In the first of a monthly series on corporate governance, Joan Withers talks to Julia Raue about her transition to the boardroom and dealing with chief executives and the flow of information from management.
Q – After almost five years in governance, what has been the most challenging situation you have faced so far as a director?
It's an ongoing challenge to manage the needs of five diverse businesses in five very different industries. However my biggest single challenge – and learning experience - would be separating a company into two new entities, both with majority offshore owners.
Q – How did you find the transition from a senior executive career to being a professional non-executive director?
I was fortunate to become a director at TVNZ while I was still an executive at Air New Zealand, which really helped in my transition. Initially it felt a bit lonely as I was used to having a large team to bounce ideas off. And I found it challenging not being responsible for delivery but still driving outcomes within the governance role. I now have a huge sense of pride when the organisation achieves its goals.
Q – How challenging was it to make the transition to executive life? Did you expect a significant difference between your executive remuneration and the total income you could achieve as a non-executive director?
This is definitely an issue in New Zealand and one that we must not shy away from! You do take a dip even when you have a full portfolio. Personally, I was passionate about the career change and I was realistic about what it meant to us as a family, particularly while I built up my portfolio.
Q – What training did you undertake to supplement your executive experience going into directorship roles?
I attended the Company Directors' Course through the AICD [Australian Institute of Company Directors], and I joined the NZIoD [NZ Institute of DIrectors] and attended some of their courses. I have been incredibly fortunate to work with some of the country's top directors, and I have definitely watched and learned from their experience, and the experience of those in my wider networks.
Q – What due diligence did you do on the companies, directors and executive where you were invited to join the board?
I read annual reports, financial statements, strategic documents – as much material as I could get my hands on. It was important to me that the organisation aligned to my own values and beliefs, that my background and skills could complement the board, support a step-change in the organisation, and that I could influence a positive outcome for shareholders and customers.
Q – How would you recommend people looking to gain positions on boards go about promoting their ambition?
Network, network, network! Do your homework. Understand the role, the organisation, what they need and be ready to articulate why you are the best candidate to take the organisation forward. Talk to recruiters, the team, the board, the chair. And network again!
Q – How much time do you spend preparing for board meetings?
At least 10-16 hours of reading material per board meeting day alone. Add to that prep and attendance at committee and other meetings to support each board meeting. And then the meeting itself. It's a big commitment that people often don't appreciate.
Q – Did you have to change your approach and style at any point from the demeanour you demonstrated as a senior executive?
Absolutely, and it didn't happen overnight. There were times where I had to work hard to be less combative and more constructive and supportive. Board reviews are incredibly valuable tools to assist directors to understand the positive and less constructive elements of their style and behaviour – feedback is a gift!
Q- How financially literate are you? Do you feel competent to make a critical assessment of the company's financial situation at any point in time?
Being financially literate is an essential skill of every director. The important thing is being able to digest a large amount of information, and to drill down and apply focus in the right areas.
Q – Has there ever been a situation where you have felt there was a lack of information provided by management that could potentially impact on the board's decision making?
Yes absolutely. If the information gap is significant, I might email a range of questions through ahead of the meeting. If a lack of information defers a decision, I would want to understand any immediate impact on that outcome. It's a balance. We need our businesses to be agile, and to support that through agile and informed decision-making.
Q – How do you deal with a defensive or difficult CEO?
Carefully. I believe the board has a role to both support and challenge the CEO. Robust challenge and debate can at times invoke unfamiliar or unwanted behaviours. I might reframe my question, or respectfully call the behaviour out and attempt to understand what is behind it. If extreme or repetitive, I would raise it with the wider board and chair so that we could collectively address it.
Q – Have you experienced a dysfunctional board situation and how was that resolved?
Yes. I discussed the situation with the chair, who sought individual perspectives from other board members. The situation was resolved quickly and respectfully, which I believe is important.
Julia Raue is one of the new breed of corporate governance practitioners operating in senior New Zealand directorial roles. Formerly CIO at Air New Zealand, she currently sits on the boards of Southern Cross Health Society, Z Energy, TVNZ, The Warehouse Group and Jade Software.