Strengthening society through world-class governance

Our new vision for the AICD reflects the commitment of members and staff to making a positive impact.

I took up the role of CEO one year ago and an early impression was the passion of our people — members, staff and faculty — for the objectives of the AICD. That impression was reinforced in the past week by the results of our recent member survey, which highlighted again that an individual becomes and remains a member of the AICD to be a better director, to be aware of their responsibilities and obligations, with the objective of creating stronger boards.

In the past year, we have confronted serious issues with roots in governance practice that have angered the community and contributed to the erosion of trust in our society. It is not an exaggeration to say that our community is questioning governance practices in the most fundamental ways. The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has been impelled to ask at what point breaking the law became a choice based on a cost-benefit calculation.

Fundamental questions have been raised about the role of the board, corporate structures, accountability frameworks, oversight practices and remuneration that are relevant to any organisation, regardless of size or sector. The Royal Commission’s interim report, as well as the Australian Prudential Regulation Authority’s Prudential Inquiry into the Commonwealth Bank of Australia, make abundantly clear, in case study after case study, that governance is not an abstract concept leading to intangible outcomes.

Our mission was previously expressed around a commitment to excellence in governance, and that passion for excellence remains. It is now time for our mission to emphasise the most fundamental promise from achieving excellence in governance: the benefit to society.

To be the independent and trusted voice of governance, building the capability of a community of leaders for the benefit of society.

The AICD must be — and be seen to be — independent in its activities and education programs. Based on research and the experience of practising directors and specialists, our teaching and policy positions will be non-partisan. The community expects the AICD to act without vested interest. Our practice is focused on creating and preserving the independence of directors. By acting independently and being seen as such, the AICD will encourage people to trust our motivations, even if we hold different views.

Our focus will remain on building capability in our membership and clients through education programs and research, and advisory and advocacy work. In the past year almost 5000 individuals undertook the Company Directors Course and we had almost 20,000 enrolments in our webinars. However, we are focused beyond capable individual directors. Working with over 250 clients in a range of industries — including public administration, healthcare, financial services, faith-based organisations and schools — we have provided support through governance consulting services, board reviews and in-boardroom governance education. All that activity continued at the benchmark-quality level you expect from the AICD, based on the feedback from surveys completed immediately after each course or event.

We are building the capability of a community of leaders, and the 43,000 members of the AICD genuinely represent the Australian community. We have more not-for-profit directors — working in health, social services, schools and charities — than ASX directors; we have more small business owners than public sector members. By number and proportion in our economy, this is the right outcome. That breadth in our membership allows the AICD to gather views and experience across the community like no other governance body in Australia, tackling a wide range of issues that confront directors in startups right through to ASX 50 companies.

It is essential that our work on good governance with that community translates into benefits for society. Both the Royal Commission into Institutional Responses to Child Sexual Abuse and the banking Royal Commission illustrate the implications for society when governance falls short. The former revealed stories of gross abuse and neglect, and the bracing reality of those stories was that responsibility does not solely fall to the individuals who explicitly sought to abuse the rights of the vulnerable. There were often endemic, systemic problems within organisations and sectors.

Based on the Royal Commission’s recommendations, the AICD this year introduced a new education program, Governing to Protect Vulnerable People. The program offers directors on boards that provide essential services to children, the elderly, the disabled, and those who are incarcerated or struggling with addiction, with the principles and frameworks to ensure that those in their charge receive appropriate care, support and protection.

The banking Royal Commission is an obvious focus this year. We share the community’s deep concerns with the indefensible behaviours and practices revealed in the Royal Commission, and have made clear our view that boards have a responsibility for culture and outcomes.

The AICD has examined the evidence and summaries throughout the Royal Commission and provided frequent briefings and updates to members, reflecting our understanding of the issues. We will respond to the Royal Commission’s interim report through our education program, director resources and guidance for members, and in a submission to the Royal Commission on the policy questions raised to this point.

On governance issues that matter to society, you can expect the AICD to present independent views on best-practice based on research and the experience of the director community — because world-class governance is critical to re-establishing trust in the institutions in our community. To quote from CEDA’s 2018 Community Pulse: “For government to have the political capital to implement the right policy settings, the community needs to have trust that the benefits will be shared broadly”. A similar sentiment could be expressed for any institution in our society, public or private.

It is critical that boards and leadership teams drive the governance changes we need to re-establish trust. Trust in society is a fundamental precondition to tackle the significant changes and uncertainty we will face in the future of work, changing business models, increasingly complex organisations and rapid advances in technology. Re-establishing trust is essential to address the challenges we can already see emerging in the global political and socio-economic environment. Commitment to world-class governance will be required to thrive in this world. To prosper, we need capable people and the right structures in place throughout any organisation. The AICD aims to enable both, for the benefit of society.