Introducing Kerryn Newton from Directors Australia

Q: How can Boards improve their strategy in order to prepare for future challenges?

 A key role of a board is to ensure that there is an effective strategy in place to ensure the organisation’s purpose is achieved in a sustainable way.

To do this, boards need to have an agreed strategy process where they work with management to ensure that the strategy is right given the environment in which the organisation operates. This requires regular scanning of matters such as industry trends, competitor activity, technological developments and new innovations etc.

Boards also need to ensure they have regular reports to monitor that the agreed strategy is being implemented.
 
Stakeholder engagement is also a key part of strategy. Stakeholder input should inform an organisation’s strategy – and stakeholders invariably play a key role in the effective delivery of strategy. Boards should understand their organisation’s stakeholder engagement strategy and the role that the Board collectively and directors individually might play in that engagement.

Q: In your opinion, how should a Board structure itself for optimal results, both internally and in relation to the rest of its organisation?

A board should structure itself so that it can effectively guide and drive strategy and govern the organisation.
 
There are three key components that a board should consider when looking at its composition:

• Professional and industry skills and experience needed collectively by the Board
• Diversity requirements needed collectively by the Board
• Personal attributes and behaviours which all directors should possess (as without these, directors won’t be able to bring their skills, experience and diverse perspective to bear effectively in the boardroom).

Boards should prepare a board composition matrix with these three parts outlining what ideally the Board should hold in light of the organisation’s strategy. The matrix should then be populated with the skills, experience, diversity and attributes of the existing directors to identify gaps. These gaps should be ultimately filled through director recruitment and succession planning. In the short term, the gaps might be filled by board advisors, external committee members and/or Board professional development.

Q: How do the needs of Boards differ across sectors? In what way is this reflected in the role of the Board members?

Fundamentally, the role of directors and boards is the same across all organisation types and industries. However, the size, nature and stage of a company will have a nuanced impact on the Board’s composition and how the Board performs its role. For example, directors of an early-stage company will most likely play a more operational role than directors of a well-established, large listed company.
 
Importantly for all companies, there should be clarity on the following:

• The role of the Board, directors and management (usually set out in a board charter and director position descriptions)
• The authority of the directors and what they have delegated to the CEO (usually set out in a delegation of authority policy), and
• Communication protocols.

Ensuring clarity on these matters in a proactive way is preferable to trying to deal with them when something has gone amiss.

Q: What is your top piece of good governance advice, both for companies just starting out as well as established industry professionals?

I’m a big fan of ‘best fit’ as opposed to ‘best practice governance. Ultimately, governance is about achieving purpose and strategy through systems, structures and processes. Governance should be beneficial and not unduly restrictive.
 
So my advice to any company is to work out what ‘best fit’ governance looks like for them.
 
At its core, this should involve:

• A clear strategic plan with KPIs (to give effect to the purpose for which the company was created)
• Clarity on roles
• Clarity on authority
• Clear communication protocols
• Clarity on the desired culture and how it is lived in practice.

Q: How can Boards improve their collaborative capacity to work as a team?

What fascinates me about working with boards is the inherent paradox by which I mean:

• Collective decision-making and responsibility (involving consensus decision-making on most issues ideally), but
• Individual director liability.

The idea with a board is that the ‘whole is better than the sum of the parts’. This requires a focus on not only the various ‘hard’ aspects of governance (that is, policies, charters etc.), but also a focus on the ‘soft’ aspects of governance (that is, the right dynamics). In my experience, boards are not necessarily good at understanding the dynamics within the boardroom.
 
At Directors Australia, we use the HDBI® tool (https://www.thinkherrmann.com/hbdi) to understand the thinking preference of each director and how that impacts the dynamic and decision-making of the Board.
 
Dynamics are also important to understanding the dynamics between Board and management – which is also a key relationship of effective governance.  

Q: What barriers do you see as still facing women in the governance industry? What changes would you like to see take place? How can companies take the next steps to achieving these?

Personally, I can’t say that I have experienced any barriers in the governance industry based on my gender. Rather, I believe that there are many opportunities, and I encourage women to seek out those opportunities.
 
Finding mentors, networking and undertaking continual learning are always good ways to enhance personal growth and development. This can be done by individuals but also led at a company level.

Q: Should governance structures be adapted across sectors? What aspects must remain constant and what should be formulated to suit specific needs?

Governance structures will change according to the needs and activities of the sector in which the organisation is operating. Regulatory requirements often mandate these structures. For example, listed companies, financial service institutions, private health insurers, and charities all have governance requirements set by external regulators.
At its core though, governance structures should be designed to assist the organisation achieve its purpose in a sustainable way. This requires

• A clear desired culture
• A strategic plan with defined strategic intent and KPIs to enable monitoring of financial and operational performance
• A clear risk appetite and effective risk and compliance management systems, and
• A CEO performance framework aligned to achieving strategy consistent with the desired culture and risk appetite

The Board should also have structures to perform its role, including an effective board committee structure.

Q: As a BoardPro user/partner, please share why BoardPro’s software is such a valuable tool for Boards and organisations:

I have been a supporter and promoter of Boardpro from its very early days. It offers a cost-effective, easy-to-use option for boards, especially those of smaller companies, to assist with their administration.

1. Good board administration is a key platform for an effective board.
2. For directors to come to board meetings well prepared, they need to receive papers in a timely way.
3. For board meetings to be effective, there needs to be a clear agenda with decisions and actions clearly documented.
4. For directors to meet their duties and ultimately protect themselves from a liability perspective, board meeting minutes and board record-keeping needs to be accurate and complete.