Tony Carter talks to Henri Eliot about his perspectives on corporate governance since being recently appointed as the chairman of Air New Zealand.
What are your thoughts on board diversity?
First and foremost - diversity is about thinking differently. Being a director requires a lot of responsibility and not everyone is capable of this role. As Roger France sums it up best. It's about four things: Diligence (time), Integrity, Intellect and Commercial acumen. In the end it's about doing what's best for the company.
What is the cost of an unproductive board meeting?
Poor productivity reduces board effectiveness, exposes the organisation to greater risk, erodes management confidence in directors and gets in management's way. At a personal level, an unproductive board reduces director satisfaction and sends a bad message to prospective directors.
Board productivity will be a bigger issue in coming years as directors' workloads increase, governance issues become even more complex and risks magnify.
Of course, measuring board productivity and performance is far from clear cut. Board evaluations help, but I'm not sure how many boards actually do this well. Good governance does not come with neat measurements or scales.
How do you boost board productivity?
Boosting board productivity is not a new issue. Boards generally have done a better job at streamlining agendas, ensuring important items are discussed first and moving to electronic board packs and minutes through iPads and other devices. But it is important that boards focus on what makes a difference and spend their time looking forward not back.
How do you approach recruiting younger directors?
We follow a very robust process using professional search firms when recruiting for new directors. The recent Sky TV appointment is a great example of the next generation joining the board of a large corporate in New Zealand. Air New Zealand for example has just announced the appointment of Linda Jenkinson who is a successful entrepreneur who has most of her career in the USA.
What makes a great chair?
They should draw everyone together creating a collaborative team. They should ensure all voices are heard, summarise the key points and bring the decision to a clear conclusion.
An effective chair allows some debate but limits the voices that go "round and round" which eventually creates unproductive board meetings. The best boards from my experience are collegiate, open to challenge and debate coupled with an experienced chair.
Any tips for aspiring directors?
It's important to combine your executive role with governance experience earlier in your career and not wait for retirement as a starting point. I would encourage more CEO's to combine their day job with one board role. Common practice in the US and Australia. It's less common in New Zealand.
Getting your first board role is the hardest but perseverance will help here. By combining networking and having realistic expectations on your first appointment is necessary. There's always a temptation to accept the first board role presented to you without the appropriate due diligence which may end up being a very risky career move. Ensure that the opportunity fits within your skill set, you feel comfortable about the business model, passionate about the industry and the board composition.
Future trends in corporate governance?
We will see continued growing use of tablets in the boardroom delivering electronic papers. Board meetings will still need to be face to face as we would miss the side conversations and discussions over lunch.
The timing of meetings may also change from monthly to bi-monthly but over two days versus one day currently. A two-hour conference call in between will ensure regular ongoing communication between the board and management.
What were your key learnings in transitioning from MD of Foodstuffs to becoming a professional director?
I suddenly had a complete lack of administrative support - I was now a sole trader. It was initially difficult in managing multiple clients - Today healthcare, tomorrow Air NZ. A CEO does not have to work with different people and industries on a regular basis. Management consultants, lawyers and accountants are used to this way of working not executives.
I am now responsible for my own professional development and networking is critical in my continuous learning and knowledge.
Looking forward not backwards. Being a director is a profession where your contribution is based on your professional experience. If boards have diversity of people and experience then it's fun!
Carter is Chairman of Fisher & Paykel Healthcare Limited, a director of Fletcher Building Limited and ANZ Bank New Zealand Limited and Co-Chairman of the New Zealand Initiative.
Henri Eliot is CEO of Board Dynamics