All articles in Volume 12 Issue 18

Director tenure moves to front burner

19 Sep lead image

The appropriate term for individual directors needs to be considered more closely when creating and maintaining a high performance board with the right mix of competencies, according to recruitment and consulting firm Heidrick & Struggles (H&S).

The question of tenure has been brought to the fore by four convergent trends that have given the issue new momentum, H&S said in a recent note to clients.

The first is the bar for director independence has been raised considerably, as someone who has been on the board for 15 years and working with the same CEO, could become too cosy with management and cease to be genuinely independent.

Secondly, boards, institutional investors and advocates for good governance increasingly frame director tenure as a question of board "refreshment", with a reliable mechanism needing to be found to bring new ideas and fresh perspectives to the board.

The third point highlighted by H&S is that the emergence of new technologies means many boards want and need to tap into candidates on the cutting edge of this change, yet many of these potential candidates are younger than the average director. Limiting the length of tenures could help to pave the way for these candidates.

Finally, H&S adds that limiting tenure by either age or term will also increase opportunities to create more diverse boards.

For a full copy of the report, click here.

Red tape stifling NFP sector

Policy, regulation and funding have been identified as the biggest negative impacts on the Australian not-for-profit (NFP) sector.

Findings from the Pro Bono Australia State of the Sector Survey 2014 identified federal government policy and regulation and funding as having the biggest negative impact on performance over the last 12 months, with these issues likely to be further exacerbated over the course of the next year at both a federal and state level.

High levels of uncertainty over these issues are impacting on the ability to manage and make strategic decisions, the survey found. However, specific components of the regulatory and policy framework were cited as having a positive impact. They include:

  • A report-once and use many times reporting framework
  • A one-stop online information source for NFP organisations
  • The Australian Charities and Not-for-profits Commission (ACNC)
  • Charitable status and eligibility through the ACNC national register for charities, community organisations and NFP organisations

Eighty two per cent of respondents stated the ACNC as important or extremely important for developing a thriving Australian NFP sector, with a strong preference for ACNC regulation rather than co-regulation, self-regulation or regulation through the Australian Tax Office.

The survey also identified a mechanism to expand and strengthen partnerships between business and NFP organisations and a social finance task force to develop a strategy to increase the capital available to the NFP sector as key priorities for government.

For a full copy of the report, please click here.

Call for streamlined awards

Small business owners have called for modern award documents to be shorter, simpler and use more examples and less jargon.

A report released by the Fair Work Commission questioning 47 small business owners about the usage and usability of modern awards found many worried about not understanding the system and as a result, paid staff above award pay rates as a form of insurance.

Similarly, some business owners have changed their employment practices by choosing not to hire or to use contractors to avoid dealing with the awards.

The lack of clarity around the awards has resulted in many small business owners feeling disempowered, with the existing layout of modern awards eliciting negative sentiment and considered daunting by others.

Many said the documents were difficult to use, complex and challenging, but in line with their low expectations of a government, regulatory policy document.

This did not align with the participants’ priority focus, which was to maintain business profitability at a time of constant challenge and change.

To combat this, the participants called for certainty, efficiency, ease and support around modern awards, with a number of stand-out improvements recommended.

These included:

  • Reduced length
  • Clearer table of contents, i.e. with the amendment listing removed
  • Increased use of tables
  • Inclusion of examples
  • Simpler language
  • A reduced need for interpretation and calculations (of wages)

A full copy of the report can be found here.

Best leaders are insatiable learners

Leadership as a subject tends to overshadow everything else when raised. Small fortunes are spent by organisations trying to coax leadership from their executives – presumably with the ultimate aim of improving the organisation’s performance, but can it be learnt or is it a trait only found within certain individuals?

In an interesting twist on the topic, Bill Taylor, who co-founded US magazine Fast Company, discussed constant learning as a key attribute of leaders in a recent blog.

Quoting legendary US thinker, the late John W. Gardner, Taylor said: “Be interested. Everyone wants to be interesting, but the vitalising thing is to be interested. As the proverb says, ‘It’s what you learn after you know it all that counts.’”

Taylor then stated: “In these head-spinning times, even more so than when John Gardner offered his timeless advice, the challenge for leaders is not to out-hustle, out-muscle, or out-maneouvre the competition. It is to out-think the competition in ways big and small, to develop a unique point of view about the future and get there before anyone else does.

“The best leaders I have gotten to know are not just the boldest thinkers; they are the most insatiable learners.”

The blog raises some possibly awkward questions we need to ask ourselves – such as whether we spend most of our time with people exactly like us.

Taylor contends the best leaders do not, instead they are constantly undertaking new things.

Taylor urges us, as leaders or aspirant leaders “to seek out new sources of inspiration, to visit a lab whose work you do not really understand, to attend a conference you should not be at.

“When you’re a kid, every day is full of firsts, full of new experiences. As you get older, your firsts become fewer and fewer. If you want to stay young, you have to work to keep trying new things.”

To read the full blog entry, please click here.

Micro SMEs missing out on growth

Micro businesses are missing out on growth opportunities being leveraged by other small to medium-sized (SME) businesses by failing to develop a business plan.

The latest RSM Bird Cameron’s thinkBIG 2014 survey into the Australian SME sector found smaller SMEs are significantly less likely to undertake formal business planning which sets outs strategic goals and identifies ways to get there.

Sixty three per cent of businesses with three to five employees complete a business plan, the study found, a figure that drops to 60 per cent in businesses with one to two employees. Only 40 per cent of sole ownership businesses have a business plan.

Unsurprisingly, larger businesses were more astute at strategic long-term planning, with 95 per cent of firms with 50 to 99 employees preparing a business plan. These businesses are also much more likely to complete a plan on a yearly basis, with 77 per cent reporting that they do so.

Andrew Graham, national head of business solutions at RSM Bird Cameron, said: “A good business plan can set a clear path towards growth that many smaller businesses are not taking. Regularly updating the plan is an important factor in growth.

“Business planning remains key for SME owners. Many industries continue to face scrutiny from various authorities and financial institutions. Having a solid business plan is critical in meeting financing requirements,” he said.

More information can be found here.

New insight into mental health

Attending work while suffering a depressive illness could help employees better manage their depression more than taking a sickness absence from work, a new study has found.

The research has implications for boards who are considering an organisations’ human resource policies and the impact these policies have on strategic outcomes.

The collaborative study between the University Of Melbourne and the Menzies Research Institute at the University of Tasmania estimated the long-term costs and health outcomes of depression-related absence as compared to individuals with depression who continue to work.

Researchers calculated the costs based on lost productivity, expenses associated with medication and use of health services as well as the cost of replacing an employee who is absent from work and unwell.

It found that continuing to work while experiencing a depressive illness may offer employees certain health benefits, while depression-related absence from work offers no significant improvement in employee health outcomes or quality of life.

It suggests that future workplace mental health promotions strategies should include policies that focus on promoting continued work attendance via offering flexible hours and modification of tasks or working environment.

Lead researcher Dr Fiona Cocker from the Melbourne School of Population and Global Health said a greater understanding of the costs and consequences of both absenteeism and presenteeism would allow for more informed recommendations to be made to the benefit of employees and their employers.

To read a fully copy of the study, please click here.

Firms slow to embrace real-time tax

More than 23,000 businesses have used the Australia Tax Office’s (ATO) new standard business reporting (SBR) tool, since it was introduced in July 2010.

However, this represents just 1 per cent of the two million micro and small businesses in Australia, well below the estimated take-up rates.

The figures released by the government agency has revealed that overall, nearly 600,000 business compliance reports are being electronically lodged with the ATO as it moves towards a real-time tax system. However, this figure still remains below initial take-up estimates.

The ATO has said the move to real-time reporting will allow business systems to interact with it and other government agencies more seamlessly. It added that pretax benefits to business were expected to reach $800 million after the fourth year.

The data revealed about 568,500 reports had been lodged using the SBR tool by the end of June. Almost 70 per cent of these were recorded in the 12 months prior and mainly involved people lodging activity statements, PAYG statements and tax file declarations.

The ATO has said it expects the number of real time lodgments to increase as it continues its move towards eliminating costly paper-based interactions with business.

King announced as Sundance chair

Former Leighton Holdings CEO Wal King AO FAICD will succeed George Jones AM FAICD as chairman of Sundance Resources after Jones retires following the annual general meeting in November.

King has held the position of deputy chairman of Sundance since May this year, while Jones has been chairman since 2006 and held the position until 2009, when he resigned for health reasons. He returned to the chairmanship in July 2010 following a plane crash that killed the entire board of the company.

King was CEO at the construction and contracting giant Leighton for 23 years.

In another market move, City of Melbourne CEO, Dr Kathy Alexander MAICD has resigned from the role to pursue new opportunities and spend more time with her family. She will remain in the role until 3 December 2014 while the organisation undertakes a recruitment program.

Dr Alexander has held the position for six years and during her tenure has led several major capital works projects, including the Swanston Street redevelopment and the construction of major community infrastructure, including Boyd in Southbank, Carlton Community Centre and the new Docklands Library. She has been instrumental in driving what will be the council’s largest investment in its history, the renewal of the Queen Victoria Market.

Boardroom Report disclaimer:

The opinions in Boardroom Report do not necessarily represent the views of the publisher nor the publication. Every effort has been made to ensure accuracy, but no responsibility is accepted for errors. All rights reserved.