Culture, change and diversity were reinforced as key areas of focus for boards by former chair of AMP and 2011 Australian of the Year Simon McKeon AO FAICD, as they navigate the complex and evolving corporate governance landscape.

In a keynote address closing the summit, McKeon drew on the themes explored by fellow speakers by driving home the issue of the changing governance landscape. Describing culture as “difficult to define, difficult to measure, but the absolute starting point for any organisation’s pathway to success,” McKeon warned directors not to avoid the issue simply because of the challenges it presents.

“Whether a for-profit, not-for-profit, or government organisation – it doesn’t matter. Culture is important and indeed any attempt to suggest that it’s not is simply wrong,” he said.

“It can be vague and incapable of precise definition, perhaps meaning even different things to different people, but all I would suggest is when at the top of any organisation, one avoids it at their peril. Indeed it is the starting point.”

McKeon added that culture has to be felt throughout the organisation and must influence behaviour and lead to change. Referring specifically to environmental, social and corporate governance (ESG) as having “well and truly left the era of being something that’s just a noble purpose or something that sounds decent to most of us,” McKeon drew a link between such policies and financial performance.

“It’s very difficult to generate long-term financial returns when the culture is sub-optimal. A top culture is critical to the success and sustainability of our organisations,” he said.

On the issue of diversity, McKeon warned that “diversity is a whole lot bigger than gender discrimination,” and added that a healthy board is one that can have honest conversations and embrace differences of opinion. “A board that does not have any differences is a board I worry about. There will be a number of different possibilities and differences of opinion and the disagreements that occur have to be part and parcel of board life,” he said.

Ideas for change

Moving on to the importance of change, McKeon said change is coming for all companies, no matter what sector they operate in, and embracing it is critical to future success. “In promoting positive change, the message must be from the board down that everyone is responsible. Ideas for change can and must come from everywhere, from the janitor, to the company secretary, from the apprentice even to the internal auditor. Everyone ought to come to work thinking, what can be better?”

McKeon concluded by instructing companies to not consider each of these issues in isolation and encouraged directors on the importance of their roles. “When we think of innovation as cultural rather than a corporate function, it becomes less threatening. Good governance is as necessary as it has ever been and excellent governance will continue to be needed to shift the culture of organisations from good to great,” he said.