A year of caution

A number of significant global events in 2016 will continue to impact on domestic and international affairs in 2017, writes Elizabeth Proust.

As we reflect on a remarkable 2016, we take stock of the global events that have shaped and impacted the director community. We witnessed a federal election and two territory elections, a deteriorating budget bottom line and the national economy contract in December – just the fourth time it has done so in the last 25 years.

Surprise results in two internationally significant elections, BREXIT – resulting in a leadership change for one of our major trading partners – and the US Presidential Election, created domestic and global uncertainty. In that context, we, as governance leaders, begin 2017 with anticipation, hope and caution.

This caution is particularly acute in the face of domestic governments’ seeming inability to garner meaningful reform to drive economic security and grow the economy. As the Australian Institute of Company Directors’ (AICD) most recent Director Sentiment Index (DSI) showed, directors remain concerned about a lack of infrastructure spending, taxation reform and the size of the federal budget deficit. Almost 80 per cent of directors believe the Federal Government is negatively impacting consumer confidence while only eight per cent believe the government’s performance is having a positive impact on business decision-making.

More troubling is the impact this has on innovation. Business is the engine room of the national economy. Strong business investment and growth, backed by continued consumer spending, will see a turnaround of the nation’s economic prospects. However, with 71 per cent of directors surveyed in our DSI reporting a risk-adverse decision making culture on Australian boards, we should all work to ensure that we are not restricted by this approach and ensure that innovation becomes a normal part of everything we do.

While in the past, the AICD has pursued a more narrow policy agenda, in 2016 we released a Blueprint for Growth which outlined a national plan for reform. As we enter 2017, the AICD remains committed to representing the director community and advocating for change to achieve better social and economic outcomes for all Australians. We recognise that we have an important role in the broader debate about issues related to the governance of the nation.

These issues and challenges are felt and discussed in boardrooms around the country and decisions are required. They also represent opportunities for us to think and act differently, with the promotion of good governance practices within our director community at the heart of everything we do. To this end, our 2017 Annual Governance Summit’s (AGS) theme Directing in a Complex Environment explores what it takes to govern and lead through complexity and change, where governance is agile and deals with real-world complexity.

The Summit, to be held in Melbourne on Thursday 2 to Friday 3 March, will be attended by more than 1,000 participants – making it the largest gathering of governance professionals in the southern hemisphere. It attracts leaders from a range of sectors and industries and is a great opportunity to network with peers and be up-to-date on the critical issues facing all organisations.

In this edition of Company Director we profile Margie Seale FAICD, a leading professional non-executive director of Telstra, Ramsay Health Care, Bank of Queensland and Scentre Group and hear first-hand the challenges faced in the boardrooms in uncertain times. Focusing on the impact of the digital revolution and how boards must think, Margie notes that assembling the right board for the digital age requires diversity. This doesn’t necessarily mean stacking the board with young tech professionals, “but it helps to have people or a person who lives in that world,” she says.

The AICD is continuing to play a key role in educating directors and executives about how to face challenging times with confidence and how the board should be thinking about the impact of the digital age, now and into the future.

At the AICD we are continuing to grow and expand our services to meet the needs of our members. I look forward to continuing to work with you all throughout 2017, and to seeing many of you at the AGS in March.