All articles in Volume 12 Issue 13

Government grants double diversity scholarship program

9 July quote

A grant from the federal government will double the amount of places available for the next round of the Board Diversity Scholarship Program, with the first round of scholarships for women from rural and remote areas opening on Monday 14 July.

In a bid to lift female representation in senior executive positions and on Australia’s boards, the government will match the Australian Institute of Company Directors’ contribution to the scholarship program through a $650,000 grant.

This means that 140 scholarships will be available for women to attend one of Company Directors’ highly-regarded governance education programs.

Recipients will also receive 12 months free membership of Company Directors and, in some instances, travel and accommodation expenses.

“This scholarship round is the latest in a series of initiatives we have undertaken to help improve gender diversity in our boardrooms. It represents a serious commitment of resources from both the federal government and ourselves as we recognise that the business case for board diversity is very strong,” says John Colvin, CEO of Company Directors.

“More than 3,600 women applied for the two rounds of scholarships we offered in 2010 and 2012 and some recipients have achieved great success in finding board positions. We are now adding dedicated scholarships for women in remote and rural areas to our program, as well as scholarships for women working in male-dominated sectors, as we recognise the particular difficulties both these groups may face.”

Three types of scholarships will be offered over the next two years:

  • Rural and Remote Scholarships will provide women living in rural and remote locations with a full scholarship (including an allocation for travel costs) to undertake the Company Directors Course to develop their executive or professional director careers.
  • Board Ready Scholarships will support women seeking to transition from executive careers to board careers or professional non-executive directors to advance their board careers.
  • Sector Development Scholarships will provide women currently working in executive roles in male dominated sectors with support to undertake governance education aimed at developing their executive careers.

Since the launch of the Board Diversity Scholarship Program in 2010, there has been an encouraging improvement in the number of women on boards.

According to real-time statistics compiled by Company Directors, women held 18.2 per cent of positions on S&P/ASX 200 boards at 28 May 2014, compared to 8.3 per cent in 2010. Women have also made up 31 per cent of new appointments to ASX 200 boards so far in 2014.

Females now hold 22.3 per cent of directorships on ASX 50 boards and 24.6 per cent of the directorships on ASX 20 boards.

“More needs to be done, but I am confident the practical steps we have taken are the best way to achieve the desired outcome. We want more high-performing women in the pipeline for board positions and to be recognised, on their merits, as among the best candidates for directorships in Australia going forward,” says Colvin.

The scholarship program is just one of several board diversity initiatives Company Directors has launched over the past four years. For example, it has established a Chairman’s Mentoring Program that is now in its third year, taken a leadership role in the development of the ASX reporting guidelines on diversity and published a detailed report on female appointments to ASX 200 boards from 2010 to 2014.

In another development, the Victorian Government is co-sponsoring 34 scholarships for women on not-for-profit (NFP) boards to undertake the Company Directors Course. Successful applicants will also receive a year’s free membership of Company Directors.

This third round of the Victorian Women’s Governance Scholarship program is being facilitated by a grant of more than $187,000 from the Victorian Government as well as a contribution by Company Directors itself.

President of the Victorian Division Council of Company Directors, Bill Scales AO FAICD, observes: “These scholarships are part of our commitment to supporting directors in the NFP community, who constitute a large part of our membership.

“More than 70 women have previously won scholarships in this program, boosting their own knowledge and skills to the ultimate benefit of the boards on which they serve. The NFP sector faces particular challenges and the winners will have the opportunity to network with peers in similar positions.”

Applications for the Victorian Women’s Governance Scholarship program close on 18 August 2014. For further information, visit www.companydirectors.com.au/vicwomenscholarship


Cut through questions to survive digital disruption 

Boards need to ask “cut through” questions of management to punch through any complacency and hold it to account on digital strategy.

That is the advice from Damien Tampling, head of digital strategy, transformation and investments at Deloitte, in the wake of the release of a new report from his firm.

Called Harnessing the ‘bang’ ─ Stories from the digital frontline, the report singles out six industries, representing one third of the $1.4 trillion Australian economy that will be subject to the next big wave of disruption. Among these are government services, including health, education, utilities, transport, post, and agriculture.

The report is a follow up to Digital disruption – Short fuse, big bang? where Deloitte mapped how exposed Australia’s key 18 industries were to disruption.

Tampling suggests the following questions for boards to ask management:

 1. What innovations has our organisation developed over the past two years?

    • What innovations have our major competitors developed in the same period?
    • Are we leading, keeping pace with, or falling behind our competitors?

 2. What are the most disruptive innovations in our industry?

    • How can we better test or harness these emerging business models?

3.  Are we sufficiently curious about our customers

    • Do we collect enough data often enough, from our customers?
    • Do we make good use of it?
    • Do we listen to them?

4. How are our customer behaviours changing as a result of digital products and disruptions?

    • What does this mean for our products?
    • How can we respond to and better harness the opportunities these changes present (remembering everything is about the customer)?

5. On an ongoing basis, how do we better sense and shape the trends in our industry?

    • What sensing and sharing tools have we developed?

6. What is our organisation’s innovation culture?

    • Are we willing to take innovation-related risks or is our organisation too tentative and, therefore, in danger of remaining stuck in the ways that it has operated in the past?
    • Do we encourage orthodoxies to be challenged?

7. How agile are our organisation’s IT systems given these are an increasingly important element of a company’s capacity to be innovative?

8. Has our organisation created any innovative partnerships?

    • Are there others we should be forging?
    • In what ways are we adding value into a broader ecosystem that enables us to more quickly learn and better compete?

9. What worked? What didn’t? Learnings from hindsight?

    • Can you see more change on your horizon?

10. Who are considered the brightest and most influential entrepreneurs in our industry?

    • How do we forge stronger relationships with these people?

11. What can we learn from other industries across the world that have been materially disrupted?

12. What’s next? How would we break our own business if we were an attacker?

13. Who on our board would we regard as entrepreneurial, innovative or digital in spirit, reputation and with a successful track record who helps us as board be better at asking the right questions and post the right challenges to management?

In a nutshell, Tampling says:

1. Ask your CEO about the company’s digital strategy. If he or she says “let me ask IT”, you have got a problem. Digital strategies should be integrated with the firm’s vision.

2. Ask for assessments of digital investments. Did anyone track the success of the company’s new app? What’s the data? Or was it just a distraction?

3. How many partnerships, alliances or acquisitions has the firm made in the past three years with innovative small and medium-sized enterprises? If the answer is none, you had better hope you are generating innovations internally.

4. What do your customers and employees think of your firm compared with competitors? Innovation leader? Solid trier? Or musty has-been resting on its laurels?

5. What signs can you see that your firm has an innovative culture?

    • Do people socialise and collaborate?
    • Do they work in flexible teams
    • Do they use the latest technology themselves?

Tampling adds: “In a world where things are changing so rapidly and it is becoming so critical to get your digital strategy right, smart boards are starting to think about how they are reshuffling their board composition to have someone who has that innovative, digital and entrepreneurial spirit and reputation.

“Not only will that person ensure the board is asking the right questions of the executive, but he or she can also be a mentor to other members of the board and help them move up the digital scale.”

While Tampling believes bringing in advisers can also be useful, he cautions: “Digital disruption and digital transformation is not a destination. It is ongoing journey. It affects the business every single day and at a rapid rate. Calling in a consultant once a quarter is probably not going to give the board enough of the information flow it needs to truly deal with digital disruption and innovation. Making permanent space at the board level is more likely to keep the journey going.”


A compliance fillip for small businesses 

An estimated 372,500 small Australian businesses are set to benefit from administrative changes to pay as you go (PAYG) instalment thresholds.

Minister for Small Business, Bruce Billson, told a G20 conference on small and medium-sized enterprises (SMEs) in Melbourne last month that his government planned to reduce compliance costs for taxpayers by $56 million a year by reducing PAYG reporting requirements for a range of small businesses.

“By simply reviewing thresholds that are more than a decade old, we can cut the red tape burden which lands most heavily on small business,” he said.

“Around 32,500 small businesses will no longer have to lodge a business activity statement (BAS) simply to report their PAYG instalments.  A further 340,000 small businesses will still be required to lodge a BAS, but will no longer have to interact with the PAYG instalment system.”

The PAYG tax instalment system allows small businesses to pay portions of tax throughout the year to meet their expected income tax liability for the full financial year.

Billson added that the following threshold changes, which had not been reviewed since 2001/02, were being considered by the government:

  • Increase the business or investment income threshold from $2,000 to $4,000.
  • Increase the balance of assessment threshold from $500 to $1,000.
  • Increase the notional tax threshold from $250 to $500.
  • Remove the requirement for entities registered for GST to remain in the system even if they have a zero instalment rate.

If taxpayers no longer met the PAYG instalment thresholds, they would be automatically exited from PAYG instalments. The Australian Taxation Office (ATO) would write to each business and individual to withdraw their instalment rate.

If taxpayers still wished to pay instalments towards their end of year tax liability, they could voluntarily re-enter PAYG instalments by contacting the ATO on 13 28 61. 


ASIC fixes reporting anomaly

The Australian Securities and Investments Commission (ASIC) has released a new class order to clarify what directors and key management personnel (KMP) have to disclose about their company shareholdings in the upcoming reporting season. This was a result of the identification of an anomaly in the regulations by the Reporting Committee of the Australian Institute of Company Directors.

The relief means that directors and KMP only need to disclose equity instruments they have in the reporting entity or its subsidiaries rather than every company they have an investment in.

Class Order [CO 14/632] Key management personnel equity instrument disclosures addresses drafting anomalies in KMP disclosure requirements relating to:

  • Equity instruments (such as shares and options) held by KMP or their close family members.
  • Certain transactions involving equity instruments between the disclosing entity and members of KMP or their close family members.
  • Options or rights over equity instruments held by KMP or their close family members.

Lynda Tomkins, Ernst & Young’s Australian International Financial Reporting Standards Leader, explains that the anomalies emerged after steps were taken last year to better align Australian disclosure requirements with those internationally. To do this, disclosure requirements were moved from accounting standard AASB 124 Related Party Disclosures (AASB 124) into the corporations regulations.

However, unintentional drafting inconsistencies resulted in the resolutions requiring directors and KMP to disclose all their equity and investments  and would have resulted in additional work and unnecessary information being released.

“The class order brings things back to what directors had to disclose in the accounting standards and moves these disclosures to the remuneration report,” says Tomkins. “It only applies for financial years ending on or before 30 September 2014 because the regulations are expected to be changed by then.”

“Had the inconsistencies not been addressed, users of the financial report would have potentially been provided with a great deal of information that would be of little relevance,” says Alasdair Whyte GAICD, assurance and advisory partner at RSM Bird Cameron.

But he adds that with the reporting season upon us, the situation is an opportune reminder that directors should be questioning management regarding its systems to track and monitor director’s equity holdings that remain subject to disclosure within the director’s report. “In addition, directors must ensure that management is aware of equity holdings in the company and its subsidiaries that are held via director related entities and the close family members.”


Calling all NFP directors and executives

Are you involved in the governance of a not-for-profit (NFP) organisation as a director or executive? If so, we need your input into Australia's largest director study examining trends in NFP governance, the 2014 NFP Governance and Performance Study.

Since it was first launched in 2010, the study, formerly known as the Directors Social Impact Study, has helped the Australian Institute of Company Directors build up its understanding of governance principles across the NFP sector compared to the for-profit sector. It also provides meaningful information on the challenges NFP directors face.

The study is now the largest of its kind in Australia. Last year, 2,132 directors responded to our online survey and over 50 directors took part in eight focus groups across Australia. And this year, we hope to get an even better response.

Among many other areas, this year’s study will investigate the link between governance and performance and how NFP boards can measure performance. It will also examine the sub-sectors of aged care and education.

If you are involved in the governance of an NFP organisation as a director or executive, please respond to the online survey by clicking here. It is open until 25 July and should take less than 20 minutes to complete.


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