You've been a director of some major companies and you've also been Director of the Auckland Philharmonia, an arts organisation not exactly flush with money. Do the same skills apply?
Yes, absolutely. There's no difference, it just depends on the sector. The key is to get the strategy right and to know what those critical success factors are for your business and then, as a board, measure and monitor them. Eighty per cent of business is the same, 20 per cent is dependent on the sector.
Why is it important to have a diversity of skills to have an effective board?
To make the right decisions, directors need to ask the right questions. To me it is the diversity of thought that is important.
That doesn't always reside in one person. I frequently leave board meetings where I know we've made a better decision after discussing it as a group as different people have approached the situation from a different perspective.
As an example, on the Airways Board we had someone who was our "Biggles". Sometimes he would look at a situation through the lens of his background in aviation that the rest of us could not see. But once he asked the question or made the comment, the rest of us could contextualise and interpret this and then bring our skills and expertise to the discussion.
I have to say that I tend to look on boards as a bit like a senior leadership team. There you always have a mix of skills, or in this case functions, sitting round the table because that's how business works.
Why do you think many small-to-medium sized businesses would benefit from a board?
Not all companies can afford directors' fees.
Probably three reasons - first, good directors will have had experience in many different industries; they will bring an external perspective to setting the strategic direction for the company. In my opinion that's the most important thing a company does. Second, and this applies more to family businesses, sometimes decisions are made relating to family which may not be the best commercial decision for the company. Boards can help guide that decision-making.
Third, an independent director's view can guide the family through areas such as succession planning or helping separate ownership and management issues - all helping mitigate the risk in the business.
When and why did you co-found The Boardroom Practice and what does it do?
We advise boards on governance matters and we conduct board reviews, which has been a growing area over the past 10 years. We also train in governance through organisations' programmes such as the University of Auckland's Executive Education, Global Women, New Zealand Asian Leaders, the Auckland Chamber of Commerce and the Equal Employment Opportunities Trust. At The Boardroom Practice, we're all directors so when we do work with boards we're doing it as practising directors which, in my opinion, makes our offering and advice more valuable.
We started in 2003, myself and three others, and we now also have associates involved in the practice. I was at crossroads in my corporate life. I had been a member of the director screening panel for the Crown Company Monitoring Unit with Ron Hamilton (former Director of Appointments and Governance and one of the co-founders of The Boardroom Practice) for about two years by then. Ron was looking to retire. He was passionate about governance and wanted to use his experience and wisdom. So The Boardroom Practice was born.
In 2010 you completed your Master of Philosophy (Honours 1st class) on good governance and effective boards. What did you learn from that?
I had been a director myself for 10 years so I was lucky to be able to talk to many really experienced chairs and directors about key factors that made boards effective or ineffective. I think the negative is sometimes a stronger indicator than the positive. In the end, the research confirmed my original premise that the key consistent influence - both positive and negative - on the board was the chair. The research also helped me be a better director.
Do you think it's important to keep learning and developing skills?
Absolutely. The world is changing so rapidly now. If ever one needed to, now is the time because there is so much happening out there and there is so much information. I don't think we can ever learn enough. But it's also important to take charge of your own learning and not expect your organisation to do this for you.
What are the most useful lessons you learned at the Business School?
University teaches you how to assimilate information and critically think about it. As a director or a manager, that's what you're doing all the time. I completed a Bachelor of Commerce majoring in finance and marketing, which was a good, practical, broad degree. It gave me confidence, which was probably the most important outcome when I ventured into my first serious job.
How applicable are those lessons today?
Understanding how businesses work is essential for anyone to be successful in business. I have seen people reach senior roles who have not had tertiary education and it seems to me that some tend to lack the disciplined approach to thinking that is necessary in today's business world. I have counselled many to take an MBA to sharpen their skills so they can be even more successful.
Janine Smith was made a Member of the New Zealand Order of Merit for services to corporate governance in this year's New Year Honours. She is also chair of AsureQuality, a director of Steel and Tube Holdings, and the independent member of Fonterra's Governance Development Committee.