Fast growth challenges Indigenous boards

Cairns-based BDO Audit Partner Greg Mitchell GAICD outlines why fast growth is one of the main challenges facing Indigenous boards.

How have you seen Indigenous governance evolve over the past decade?

The main thing I have seen is an increase in the skill set of directors. This is generally through governance training, which has increased directors knowledge and provided an insight into the workings of corporate boards and commercial organisations.

Some Indigenous organisations do this by establishing an audit committee with an independent chairperson or member of the audit committee (who may not be a director). This independent director or advisor provides guidance on governance, finance and risk issues.

As an example, besides being an audit partner at BDO in North Queensland, I am also an independent skill-based director for the Apunipima Cape York Health Council. This board identifies what their responsibilities need to be and invests a lot of time on governance training yearly.

The Apunipima Cape York Health Council board has three independent skill-based directors - a human resources specialist, a clinical governance specialist and I am the finance specialist. Between the three directors, we focus on building a knowledge base, then guide and oversee functions where the board feel they do not have the full skill set covered.

Bringing in outside training expertise is important when the Indigenous board identifies a skill set gap. This strategic move fills an immediate gap and simultaneously transfers knowledge and enhances current skill sets.

What are the main governance challenges facing Indigenous corporations?

Fast growth is one of the main challenges facing Indigenous boards. Health, tourism and employment services have grown fast in North Queensland over the past few years.

Apunipima is a good example because it grew from an advisory lobbying entity to now operating 11 health services. The organisation has grown significantly and as it has evolved, skill-based directors have helped with that growth.

As these Indigenous organisations grow, the board needs to develop additional skill sets to address the issues facing dynamic organisations.

The last decade has seen significant changes in Indigenous organisations. Increasingly, Indigenous boards are better organised and overseeing more complex and larger organisations. They have become more knowledgeable about what their board obligations are and what they need to do. Going back a number of years, you would go into an Indigenous board meeting and many of the board members were very quiet and reserved. Whereas now they are questioning, querying and driving discussions and debates. I think as their confidence and knowledge base has grown, they have become even more effective in their governing roles.

Within the Indigenous sector, many boards find government funding models challenging, as they are not always flexible enough to accommodate Indigenous cultural values and customs. Some government organisations find it difficult to adapt to a culturally appropriate process. For example, a health clinic built some time ago without community input had just one doorway. This is usually fine but in this particular community, culturally, men and women or poison cousins would not go into the same building via the same entry. So the men stopped going to the health clinic. When the Apunapima board became involved, they addressed this issue and built another doorway so that the men could come back and use the clinic as well.

Government departments have agreed there needs to be more community control in Indigenous organisations. It’s nuances like this that governments do not understand in terms of the nature of the community, or the particular cultural protocols they should follow. Rather than the government imposing decisions, those who live in the community actually know what is needed. There are differences in the models of service delivered and government departments need to have a tailored approach to each community rather than a one-size-fits-all approach.

How can directors and community leaders build their governance capability?

The area I’m most involved with is finance capability. Finance professionals such as CFOs, auditors and advisers need to make sure they take the time to explain and present concepts to ensure that they are understood by less experienced directors. Training play a big role in building the understanding. For directors, it is also the experience of being on a board with other experienced directors to broaden the skill base throughout the organisation. If you have boards with a mix of older and younger people coming through, that helps to build the knowledge and skill set of the next generation.

With many boards we deal with, we present financial information with graphs, charts and diagrams that are easier to digest than a page full of numbers.

Communication with local communities is also a hurdle in the Indigenous governance space. One of the recommendations in the report by the Australian Charities and Not-For-Profit Commission (ACNC) is for smaller organisations to be exempted from having an AGM. I think it is important that Indigenous organisations make sure that they communicate with members if they decide not to hold an AGM.

Indigenous board progress will continue to develop as skill gaps are bridged, confidence and knowledge are built through training expertise and input from local communities is harnessed.