Looking to the future

John Brogden reflects on the key issues driving change in corporate governance and the role they play in shaping Australian business.

Earlier this year at the Australian Governance Summit, I commented that short-termism is the scourge of the boardroom. To add value to their organisation, boards must take a long-term view in their decision-making. Strategic boards are looking to the future and governing to prepare their businesses for the challenges and the opportunities it presents.

One of the major challenges that lies in wait for Australian boards concerns corporate culture. Regulators are looking seriously at culture, as both an indicator and example of misconduct. Forward-looking boards will be considering culture not only as it concerns compliance, but also from the perspective of how it can diminish or enhance organisational performance.

We know this issue is front of mind for directors, and so in this edition we’ve invited Dr Sally Pitkin FAICD to draw together views and analyses on the issue of corporate culture in an article presented on page 16. Dr Pitkin is a non-executive director of the Australian Institute of Company Directors (AICD) and has significant expertise in the field of corporate culture.

In her article, Dr Pitkin observes that culture must be “driven by, supported by, and modelled by the leadership of the organisation”, reinforcing the board’s critical role in establishing and maintaining corporate culture.

Dr Pitkin notes that while the day-to-day responsibilities of a board differ significantly to those of an organisation’s executive, leaving culture to management does not recognise the important leadership role that the board plays within an organisation.

Even for those organisations with robust cultures that drive performance and promote compliance, a board must be critically engaged to ensure that this culture is maintained. Boards must also see that they have access to the instruments required to monitor culture and facilitate its transformation, if required.

For our not-for-profit (NFP) members, looking to the future is a challenging endeavour. The NFP sector is experiencing a period of unprecedented change and attempting to predict its future is not a precise science.

This month we profiled Lisa Chung FAICD, a member of the new AICD NFP Chairs’ Forum. In her interview, Chung addresses the changing landscape for NFPs in the aged care and disability sectors from supply-led to demand-led, as well as efforts to give service users more self-direction of their care.

Diversity continues to be a major focus for the AICD as we pursue our goal to see 30 per cent of directorships of ASX 200 companies held by women by 2018. Encouragingly, female appointments to ASX 200 boards have tracked above 40 per cent throughout 2016, the highest rate since we began tracking these figures in 2009.

From a governance perspective, board diversity should not only be seen as the “right” thing to do, but also a strategic business decision. Diverse perspectives on a board challenge assumptions, deepen discussions, and contribute to the critical thinking that forms the foundation of good decision-making.

Chung is chair of The Benevolent Society, which is the issuer of one of only two social impact bonds sponsored by the NSW Government that she discusses in her interview beginning on page 24. These bonds are financial instruments that provide an innovative way to raise capital to apply to addressing to social challenges.

Much of the NFP sector’s future may be unclear, but a significant role for social impact bonds, and other types of social impact investing, is certain.

The AICD is looking to the future too, and in July we launched our new website, featuring significant improvements in experience, accessibility and navigation. Members will notice the streamlined design and the richness of the content with improved presentation of video, image galleries and slide presentations.

The new site is also easier to use, with enhanced search functionality and a higher visibility of services that we provide to our members and to the public.

Also featured as part of this refresh are updates and additions to our popular suite of director tools. More than 60 guides, templates and other resources feature on the website which we hope will grow to be even more popular with members.