Consensus culture in boardroom allows leaders to hide from tough decisions - Michael Stiassny.
Consensus culture is "out of control" in New Zealand boardrooms and directors need to toughen up and share their views, says top Kiwi director Michael Stiassny.
Stiassny, known for his hard-nosed leadership, told those at the Institute of Directors annual conference yesterday that collegiality should not be confused with consensus.
"As long as people can sit down afterwards and have a cup of tea, the discussion should be able to go anywhere in the boardroom."
Stiassny was tasked with talking about "failures and recoveries: leadership and lessons learned".
He said the New Zealand psyche lent itself to directors agreeing with each other but consensus allowed directors to hide from making tough decisions. "I think it is time we toughened up. We need to be stronger and share our views."
Stiassny said the role of the director was simply to govern. "Management should manage."
But he also pointed to boards and chairmen needing to have a tough stance with chief executives and said Solid Energy was an example of that failing to happen.
He said former Solid Energy chief executive Don Elder was passionate in everything he did but passionate people needed clear boundaries.
"The role of the board and chair and even shareholders in managing CEOs cannot be understated. A CEO and chair can respect each other but if they are best friends it won't work. At some point in the CEO's tenure the chair is going to have to say no."
Stiassny said boards and chief executives needed to have full and frank discussions.
"If the chair and CEO are holding hands - how on earth are the board going to have a frank discussion?"
Stiassny said shareholders also had a role to play in placing a check on the executive. "Shareholders don't get out of it either."
Those who just collected a pay-cheque might be excused but if the shareholder was asking for more money they also had a responsibility to put a check on the chief executive, he said. "Anyone putting their hand in the cookie jar should have put their hand up and said - this is not right."
Stiassny said finance companies were also an example of passionate people not being kept in check.
"I doubt anyone can name a finance company that did not have someone that was passionate."
Stiassny said the boards of the finance companies had struggled to stop those companies from going where they should not have.
Struggle to get women
Michael Stiassny says a group formed last year to help get more women on boards is struggling to gain traction.
Vector chairman Stiassny was one of 12 founding members who helped set up the 25 Percent Group in June last year. It is aiming to increase the percentage of women directors on New Zealand boards to 25 per cent by 2015.
Last year the Human Rights Commission's New Zealand Census of Women's Participation found that 14.75 per cent of the top 100 New Zealand stock exchange directorships are held by women.
Stiassny told the Institute of Directors annual conference yesterday that people were talking about having more women or Maori on boards but in the boardroom it wasn't happening.
"I think it is fair to say we are struggling."
Stiassny said there were historical studies which showed having different perspectives on a board, be it sex, colour or age, led to better decisions.
"We need to have as much input as possible from different viewpoints. It sounds logical but we are struggling."