- Provincial unions take charge: Adoption of Proposal 2 leads to a new nine-person board by mid-August.
- Governance overhaul: Current board members can reapply, with significant changes to the governance structure.
- Power shift: Provincial unions gain significant control over the Governance Advisory Panel (GAP) and Appointments and Remuneration Panel (ARP).
- NZRPA’s bold move: NZRPA threatens to create a separate governance structure for professional rugby.
- High-stakes deadline: Can New Zealand Rugby attract high-caliber directors and stand up a new board by August 10?
Following a Special General Meeting last week, at which the 26 members voted in favour of adopting Proposal 2, the provincial unions now have until mid-August to stand up their new governance structure and appoint a nine-person board.
Gregor Paul explains how the process will play out, the possible ramifications and details how challenging it will be to find the nine best people to govern in the interests of all of New Zealand rugby.
Process overview
The current board will operate in an interim capacity until mid-August, when a new board appointed by the new process will take over.
Existing board members are able to reapply through the new process, with so far, only Dr Farah Palmer having confirmed she will be standing down as she has reached the end of her third term.
There are three steps to creating this new board and new structure.
The constitution will need to be updated to reflect the changes detailed in Proposal 2 - work that is being done by NZR legal counsel, Stuart Doig.
A Governance Advisory Panel (GAP) needs to be set up and all entities with an assigned role to play in that, are being asked to put forward their candidates by early next week.
The GAP needs to sign off on the skills and competencies matrix that will be used to select NZR board members and so to will it have to approve the needs and priorities statement produced by the NZR board – a document that will effectively detail any specific upcoming work streams, issues, skills shortages or experience gaps that the current board feel need to addressed.
Once the GAP is formalised, the work can then begin to create the Appointments and Remuneration Panel (ARP) - the body that will be responsible for selecting, interviewing and ultimately deciding which prospective applicants end up sitting on the NZR board.
The ARP, in conjunction with recruitment firm Sheffield, will consider applications against the skills and competencies matrix, interview candidates who make the shortlist and then put forward nine names to be ratified by the unions in time for the new board to be in place for its first meeting some time in mid-August.
Governance Advisory Panel explained
The first step for the unions in their quest to build their new structure will be to determine the role of their proposed GAP and populate it with the required eight people they stipulated in their proposal.
In the nine months between the Pilkington Review making its governance change recommendations and the SGM vote last week to ratify an alternative proposal championed by the provincial unions, one of the main sticking points in all discussions was the make-up and role of the GAP.
The Pilkington Review recommended the creation of what it called a Stakeholder Council – a 13-person panel drawn from a wide range of rugby entities including provincial unions, universities, schools, professional players, referees, local council - operating as a forum only, where they could regularly communicate with the NZR board but had no power, authority or influence over any decision-making.
The provincial unions, however, never liked the idea of a stakeholder council and came up with the alternative GAP, which differs significantly in composition and role.
The GAP that the unions are creating will have the power to determine the skills and competencies matrix as well as the board’s needs and priorities statement; it will, seemingly (although this isn’t clear from the proposal itself) have instructive powers over the NZR board and will be providing advice on governance issues; and will appoint three people (not GAP members) to ARP.
The make-up of the GAP is also narrower, as under Proposal 2 it will consist of three provincial union representatives, one from NZRPA, one from NZ Māori Board, one from Pasifika Advisory Council, one from the Super Rugby clubs and an independent chair, appointed by the GAP members in conjunction with NZR.
The chair will be paid by NZR, but not have any voting rights, and if the GAP is set up as per the proposal, it will have seven voting members, three of whom represent unions, meaning it will only take one other member of the panel to be persuaded to side with them for the provinces to dominate decision-making.
David Pilkington, the former Fonterra executive and highly experienced director who delivered the independent review of rugby’s governance structure that formed the basis of Proposal 1 that was rejected by the unions, believes any prospective NZR directors will be wary about the lack of clarity in the intended relationship between the GAP and national body’s board.
He says the set-up looks like a two-tier board where a provincial union dominated GAP will have a remit and mandated powers to influence the NZR board on matters of governance.
It would be unprecedented in business or sport to have a board advising a board, and Pilkington, and other experienced governance personnel spoken to the Herald, believe that high-calibre directors will be reluctant to apply for positions on the NZR board given the probable control and influence the GAP will hold over it, and the uncertainty as to the true nature of its intended relationship with the national body.
What may further erode confidence is that the provincial unions who have been so determined to create the GAP, appear to have little to no understanding themselves of what kind of skillsets, experience and knowledge they want contained within the new body.
Wellington chairman Russell Poole, who led the working group that devised Proposal 2, wrote to all unions on June 3, before an update meeting later that day, to say:
“Ahead of the hui tonight for those PU chairs that can make it, I asked AI for a position and person description for a GAP member.
“Specifically, I typed in the following: job and person description for a role in a Governance Advisory Panel in a New Zealand sporting organisation.
“The above of course needs to be read in conjunction with the tasks outlined in P2 and is not ‘gospel’ but simply a starter document.
“It is imperative for all stakeholders to understand the function of the GAP and from there fine tune the P and P document attached.
“Only then can we then look to seek out and appoint the appropriate people to sit on this critical panel in achieving everyone’s desire for a high performing NZR board.”
Once the unions have finalised their job description for prospective GAP representatives, each entity will run its own process to submit people for consideration and in the case of the unions, one of the three names put forward must come from a Heartland province.
But the unknown in all this is whether all four groups invited to submit GAP candidates will take up the invitation to do so.
Poole says that the PAC have put forward a name, but as the other three were all strong supporters of Proposal 1, it would be a surprising about-turn if any were now willing to take part in a governance structure that they opposed.
NZRPA, the Super clubs and NZMRB are considering their invitations but it is almost certain that the former won’t take its seat at the GAP, which will mean it will operate with six voting members – and therefore, the provincial unions, with three representatives, will have an effective power of veto and there will be no means to break potential deadlocks.
Poole told the Herald that the NZRPA’s likely stance is disappointing, but that he saw no issue with the new scenario, and he also refuted Pilkington’s claim that the GAP would be operating as a second board.
He says the GAP will only meet twice a year to update and review the skills and competencies framework.
Appointments and remuneration panel explained
The unions need to create the GAP first, because it will nominate three people to sit on the ARP - the entity that will effectively decide which candidates will be put forward to sit on the NZR board.
Again, the make-up of the ARP as proposed and voted for by the unions is significantly different to the one recommended by Pilkington.
The review recommendation was for the Institute of Directors (IoD) to appoint two people to the panel; two would be appointed by the Stakeholder Council and the NZR board would appoint one independent person -not an existing director or member of staff.
There would, therefore, be three independents on the five-strong panel - with the NZR board having set the skills and competencies framework.
But the set-up being created by the unions is for the three GAP appointed members to be joined by two from the IoD and one appointed by the NZR board (not an existing director or staff member).
Of the three members appointed by the GAP, one must identify as tangata whenua and have knowledge and connection with te ao Māori to the satisfaction of the NZMRB representative on the GAP; one must possess deep knowledge and connection with community/grassroots rugby, to the satisfaction of the provincial union representatives on the GAP; and one of the members must identify and have lived experience as Pasifika with ancestral, authentic cultural and community/grassroots connections to the satisfaction of the Pasifika representative on the GAP.
At least one of the five members on the ARP must be female, and one of the independent appointments will be elected - by the ARP - as chair and not have voting rights.
The proposed make-up of the ARP - and the control the GAP and ultimately the provincial unions will exert over it – has been identified by Pilkington and all those stakeholders who supported the adoption of Proposal 1, as the most prominent red flag in Proposal 2.
One of the most significant findings in Pilkington’s Review was the number of high-calibre potential NZR directors who said they would never apply because they didn’t trust the appointments system and the control the provincial unions held over it.
“At the moment the process for getting directors on to the board is heavily influenced by the potential veto that the three provincial union reps have on that appointments panel,” Pilkington says.
“We got a lot of feedback from people saying they wouldn’t put their name forward to go through that process because its dominated by provincial unions and there was plenty of history that suggests commercial people are going to come second to a person who has played 100 games for the province and who wears the blazer.
“Our recommendation was designed to have an independent panel - yes it had two reps that we would describe as coming from rugby PU-Land, but it was an independent panel that would be assisted by a professional recruitment firm screening candidates, putting those candidates forward against a skills matrix that you would determine as necessary to define the range of people.”
The perception of imbalance could be accentuated by the probability that the four current NZR board directors - Dame Patsy Reddy, Catherine Savage, Rowena Davenport and Palmer - who openly supported the review proposal, don’t reapply for positions and are, therefore, unlikely to have any influence or input into deciding who to appoint to the ARP.
In effect, the PU representatives on the NZR board will control it in the interim and decide who to appoint to the ARP.
Selecting candidates
The ARP, once it is established - probably in two to three weeks, will begin, - in conjunction with Sheffield - an executive search for the nine people the board will need to fulfil the representative criteria imposed by Proposal 2 and to meet all the skills, experience and knowledge requirements.
Sheffield will present a longlist of candidates, that will lead to an agreed shortlist of candidates being interviewed, with the ARP then making the final decision on who has been successful.
Each candidate will require majority support from the ARP to be successful and only the number of candidates required to fill the existing vacancies will be put forward to the NZR membership for ratification.
If the membership doesn’t ratify the candidate, then the ARP will propose another.
While the unions have maintained that the only difference between their governance proposal and the alternative, is that three of the nine board members must have experience on a provincial union board, that statement is manifestly not true.
Under Proposal 2 there are mandates that three of the directors must have served on a provincial union board; one of the members must have lived experience in relation to, and knowledge and understanding of, te ao Māori in a complex organisational context.
At least one member must identify and have lived experience as Pasifika with ancestral and authentic cultural connections and an ability to apply a Pasifika world view in a complex organisational context.
The proposal is also targeting the continuation of the current gender diversity goal of ensuring that 40 per cent of the board are female.
Those who have been opposed to Proposal 2 say it perpetuates the current representative model, creates the probability of tokenism, will restrict the number of eligible candidates, and ultimately it won’t find the nine best people to govern for the whole of the game because too often it will have to make compromised decisions to meet the specified mandates.
Statistically, if nothing else, the mandate that at least three people must have provincial board experience restricts the number of eligible candidates both directly and indirectly.
The indirect consequence is significant - as the statistical probability of the three directors who meet the PU experience mandate being male is exceptionally high, as NZR estimates that there are only about 50 females who are serving or who have previously served as directors on a provincial board.
Poole concedes that in the short-term, it is unlikely that more than one of the PU experienced directors will be female.
Of the six who don’t meet the PU experience mandate, at least three, if not four are going to have to be female to meet the target, and if none of the three PU experienced reps meet the specified Māori or Pasifika criteria then it places yet tighter restrictions on who can be appointed and reduces the probability of the board being able to contain the right mix of skills and experiences.
Of most concern, is that the restrictive mandates leave the board short of experience, knowledge and understanding in two key areas which have hurt them in recent times - financial and commercial risk management and high-performance planning.
NZR’s board has shown itself, given the botched initial Silver Lake deal and subsequent financial losses that are mounting in the wake of completing the revised deal, to lack understanding of complex financial instruments and to have poor oversight over commercial strategy.
While the erratic and disjointed decision-making over whether to retain former All Blacks coach Ian Foster and the lack of oversight that led to the Black Ferns going to their own World Cup with an interim head coach, illustrated the dangers of the board operating without anyone with specific experience or deep understanding of high-performance rugby.
Will this new system work?
The deadline is tight, but the unions are confident they can stand up a new board by August 10.
But the harder question to answer is whether they have any real prospect of creating a board of high-calibre directors who can best serve the whole of New Zealand rugby.
Pilkington, and others with governance and executive experience, have told the Herald that they don’t believe the system will attract high-calibre directors.
They believe the confusion over the role of the GAP, the continued control of the provincial unions over the ARP and the lack of support for the adoption of Proposal 2 by all other key entities, will deter credible and competent people from applying.
Pilkington says: “If I was rung by a recruiter, I’d want to know whether the organisation is well-chaired, what is the calibre of people sitting around the board table, what does the appointment process look like and what are the expectations of the members?
“And then I would have to determine whether I felt my skills could make a difference.”
His belief is that the set-up will attract inexperienced directors who may lack the relevant skills the game needs right now, while others believe that Proposal 2 may be seen as a pathway to redemption for directors who need to rebuild a damaged reputation.
Will the NZRPA follow through with its threat to breakaway?
The NZRPA publicly declared ahead of the SGM that it would no longer hand the right to the NZR to govern the professional game if Proposal 2 was successful.
In a letter to the unions, it said: “The adoption of Proposal 2 will result in the NZRPA being forced to establish a new governance arrangement for professional rugby in New Zealand.
“The professional rugby players of New Zealand will not be governed by the failed governance processes and outcomes currently in place in New Zealand.
“The adoption of Proposal 2 (or the status quo) entrenches these failed processes and leaves the professional players with no option but to establish alternative governance arrangements for the professional game in New Zealand.”
The letter went on to offer a brief explanation of how the NZRPA would practically split the game into separately governed professional and amateur entities.
“This new body, for example called ‘The Professional Rugby Tribunal’, will govern, in some sort of partnership with NZR, the sale of media rights, the contracting of sponsors, the revenue share model, international and national competitions, the high-performance programmes and development pathways and any other activity that impacts the careers, safety, remuneration, workplace and development of professional players.
“NZR will continue to govern alone the community and amateur game including provincial rugby, club rugby and other non-professional rugby activities.”
The statement of intent was characterised as a power play - a threat by the players to split the administration - and because of that, questions have arisen as to whether such a move would be legal, viable and achievable.
The answer would seem to be yes to all three points, and it would probably be more accurate to characterise the NZRPA’s position as protective rather than belligerent.
The accusation that many commentators have made that the NZRPA is motivated to protect the players’ income is partially true - but the wider context is that the professional salary pool is linked via a revenue sharing agreement to NZR’s income.
For the players to preserve their incomes at current levels, they need the whole rugby ecosystem to be in good health and they have no faith that Proposal 2 will deliver the game with the right calibre of leaders to improve rugby’s overall financial standing, rebuild a fit-for-purpose player development pathway, and reimagine lower cost, higher-value competitions.
It’s important to understand that it is not a self-serving or ill-considered move on the part of the NZRPA to make the threat it has, and this gets to the heart of answering whether this is viable and achievable.
What the NZRPA is proposing is not as radical or divisive as it has been portrayed, and this dual system of splitting the administration of the professional and amateur games already happens in English rugby and it’s an idea that NZR itself considered a decade ago.
There’s even an argument to be made that this split has almost already happened due to the creation of New Zealand Rugby Commercial – the company that houses all NZR’s revenue generating assets.
The creation of a new tribunal would ultimately mean that the professional game could be run without being answerable to a provincial union dominated NZR board.
The move would be entirely legal as the NZRPA would use its collective employment agreement – which it is in the midst of renegotiating - to determine with which parties it had entered into agreement.
Gregor Paul is one of New Zealand’s most respected rugby writers and columnists. He has won multiple awards for journalism and has written several books about sport.