Archive for the ‘Governance’ Category

ABS Reports on the AICD Summit 2019 “Rising to the Moment”

Wednesday, March 6, 2019

ABS Head Associate Professor Lisa Barnes attend the recent Australian Institute of Company Directors 4th Annual Governance conference in Sydney on the 4th  and 5th of March.

The opening panel was a debate on the future of corporate governance in Australia, with panel members Penny Bingham-Hall (non-executive Director), David Gonski (Chairman of ANZ) and Heather Ridout of Australian Super. Hot topic of course was the recent findings of the Royal commission into the banking sector, with Mr Gonski readily admitting they dropped the ball in terms of governance and now have a fairly rigorous amount of work to do to repair the culture from within the organisation particularly around the notion of remuneration, to gain back the trust of their stakeholders. The following was a quote that ended the session from David Gonski.

This was followed by a presentation by current CEO of Xero Steve Vamos, who has previously worked with the likes of Steve Jobs. His message was clear, we need to “humanise” our workforce and presented his talent mapping tool, where staff can be placed into one of 9 boxes, so that they can be targeted in terms of their potential in particular for succession planning. Steve asked the question are you “driving the right culture for your business”?

At the heart of it is “us” to think about how we want to achieve good culture. The humanisation of the workforce was the primary message here. He recommended to read the book “Hit Refresh” by Satya Nadella current CEO of Microsoft – a mindset change may even happen! In his words “Culture” shapes why people do what they do and how they do it. Values and engagement are elements of culture. The CEO is the chief culture officer. Culture is a contact sport.

Next was Ann Sherry AO FAICD Chairman, Carnival Australia and Board member of NAB discussed outcomes from the royal commission, she stated that the board should have “listened more” they were focussed on short term numbers rather than long term outcomes, they basically lost their customer focus. Stepping back from a human level, they got caught up in the micro, forgetting the macro.

Finally to end the first day was a role playing “hypothetical” session attended by 5 high profile Company Directors entitled “Moral and Ethical Decision Making in the Boardroom – Exploring the complex dilemmas facing todays Board”. 5 different scenarios were posed from a cyberattack, media leak accusing the company of unethical sales practices and discussion on amoral practices companies unwillingly engage in. A great way for delegates to continue thinking about their own performance as a Board member is this constantly challenging state that us being on a Board.

The second day of the summit opened up with Australia’s Chief Scientist Dr Alan Finkel’s address on the Imperative of Innovation. He predicts the advent of fully autonomous companies by the end of the decade – that is no humans running companies, just DirectorBots. Alan touched on his 6 year role as Chancellor at Monash University. In his opinion a good director should be competent, intelligent and well meaning. Directors when making decisions shouldn’t be asking can we do this, but should we do this.

The second session of the day was a panel “Unlocking the value of doing the right thing”. Panel members included Michael O’Loughlin (ex Sydney Swans player and GO Foundation co-founder), Jill Hannaford, Shelley Reys & Shirley Chowdhary. Run by Ali Moore, journalist with the ABC, the panel discussed diversity and inclusion and embedded work practices, particularly the representation of indigenous people and cultural awareness in corporates.

The next session involved the Not-For-Profit sector, entitled the “Evolution of the for-purpose sector”. The panel discussion centred on remuneration of directors on for-purpose boards. A representative of the ACNC, the Productivity Commission, and some directors of for-purpose directors, also discussed the changes of reduction in not-for-profit red tape, but increase in liability and fiduciary responsibilities for directors serving on for-purpose boards.

The next panel discussed Future Trends: Preparing for the next cycle of change.

This panel discussed technology governance, in the framework of ethics, regulation, agile governance approaches, & competitive advantage. In a live audience poll asking “which trend is your Board least prepared for?”, 34% felt least prepared for governance of emerging technologies, followed by 27% machine learning, 22% autonomous machines and finally 18% social trends.

The final session was a discussion on the findings of the Royal Commission into the Banking and Finance Sector. According to Honorary Neville Owen who presided over the HIH Royal Commission in 2003, his views have not changed with the recent outcomes from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, he wants to know, did anyone ask themselves “is this right”?. The summit finished with a panel made up of the AICD Chair, Justice Owen, Ali Moore (ABC) taking questions from the audience on any matters concerning director and governance.

The conference program can be accessed via the AICD website at https://aicd.companydirectors.com.au/-/media/cd2/resources/events/ags/2019/pdf/06841-5-eve-national-conference-ags-march19-program-v15.ashx.

The Power of the Executive Assistant

Tuesday, February 19, 2019

I have long been a believer that the real power in any office does not lie with the “bosses”, but with those who look after the bosses. And now I have the research to support my hunch.

Dilemma-Assist, in conjunction with the International Management Assistants (IMA) network recently released a report ‘The Secret Power in the Office’ (read it here), which is the first international survey of the executive assistant’s role in integrity and business ethics. The findings are fascinating, and at time disturbing.

So rather than being the ‘gate keepers’ Executive Assistants (EA) are actually seen more as the ‘confidant’ or ‘trusted advisor’ of their bosses, frequently being asked for their advice on all manner of issues, including internal promotions and hiring new executives. The report actually uses the analogy of spiders in the web, because the EAs are seen as having access to all the most confidential information, internal politics and personal behaviors within the organisation. A very powerful positon indeed.

However, the research also found some quite disturbing things as well. For example:

  • EAs are frequently confronted with serious misconduct, the most common being waste or abuse of corporate resources
  • Facing inappropriate or rude behavior
  • They also do not feel comfortable to speak up when faced with inappropriate behavior (only a third are prepared to, and even less if their immediate superior is involved)

The report goes into each of these (and other issues) in some depth, and is a very interesting read. The challenge is to image how much better the organisation would fare if these talented and well informed individuals were even more onside and treated better.

So take a moment to reflect on the relationship between you and your team – is it as good as you think it is, or are they too scared to speak up?

The Avondale Business School (ABS) is able to help you and your team maximize their potential. To find out how, call Warrick Long on 02 4980 2168 or email Warrick.long@avondale.edu.au

Too Scared to be Fearless?

Tuesday, February 12, 2019

While high-performance organisations are not as common as we would think, there is a common attribute amongst them – being a fearless organisation. Amy Edmondson, in a great article called ‘How Fearless Organisations Succeed’ (read it here), goes right to the heart of the matter and outlines the essential characteristics of being fearless.

A fearless organisation is one where employees have confidence to take risks, and where the organisation minimizes the fear people feel on the job. This provides psychological safety, where there is the belief it is safe to speak up when needed with relevant ideas, questions or concerns, without being shutdown is a gratuitous way. Employees respect and trust each other, and can be candid when needed.

Edmondson quotes a 2017 Gallup poll that notes only three in 1- employees agree with the statement that their opinions count at work. Do the opinions of your employees count at your work?

There are some caveats, which include noting that such a fearless organisation is not one where people agrees for the sake of it, or offer unconditional support for every idea. On the contrary, psychological safety enables candor and openness, and therefore, thrives in an environment of mutual respect.

So how do you create such an environment? The article offers three main things leaders can do:

  1. Set the stage. That is, get people on the same page, with common goals and a shared appreciation of what they are up against.
  2. Invite participation. This involves adopting a mindset of situational humility and engaging in proactive inquiry. No one want to take the risks of proposing ideas when the boss appears to think they know everything.
  3. Respond productively. This sort of a response is characterized by the tree elements of appreciation, destigmatizing failure, and sanctioning clear violations.

I recommend you read the entire article to get the details of these, but this is a good summary to hopefully inspire you to move your organisation towards being more fearless.

If you would like to find out how Avondale Business School can help your organisation become fearless, call or email Warrick Long on 02 4980 2168 or warrick.long@avondale.edu.au

We Need To Talk About CFOs

Wednesday, December 12, 2018

Apparently few others really understand what the Chief Financial Officer (CFO) thinks is important. The most recent survey by McKinsey and Company on CFO’s reveals a range of issues relating to CFOs (read it here). While the whole article deals with a number of observations from the survey relating to the CFO and their roles, one in particular highlights how important it is for the key leaders of the organisation and the CFO to have a conversation to be on the same page.

The following table lists the top 10 activities the CFO believes they have engaged in which adds financial value to the organisation. Next to that is the ranking given to the same activity by other leaders in organisations:

Activity

CFO Ranking

Other Leaders Ranking

Performance management (e.g., metrics, value management, incentives/targets)

1

8

Strategic leadership

1

4

Traditional finance roles (e.g., accounting, controlling, planning and analysis)

3

1

Organisational transformation (enterprise-wide or within finance organisation)

3

7

Finance capabilities (e.g., finance-organisation talent pipeline)

5

9

Speciality finance roles (e.g., treasury, audit, investor relations)

5

3

Cost and productivity management across organisation

7

2

Support for digital capabilities and advanced analytics

8

10

M&A (including post-merger integration)

9

5

Capital allocation (e.g., capital-expenditure allocation)

10

6

Pricing of products and/or services

10

11

 

It is interesting that so much of what the CFOs think is important other leaders place less importance on. The risk with this is that the CFOs will be spending time on activities important to them, but not necessarily important to the rest of the business, potentially causing tension and issues between the leadership team and business units. It is important that leaders within an organisation have the conversation to ensure everyone agrees with what is important, and remain focused on those.

And Avondale Business School (ABS) can help you achieve this, and indeed with any aspect of your business. Simply contact us a ABS@avondale.edu.au or call on 02 49802168.

Have you updated your Director’s qualification?

Tuesday, October 23, 2018

Associate Professor Lisa Barnes attended a 2 day update workshop in Brisbane last week run by the Australian Institute of Company Directors. The course was attended by members who had previously completed the Australian Institute of Company Directors course, but had not been updated in the last few years. The course attendees were made up of actively serving board members from listed companies, the not-for-profit sector as well as the government and private sectors. The link to the AICD website is https://aicd.companydirectors.com.au/

The updated course covered recent topics such as the Royal Commission into the Banking Sector, the legal environment that company directors operate in, as well as fiduciary duties and responsibilities of company directors in both the civil and criminal legal environments.

Other topics included definitions of conflict of interest, board composition, board remuneration, board risk, the importance of strategy as well as understanding financial papers in light of the Centro case. All topics covered were discussed and case studies presented and discussed by participants.

The 2 days ended with 3 groups being allocated different roles (Board, Remuneration Committee, Risk Committee) and a case study given where participants had to role play different scenarios and present to a board for discussion in light of a crisis, being either a legal issues, a risk issue or a strategy issue.

Lisa Barnes attended the course in her role as Vice Chair of a not-for-profit organisation called “Coastlink” who provide disability respite care to youth on the Central Coast. She has recently been appointed to the Risk & Audit sub-committee of ACARA, the Australian Curriculum, Assessment & Reporting Authority which is an independent statutory authority that hopes to improve the learning of young Australians. They currently administer the NAPLAN program. ACARA was established under Section 5 of the Australian Curriculum, Assessment and Reporting Authority Act (Cth) on 8 December 2008. Lisa will take up the new position in November 2018.

 

Do More But Do It Quicker

Wednesday, September 26, 2018

If you have been working for any length of time, you will agree with me that we are being required to do more in less time. And leaders and managers are particularly susceptible to this due to the huge amount of additional information they have access to and the more compressed time frames to make decisions. Consequently leaders are looking for ways to do more with less.

A recent article by Scott Stein for the Governance Institute of Australia entitled ‘How Leaders Can Learn to do More with Less’  (read it here) tackles this issue head on and provides some excellent strategies to achieve this. I am not going to go into the details, but the 5 strategies are:

  1. Limit distractions that steal your attention
  2. Leverage time by hacking your approach to email
  3. Identify the activities you shouldn’t be doing
  4. Boost impact by delegating to your people
  5. Use the right type of team meeting to enable people to do more.

I would encourage you to read the full article to see how these 5 strategies can actually help you achieve more. And the Avondale Business School is here to help you also. Just contact Warrick Long on 02 4980 2168 or Warrick.long@avondale.edu.au to find out how we can add value to your business.

Leaders Should Take The Blame?

Sunday, September 9, 2018

Corporate culture is very topical at the moment, as we see unprecedented numbers of organisations under scrutiny for inappropriate corporate behaviours. It was hoped that the introduction of corporate reforms (Sarbanes-Oxley, CLERP 9, Etc.) would see a significant reduction in such issues, but has that really been the case?

More importantly, who is responsible for these events. Craig Smith, in a recent article entitled The Critical Consequences of Culture (read it here) provides three case studies of recent failures of corporate culture, being Wells Fargo, Volkswagen, and Uber. In the case of the first two entities, the failures resulted from pressures in either sales targets (Wells Fargo) or product to market deadlines (Volkswagen). In both cases the organisations were fined very heavily, and the people who “did the wrong things” were punished, usually by being fired. The difference with Uber, is that it was the senior corporate executives who paid the price, unlike the first two. Yet when things go well, it is the senior executive team who take the credit (and often the multi-million dollar bonuses).

And that is the nub of Smiths article – too frequently it is the workers struggling to meet unrealistic targets set by the senior leadership that pay the ultimate price. Yet who sets the culture of the organisation? Senior leadership. Smith makes the point that “while individuals must bear responsibility for their actions, the body corporate can also have some measure of responsibility, not least as a result of the goals set by senior management and the culture in which employees operate’.

The challenge for leaders is to think bigger picture to see what the real culture of the organisation is as a consequence of their actions, and whether they are prepared to personally take responsibility for the resultant culture of their decisions. As you consider your organisation and culture, Avondale Business School (ABS) may be able to help to be the ethical company to want to be. Call or email Warrick Long on 02 4980 2168 or Warrick.long@avondale.edu.au to find out how we can help.

Kicking Your Strategy Into High Gear

Thursday, August 9, 2018

There is so much to absorb when you start looking at strategy. Everyone has a view as to how to formulate and implement it, stakeholders all have different views as to what it should be, and if you do a google search for it – well let’s just say there is an avalanche of sites all purporting to have the answers for you.

Having studied and taught strategy, we know how difficult it can be to sift through all the available information to plot a course for your organisation. One article that came across our desk recently seemed to offer some new perspectives on how to really shift your strategy process into high gear. It comes from McKinsey&Company, based on an article and book by some of their team, Chris Bradley, Martin Hirt and Sven Smit, and is entitled ‘Eight shifts that will take your strategy into high gear’ (read it here).

Rather than parrot the eight shifts, let me just outline a few of them for you, and suggest that you take the time to read the article to find the remaining ones, and to work out whether they will provide the boost to your strategy that is probably needed. Note that the authors are not trying to provide the magic pill to solve your strategy issues, but rather they aim to “…improve your strategic dialogue. The choices you make, and te business outcomes you experience.”

  1. From annual planning to strategy as a journey
    Do away with the annual planning meeting and process that looks at 3- to 5-year plans (which become outdated within weeks of them being written), and instead look at a ‘rolling plan’ that can be regularly updat3ed as your context changes. This will involve regular strategy conversations with amoung your senior leadership team on a monthly basis. You should be regularly checking the assumptions of your strategy, and adjusting strategy as needed.
  2. From getting to ‘yes’ to debating real alternatives
    Too often strategy discussion revolve around the leadership team bringing a single proposal that is to be approved. Anyone suggesting different options or questioning the plan is unwelcome. Instead, change the conversation so that the underlying assumptions are debated, that choices are discussed and strategy becomes a shared vision.
  3. From ‘you are your numbers’ to a holistic performance view
    Organisations are too frequently guilty of giving managers ‘stretch target’ that are overly optimistic, then penalizing that manager for not reaching that goal. Perhaps it is better to assign probabilities to managers targets, so that when the performance is being discussed, a more realistic assessment of whether goal attainment can be made. If people are punished simply because they failed to meet a high risk plan, then employees will lose confidence and ultimately the entire organisation suffers.
  4. From long-range planning to forcing the first step
    We have all seen the grand ‘strategic plan’ in all its glory – paraded in front of staff via glitzy PowerPoint presentations, or emailed out in an impressive document replete with interesting fonts, appropriate bolding, and the daring use of color. And while this may hype some of us for a short period of time, usually that is the last we see of it and it gets lost until the next review in 3 or 5 years’ time, when the performance is repeated. To give the plan the best chance of survival, also present the first steps that now need to be taken. Employees will appreciate the light being shone on the pathway and the opportunity to actually begin the journey rather than waiting for direction.

So there are just four of the eight steps for improving your strategy processes. The article is well worth a read, and highly recommended. And remember, the Avondale Business School (ABS) is just a phone call (02 4980 21468) or email (abs@avondale.edu.au) away from helping you with your strategy.

It’s All Just A Matter Of Trust

Wednesday, July 25, 2018

If public trust is the not-for-profit (NFP) sectors most valuable asset, then why are directors and leaders of NFPs not doing more to safeguard it? The Australian Charities and Not-for-profits Commission’s 2017 Australian Charities Report (find it here) reports that trust in charities amoungst Australians has declined from 37% in 2013 to just 24% in 2017. Such a decline in the value of any other form of asset would have seen the directors of organisations demanding answers and taking urgent action to correct it.

A recent article by Lucas Ryan for the Australian Institute of Company Directors (AICD) entitled ‘Trust in not-for-profits’ (read it here) looks at this issue of trust and raises a number of very important points for leaders of charities and within the NFP sector to consider. Some of the highlights in this article include:

  • The AICD indicates there is little evidence of NFP directors addressing trust
  • While directors recognise the primacy of culture as the most significant issue relevant to trust, very few directors receive reports on culture, and most don’t have it as an item on their agenda.
  • The ACNC Report identifies belief in an organisations mission and transparency about the use of resources as key influencers of individual trust.
  • 45% of people in the ACNC study did not trust charities that paid salespeople to raise funds on their behalf.
  • Fewer Australians are trusting charities to apply their donations to a charitable purpose and to be ethical and honest in their fundraising.

These are really worrying trends for NFPs and charities, and the AICD identify the top 3 factors most critical to building trust:

  • Communicating and engaging openly with stakeholders;
  • Transparency of business practices and decision-making; and
  • Understanding the issues that matter to stakeholders.

This means directors and leaders of NFPs really do need to ensure they are actively engaging in discussion trust, and ensuring there are strong governance practices in place to guard this valuable organisational asset.

What are you doing to guard and enhance the public trust in your organisation? The Avondale Business School team can assist you in ensuring your governance program is maximizing the success of your organisation. You can contact us at abs@avondale.edu.au

Book Review: ‘The Tyranny of Metrics’

Thursday, July 5, 2018

“There are things that can be measured. There are things that are worth measuring. But what can be measured is not always what is worth measuring; what gets measured may have no relationship to what we really want to know.”

This statement, and the subsequent arguments presented by Jerry Muller in his book ‘The Tyranny of Metrics’ (2018, Princeton University Press), were initially a challenge for me, with my background as an accountant. But I warmed to his argument and grew to appreciate what he was presenting.

Muller is a professor of History at Catholic University of America and the author of numerous books on markets and capitalism. He draws on publically available information, numerous research and reports to substantiate his position, and provides a number of supporting examples that are easy to relate to.

A central theme of the book is that ‘many matters of importance are too subject to judgement and interpretation to be solved by standardized metrics. Ultimately, the issue is not one of metrics versus judgement, but metrics informing judgement…” (p. 183).

I felt it was a very convincing argument which has caused me to consider the metrics I use and am exposed to. Being very well organized, with logical arguments and ample evidences, the book is easy to read over a relatively short space of time. It would appeal to anyone involved in developing or using performance metrics.

Overall, this book is a balanced and worthwhile read, and as noted, is not about the evils of measuring. Muller’s summary would be captured by this statement from page 4 of the book: “The problem is not measurement, but excessive measurement and inappropriate measurement – not metrics, but metric fixation”.

Reviewed by Warrick long, Lecturer, Avondale Business School