Agenda

  • Date:01 Feb 2016
  • Type:Company Directors Magazine

A round-up of recent governance news.

Directors need to prioritise information governance

Businesses that don’t prioritise information governance expose their operations to higher risks, according to a specialist in the area. James Price, managing director of information management business Experience Matters, says there are consequences if directors don’t take their information governance responsibilities seriously.

“If [directors] don’t impose information governance standards, they will fail,” he claims.

According to Price, businesses that don’t address information governance not only carry higher risks than businesses that do take this issue seriously, they also have higher costs and lower productivity.

To address this, he says directors must put in place key performance indicators that measure how well senior management approaches information governance.

When it comes to measuring and management, he says the idea is to start small and ensure the business is accurately keeping simple information such as first and last names and telephone numbers of its customers. “If you get this right, data quality will improve,” says Price.

While this may seem basic, Price cites one insurance business that establishes relationships with 1.7 million customers a month as an example of why information governance matters. A business in this position must store its customers’ information accurately or risk serious problems down the track.

Businesses that don't prioritise information governance expose their operations to higher risks.

As to the correct role for the board when it comes to information governance, Price says it’s up to the directors to determine who in the business is responsible for managing information. Frequently, it’s left up to the IT department to manage information, he says. But the IT department’s role is only part of the solution.

Price says the real value of information depends on its context. This determination requires human judgement, which means software solutions that ostensibly effect proper information management are only a portion of the tools needed to manage information properly. This is why areas of the business aside from IT need to be involved in information governance.

Ideally, the senior manager responsible for information will have a direct line to the chief executive. Businesses that do this demonstrate that information governance and management is a priority for the enterprise.

Additionally, Price says some businesses are rethinking the way they frame information governance. Some now see themselves in the business of information. Price names a large construction and mining equipment business as an example. The business has attached sensors to the parts of each piece of its equipment, to give management good information about when parts need to be replaced or serviced. This allows the business to operate its equipment more effectively.

Ultimately, businesses that take a proactive approach to information put themselves at a competitive advantage compared to those that don’t treat information governance as a critical commercial issue.


Henry Bosch recognised as Life Fellow

Henry Bosch AO has been awarded Life Fellow status by the Australian Institute of Company Directors (AICD) in recognition of his extraordinary contribution to AICD and corporate governance.

Described as a “founding father” of corporate governance in modern Australia, Bosch has been instrumental in shaping the field of directorship. Over his distinguished 42-year career, he has served on 35 boards in the private, public and not-for-profit sectors.

At the forefront in raising corporate governance standards in Australian companies, Bosch has advocated a number of good governance principles – for example, the separation of the roles of CEO and chair, guidelines for directors’ conduct, and an active governance role for shareholders. The impact of his work can be seen in the increasing willingness of shareholders to demand better performance from the companies in which they have invested and, in particular, higher standards of performance and accountability from company directors.

Bosch was chairman of the Working Group on Corporate Practices and Conduct, which produced the first Australian Corporate Governance Principles and subsequently the chairman of the committee of Standards Australia, which developed the Australian Standard on Corporate Governance.

In addition, Bosch has provided a notable contribution to AICD as one of its longest standing facilitators. Over the last 20 years, Bosch has facilitated the Company Directors Course and up until most recently, he delivered the short course, The Role of the Chair.

It is a rare honour to receive life fellowship, with only 30 being awarded by AICD in its history.


The big question

Question

Is there a legal requirement for sub-committees to take meeting minutes?

Answer

In short, unless the company’s constitution or the sub-committees’ respective charters say otherwise, then strictly there is no legal requirement for the sub-committees to take and keep minutes of their meetings.

However, it is widely recognised and accepted as good corporate governance to keep minutes, as well as providing a practical means for the sub-committees to keep track of their decisions, activities and objectives.

Keeping minutes also affords sub-committee members a degree of protection in the event that one of their decisions is challenged in the future – having minutes available allows the sub-committee members to provide evidence of how and why a particular decision was made.

Keeping minutes also affords sub-committee members a degree of protection in the event that one of their decisions is challenged in the future – having minutes available allows the sub-committee members to provide evidence of how and why a particular decision was made.

This Q&A is taken from Director Assist, a complimentary member service operated in partnership with IFX. Answers are provided by a network of specialist practitioners. For more information click here.

Elizabeth Proust elected as AICD chairman

One of the nation’s leading directors, Elizabeth Proust AO FAICD, has been elected chairman of the Australian Institute of Company Directors (AICD).

Proust has been a director of the AICD since March 2014 and held leadership roles in the public, private and not-for-profit sectors for more than 30 years. She is chairman of Nestle Australia, chairman of the Bank of Melbourne and a member of the JP Morgan Advisory Council. She is also deputy chairman of the Catholic Church’s Truth, Justice and Healing Council.

“I am honoured to chair the AICD during a significant period in its growth. I strongly believe in the value of good corporate governance and am excited by the prospect of continuing to build our reputation as the voice of directors in Australia,” Proust said.

John Brogden, AICD managing director & CEO said: “Elizabeth’s appointment will enable the AICD to continue its role of promoting excellence in governance and advocating on behalf of directors. Her passion for issues such as gender diversity and public policy reform will be of great benefit to the organisation as it seeks to increase its impact.”

Proust replaces acting chair Yasmin Allen FAICD, who was appointed when Michael Smith stood aside from the role in September. Smith has resigned from the board in order to concentrate on his duties as chair of convenience store chain 7-Eleven.

“We thank Michael for his four years’ dedicated service on the AICD board, including his more than two years as chair,” Proust said. Further recent changes to the AICD board include:

Three new directors joined the board in 2015: Michael Coleman FAICD as NSW division director, Kathy Gramp FAICD as SA/NT division director, and Liesel Wett as ACT division director.

Yasmin Allen FAICD has stepped down as national director.

Anne O’Donnell FAICD, Kathleen Conlon FAICD and Kevin Osborn FAICD have departed the board following the completion of their terms.

The AICD welcomes our new board members, who each bring with them extensive experience as directors, and acknowledges those departing directors for their dedication and service to our organisation.

Full biographies of our directors are available on our website.

The composition of the board is now as follows:
  • Chairman: Elizabeth Proust AO FAICD
  • National director: Peter Hay FAICD
  • Division directors: David Bayes FAICD, Michael Coleman FAICD, Kathy Gramp FAICD, Dr Sally Pitkin FAICD, Rod Roberts FAICD, Gene Tilbrook FAICD, Liesel Wett FAICD

Governing a global company

The current era of broader and faster globalisation presents new questions and challenges for corporate governance and oversight. But what are the implications in terms of boardroom composition, practices, and the necessary skill sets for directors and what constitutes an effective global board?

This is the question that Marsh & McLennan and the National Association of Corporate Directors (NACD) has sought to answer in a new report, Governing the Global Company, which states that despite the rise in international corporate business activity in nearly every industry, little has been written about the challenges of governance in a global organisation.

The report sought the opinion of nearly 30 experienced directors serving on the boards of companies domiciled in Europe, North America and Asia. It found that as globalisation continues, the geographic diversity of boards will also increase, as companies seek more directors with international experience. However, with that comes additional risk and responsibilities. The report identifies three ways in which boards need to respond to global governance demands and complexity:

  • Board composition with an emphasis on increasing geographic diversity and international experience.
  • Board processes and the importance of well-planned agendas and site visits.
  • The expertise of individual directors.

The report highlighted a number of top issues for the global board, with risk oversight a key priority, breaking down risk into three key categories: geopolitical, regulatory, and legal and compliance. In a context of proliferating geopolitical risks, the report highlighted a wide range of geopolitical issues that are a clear concern, and stated that global boards have greater engagement with management on these issues, especially when considering entry to new markets and countries. Given this, interviewees noted the importance of having directors who possess a deep political sensibility and local contacts in key countries to provide valuable guidance to management.