The success of the inaugural Australian Governance Summit surpassed all expectations. Places sold out quickly, which meant that close to 1000 people attended the event.

The theme of this year’s summit was ‘Directing for performance’ and managing director and CEO John Brogden FAICD touched on matters that are currently hampering performance, such as short-term thinking and lack of diversity.

Chair Elizabeth Proust AO FAICD reiterated AICD’s commitment to change the gender imbalance in Australian boardrooms.

But, she reminded the audience that board diversity is about much more than gender.

“A truly diverse board will also reflect the cultural, economic and other differences apparent in our society,” she said. “Greater board diversity is known to encourage robust debate, foster creativity and limit the risk of group think that is inherent when individuals from similar backgrounds dominate a board.”

David Gonski AC FAICDLife, chair of Coca-Cola Amatil and the Australia and New Zealand Banking Group, took up these issues in the first plenary session. He raised the question of whether directors should focus their attention on short-term investors, who are also generally most vociferous, or the majority who are investing for the longer term.

My view is that a director has to manage the performance of a company as an ongoing entity - that is, for the long term.

“I’m not convinced that any statutes or case law have made that absolutely clear,” he said. “My view is that a director has to manage the performance of a company as an ongoing entity – that is, for the long term.”

Diverse experience

Gonski suggested that directing for performance requires not only a diversity of views but also experience, dismissing the idea that, after a certain number of years on a board, directors should have to prove their independence.

Gonski suggested that directing for performance requires not only a diversity of views but also experience, dismissing the idea that, after a certain number of years on a board, directors should have to prove their independence.

He cautioned against a culture that is overly risk averse and expressed a strong personal belief in improving laws on insolvency. He would like to see a properly formulated safe harbour position that is not only available in the case of potential insolvency but also to give some support to directors who are prepared to take appropriate risk.

He also expressed concern that the word disruption has become something of an excuse for failure.

“A good board knows what to question and one of the absolute questions we have to ask is what is the risk and what is the opportunity in new technology?” he asked.

Changing the culture

In the final plenary session, Lieutenant General David Morrison AO (Rtd)tightened the focus on the need for diversity. He is perhaps best known to the public for ordering misbehaving troops to “get out” if they couldn’t accept women as equals in 2013. He was named Australian of the Year 2016 in recognition of his commitment to gender equality, diversity and inclusion and, since leaving the army, he has continued to champion human rights in his role as the chairman of the Diversity Council Australia.

In his argument for gender equality Morrison challenged the deeply-ingrained assumption that Australians are, by nature, egalitarian.

“If we are egalitarian why, across all of our workplaces, is there a pay gap between men and women of 18.8 per cent?” he questioned.

“In the mining and construction industry the gap is 39 per cent. In communications and IT it’s 28 per cent. Averaged out across all professions over the course of a working life this is a difference in superannuation terms alone of $700,000.”

He also spoke of his own ‘Saul on the road to Damascus’ moment when he was confronted by former Sex Discrimination Commissioner Elizabeth Broderick.

“She came into my office about three months into my term as chief of army and wanted to know why women had represented less than 10 per cent of army personnel for the last 100 years,” he said. “I had only the worst possible answer – that it’s just the way it is.”

He quickly realised he had been blind to some critical issues.

“I was the product of a privileged upbringing and had all of the advantages in life,” he said. “I had also assumed, like so many others, that the hurdles I was being asked to leap over were pretty much the same for women and everyone else. I don’t assume that any more. I absolutely know that’s not the case.”

However, that belief persists in Australian corporate life as well as institutions like the military.

“This is perpetuating the myth that some people are more deserving than others,” said Morrison. “We tell ourselves that we are a meritocracy – I hear it almost every day. My response is to ask what is the criterion on which you judge merit? Is it primarily the fact that someone looks and sounds like you? I’m forced to conclude that in most cases it is.

“I realise now that when we prevent people from reaching their potential based on the most questionable of criteria we are dooming an institution like the army to a mediocre future. And there are too many areas of the Australian workforce that do exactly the same. We propagate a future that looks like our past, yet the challenges we face now and will face in the future are dramatically different from those of our predecessors’.”

Morrison is an advocate of setting targets, which he described as “leading with the head.” But he also believes directors have a responsibility to lead with the heart by being inclusive rather than exclusive. He referred to the plethora of evidence that a culture of inclusion benefits both the board and the organisation as a whole, yet many leaders are yet to stand behind change.

An unexpected challenge

Morrison believes good leaders identify and personalise big problems and stand next to them. When he took over as chief of the army in 2011 he had identified three – the commitment of troops to operations in Afghanistan, Iraq, Solomon Islands and Timor; the challenge of maintaining an army that was both robust and relevant; and providing support for the men and women who had lived through confronting events in theatres of operations. Unlooked for and unexpected was the issue of culture in the army and the defence forces as a whole.

“I came to realise that what I needed to do was look at culture almost from a first principles point of view,” he said. “This was a big step to take in an organisation like an army.”

He found that women in particular were having their dignity and self-respect stripped away and were being denied a chance to reach their potential. These were not islands of poor behaviour but systemic flaws within the culture.

I came to realise that what I needed to do was look at culture almost from a first principe's point of view.

When he spoke the words ‘Aussie digger’ he was confident the audience pictured a white, Anglo Saxon man, probably from a rural background, a natural soldier who fights best with a hangover and never salutes officers.

“Who thought of a woman, or a man or woman of Aboriginal or Torres Strait Islander heritage, of Muslim faith or from our Asian communities?” he asked. “The prevailing story that supports the culture of the army is saying to anyone who is not an Anglo Saxon man: “don’t come”. Or that, if you do, in an unspoken way the hurdles you will be asked to jump will be much higher than those that David Morrison will ever be asked to jump in his life.”

A director’s legacy

Morrison challenged the audience to consider whether their own board and organisation are inclusive or exclusive.

“In our schools and universities there are thousands and thousands of young Australians, men and women, with different cultural backgrounds, different sexual orientations, different levels of physical and mental ability that want to come to you and have the chance to shine,” he said.

He concluded by telling the audience that, if their legacy were an institution that recognises that everyone has a role to play, that everyone is important and that everyone deserves the opportunity to reach their potential, they would have much to celebrate at the end of their professional life.

“Look at this country – who is well off under the existing order of things?” he asked. “Mainly, and I speak as a card-carrying member, it is men who are white, heterosexual, middle-aged and Anglo Saxon. We need to recognise that we have shaped the rules of the game up to this point and those rules need to change. My commitment to diversity is the best thing I’ve ever done.”