Vol 7 Issue 5 March 25 2009

  • Date:25 Mar 2009
  • Type:Boardroom Report

Good governance pays off

Australian companies with better corporate governance outperform poorly governed companies, particularly in relation to earnings per share and return on assets, but also when it comes to one year sales growth.

That is the finding of a recently released Treasury Working Paper, prepared by Treasury’s Rebecca Brown and the Australian National University’s Tue Gørgens.

NFP reporting guide released

The Institute of Chartered Accountants in Australia has released an updated edition of its leadership paper, Enhancing not-forprofit annual and financial reporting. It was developed to guide not-for-profit (NFP) entities on the most transparent way of reporting their annual and financial obligations, given the current economic environment.

“There is increasing momentum among organisations for reporting that provides stakeholders with an understanding of the key drivers of an entity, and using KPIs to measure performance. This enhanced reporting applies equally to the NFP sector as it does to all sectors of the community,” says Kerry Hicks, the institute’s head of reporting.

The rules of engagement

Stakeholder communications requires the same rigour, preparation and discipline as other business activities, especiallygiven that you may now have to communicate more bad newsthan usual, warns Matthew Horan, senior communications advisor at Cato Counsel.

“Some directors or executives may spend hours or weeks preparing for a court case or a presentation to a major customer, rehearsing and making sure that the message is right or the evidence is correct. Good directors will apply the same rigour to stakeholder communications,” says Horan.

Advice on using advisors

Directors often rely on a host of experts for advice – from lawyers and accountants to investment bankers and management consultants. But at the end of the day, directors are responsible for all the decisions they make and potentially liable for them if things go wrong.

So how do they know if the advice they are receiving is sound and whether they are evaluating it effectively?

We asked John Allpass FAICD for some pointers. As chairman of Envestra and a director of several companies including MBF Australia and BUPA Australia Holdings, he has received advice from numerous experts over the years. As managing partner of KPMG (Queensland) and a member of AICD’s Reporting Committee, he has also passed on much advice to directors and companies.

Ways for women to rise to the top

Female participation in the senior ranks of business has not just stagnated, but has gone backwards since 2006, according to recent data from Equal Opportunity for Women in the Workplace.

“More than half the companies in the ASX200 have no women on their boards,” says Barbara West, director of consultancy firm 100% Project. “Only two per cent of chairs and CEOs are women, only 8.3 per cent of board directors are women, and only 10 per cent at the executive management level are women.”

 

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