Yes. Look, I was covering this a little bit earlier. Look, this executive leadership and CEOs need to lead. Okay, you’ve got a team in many cases, and your role as a CEO is to be a leader in the organisation. Equally, the board of directors need to inform themselves on where the industry’s going, where the organisation’s going, and they need to demonstrate some leadership as well. If you’ve got a passive board that isn’t interested in doing the work of creating strategies, being involved in strategy, and they’re just taping boxes and looking to the CEO to do everything, then chances are, you’ve probably go the wrong board, is my view.

Kate: Okay, then. Okay, next question. Unbeknownst to the company secretary and CEO. Any problems with the COE.

Damien: I’m assuming that was meant to be CEO.

Kate: CEO. Sorry. Yes.

Damien: Look, in an ideal wold, and this is basic practice governance, the company’s secretary would be an independent player who reports directly to the board and who isn’t in any way tied to the organisational structures of the organisation. Lots of big companies have a company secretary employed directly by the board. That’s never going to happen in most associations. So everything from there back is a compromise. If you’ve got a somebody who runs, say corporate services or one of those types of functions, they will often make good company secretaries. If you’re not big enough to have somebody with a bigger grunt who does that, then you pretty much left with either a volunteer or your CEO. And you’re left with a choice between a volunteer or a CEO, I would go with the CEO any day of the week, because being a company secretary these days is not a simple role and if you bugger it up, quite frankly, you can leave your directors exposed, so my preference would be that it’s the CEO over and above a volunteer. Is it ideal? No. Would you prefer it that was to having volunteers, absolutely.

Kate: Okay. [inaudible 00:52:40] Rich is asking should the board have approval authority over the CEO’s business plan?

Damien: Look, that’s a tricky one. And I’ll deal with it in a slightly pragmatic way. If your business plan has been created in such a way that the board is not happy with it, then you’ve got a fundamental problem because you’re heading in a direction that isn’t consistent with where your board wants you to go, which leaves you a real problem. Should a business plan require approval? Probably not. I put mine up for the board to approve simply because I have this view that they need to understand the operations of the organisation, however, I don’t let them play with it. So if you don’t like it, give me some advice on what you would like, and I’ll go away and work with the team to think about those things. And I’ll let you know we’re doing. But it’s a bit of a fine line, that one.

Kate: Okay. Jean is asking, is it OK for the president to directly approach individual operation leaders regarding the CEO’s performance?

Damien: Not without a formal process. Look, I’m pretty strict on this. Staff report to me, full stop, end of story. God help anyone who starts to play with that, and I’m very brutal with induction around saying to people if you start messing with the staff, you will have me to deal with, and I won’t be nice about it. In the event that you’ve got a situation where a board, not just a president, a board, has reasons to want to question the performance of a CEO, particularly around things like leadership and culture, then I’m fine with a board that wants to use a 360 type process and want to involve senior staff members, but again that comes back to go and get advice, and that shouldn’t be taken lightly, and it’s not for somebody who’s not expert to do it.

A 360 should be run independently. Ideally, a consultant will collect all the information, will collate it, and then will provide it to the CEO and the president to assist with performance management. It’s, in my view, its inappropriate for the president to oh, I’ll just call up and speak to the staff.

There is a complicated factor with what you do with whistle blowers, and I put a very open invitation on the table that if our staff feel there is something fundamentally wrong in the organisation is putting the organisation at risk, then they’re welcome to go and whistle-blow, and they’ll be no ramifications in the organisation. I’ve had this conversation. I to think that I’ve built enough trust that I’ve earned enough respect for people to come and raise it with me first. But if they don’t feel it’s being addressed and it puts the organisation at risk, then whistle-blowing needs to occur. Equally, that’s not just an opportunity to go to the president every time I’ve made a decision you don’t like, because that’ll end badly very quickly. That’s a bit of a fine line, that one.

Kate: Thanks, Damien. We’ve only go two minutes left. We might have to just have one more question, and if we have any more questions that we don’t get to, we will respond to you directly. And Larry is asking, “We have not not had elections for the board for years, and says, it is normally self-management to CEO assistants. So that normally match vacancies, and I’m attracted to nomination committee process, but it might open up the board membership process to a politicised one. How to deal with the factions on the board?

Damien: The quickest way to get rid of factions is to go back to focusing on the job. I am a big fan or having more talent available than there are seats, and if you’ve not developed that talent pipeline, then you’ve potentially failed. It depends on how many people you’re talking about. If you’ve got a huge membership, and you don’t have enough talent lining up to try to get on the board, then I’d very surprised if you’ve only got five members. And you can’t always fill … and it’s a different proposition. But a good board is a board where people understand what they’ve got to do, what the job is, they’re building skills or they’ve built skills, and they want to contribute. If that means that this … call it politicisation, then I still think that the outcome is better than the risk, because you can often find that you have some really great people coming out, because you’ve got to offset the idea that the board is a closed shop, it’s only for the boys, the only person who gets appointed is the person that tapped on the shoulder, that to me, causes much worse problems.

Kate: Well, Damien, we’ve now approached twelve minutes. We might have to finish there, and I’d like to thank Damien for his contributions today. Great webinar. You’ve always seen on screen there was a survey. He’s given some say back in essence to the content and I able to answer the questions, that would be great. If you’d like a copy of the presentation recording, and any information from Diligent, let us know so we can come back to you, and I’ve mentioned before all the questions that we were unable to answer, we will come back to you directly by email. Thank you, Damien.

Damien: No worries. Thanks, everyone, for coming.