Building an. Effective Board

Transcription

1 Building an Effective Board

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3 Who we are Established in 1996, Effective Governance is now Australasia s largest and most experienced independent corporate governance consulting firm. Our mission is to deliver measureable value to our clients by assisting them with their governance, strategy and risk needs. We believe that in order for governance to be effective, outcomes or recommendations from us must be specifically tailored to the type of organisation, taking account of its industry dynamics. Innovation Value Real World Approach Research Having undertaken over 350 board reviews in the last ten years, we have built a reputation for delivering practical results in ways that promote unity and alignment amongst all stakeholders and key outcomes to assist the corporate vision to become a reality through achieving a High Performance Board.

4 Who we work with A major driver of of governance systems is the regulatory environment in which they operate. As a result of our extensive experience, you can be assured that we begin any assignment with a broad understanding of the governance aspects and practical needs of your organisation. For each different type of client, we assist you to develop a: ASX/Public Company High Performance Board that sustainably ensures stakeholder confidence. Private Company High Performance Board that sustainably ensures shareholder cohesion. APRA Regulated Company High Performance Board that sustainably ensures soundness and prudence. Charity/Not-for-Profit Entity High Performance Board that sustainably balances compassion/mission and business imperatives. Government Entity High Performance Board that sustainably demonstrates accountability. Family Company High Performance Board that sustainably ensures separation of family and business matters.

5 How we can assist you Effective Governance has developed tailored products and services to assist in the achievement of a High Performance Board, that can add value to the organisation it serves and governs. BOARD REVIEW BOARD ENHANCEMENT and MATURITY CEO REVIEW STRATEGY and RISK GOVERNANCE REVIEW ADVICE and ADVOCACY BOARD ESTABLISHMENT

6 Board Review Given the board s key role in setting the strategic vision of the organisation and monitoring of management, small improvements in the board s performance can have a profoundly positive impact on the effectiveness of the organisation. A board review allows the directors time for self-reflection and is the most effective means for identifying areas for improving performance. Leading practice strongly recommends that a board review should not only involve the board as a whole, but also reviews the contribution of individual directors through an externally facilitated process of self and peer evaluation. Effective Governance utilises a holistic approach to board reviews through integrating boardroom dynamics with our proven High Performance Board Model, which is aligned to the eight ASX Corporate Governance Council s Corporate Governance Principles and Recommendations and similar leading practice guidelines. Effective Governance can assist you with: Board, chair and committee reviews; Individual director performance assessments (self and peer); Identifying skills gaps in your existing board.

7 High Performance Board Model Organisational Environment Organisation Type Legal Framework Constitution Strategy History The Board Environment Board Competencies Knowledge Skills Abilities Diversity Size Board Dynamics Board Structures Roles Processes Proceedures Commitees Board Behaviours Personality Values Norms Relationships Board Roles Strategy CEO and Executive Monitoring Risk Management Compliance Policy Framework Networking Stakeholder Communication Decision Making Work with and through the CEO and Executive Organisational Performance Approach: ONLINE SURVEY FACE-TO-FACE DOCUMENTATION WORKSHOP

8 Approach: 180 CEO 360 ONLINE SURVEY FACE-TO- FACE

9 CEO Review The CEO is the individual through which the vision and strategy of the board is realised and implemented. It is the most crucially accountable position in the organisation, the monitoring of which is the sole responsibility of the board, as the CEO is the board s only employee. CEO reviews are often challenging for the Chair, typically occuring shortly after the end of the financial year activities. An externally facilitated process not only removes this administrative responsibility, but also introduces a greater level of transparency and independence to the review, important considerations if the feedback to the CEO may not be in line with his or her expectations. A CEO review also provides the opportunity to appropriately delineate between the key remuneration components of a CEO, namely the behaviours that contribute to an increase in base salary and those incentive payments that relate to the performance of the organisation. Effective Governance can assist your organisation: establish quantitative and qualitative assessment processes and criteria; to conduct the CEO assessment, even if a formal arrangement is not currently in place; identify areas where the CEO s performance can improve; identify skills which the CEO may need to develop; assist in the de-selection of an underperforming CEO.

10 Approach: DOCUMENTATION FACE-TO-FACE WORKSHOP

11 Governance (Organisational) Review The underpinnings of corporate governance are the processes, policies and practices, which utilised throughout an organisation, ensure effective decision making. Often overlooked, they are the essential drivers of information and integrity that sustains an organisation. Areas of focus include: Ascertaining if the governance system adds value or is a burden to the organisation; Alignment of the organisation with an existing or new strategic direction; Adoption of leading practice governance systems and procedures; Compliance with national and international standards. If any of these questions cause you concern, Effective Governance, through our Corporate Governance Practice Framework can help review your governance practices and develop a system that addresses your concerns and adds value to your organisation. Governance systems are highly individualistic and depend on a number of factors such as your organisation s ownership, legal structure, regulatory environment and culture. As result, our approach is tailored for each individual client s needs. Role of the Board Board Structure Role of Individual Directors Role of the Chair Role of the Company Secretary Role of the CEO Defining Governance Roles Board Effectiveness Board Behavioural Dynamics Strategy CEO Monitoring Compliance Risk Management Policy Framework Networking Stakeholder Communication Decision Making Key Board Functions Improving Board Processes Corporate Governance Practice Framework Director Protection Board Evaluation Director Remuneration Director Selection Director Induction Director Development Board Meetings Board Meeting Agenda Board Papers Board Minutes Board Calendar Committees

12 Board Enhancement and Maturity A board is established to add value to an organisation. Like any asset it requires maintenance and enhancement that reflects the agreed board maturity level. Effective Governance can assist to enhance your board s governance practices through: Formally identifying and documenting the skills of your board; Providing director reward/remuneration advice; Reviewing and providing guidance to improve the documentation processes to enhance the decision making process of the board; Development of a board charter and committee terms of reference; Collating and providing feedback on board meeting evaluations; Assisting to optimise director induction and professional development and training. Board Maturity Model 5. Leading practice Governance practices are recognised by others to be of the highest standard and there is clearly a strong focus on continuous improvement. 4. Advanced Advanced governance practices are in place that exceed minimum performance and compliance requirements. Further improvements are required to be recognised as having leading practice. 3. Acceptable The minimum performance and compliance requirements in governance practices are in place. There is still room for improvement. 2. Developing Governance practices are below the essential requirements and there is significant room for improvement. 1. Rudimentary Governance practices are either non-existent or in the very early stages of development.

13 Board Establishment The establishment of a board is a watershed moment in the development of an organisation and represents an opportunity to bring a powerful new mix of skills and experience to bear on a common endeavour. Effective Governance can assist with the daunting task of establishing a board, encompassing everything from identification of skills required of board members that align with a formalised strategic plan, through to the development of a policy and procedures infrastructure. Getting these basics right is often the difference between a board which adds value to a business and one which is a distraction. The process of board establishment brings together all of the individual services of Effective Governance to ensure your organisation has the opportunity to engage as a High Performance Board from day one. Approach: DOCUMENTATION FACE-TO-FACE WORKSHOP

14 Strategy and Risk Strategy is the science and art of using the organisation s resources to achieve a specific outcome, commensurate with the board s appetite for risk. Risk management is the creation of processes to identify, report and manage risks and their consequences within the organisation. Risk and return are intimately linked concepts, as every major strategy involves risk of some form. Therefore, it is important to integrate processes for selecting the organisation s strategies with risk management in mind. Effective Governance can assist you: Review current strategy, implementation, monitoring processes and risk profiling; Facilitate a strategy and/or risk workshop; Develop a strategic and/or risk management plan for the organisation; Undertake strategic programming the alignment of the organisation with the strategic vision; Strategy realisation the implementation of the strategy. Advocacy and Advice Our commitment to governance is a passion and does not end with the products and services we deliver. As the largest governance firm across Australia and New Zealand, we have dedicated researchers who can distil the best of global practice to support and guide our clients. Effective Governance also provides leading practice governance content and presenters for courses run by the Australian Institute of Company Directors, Chartered Secretaries Australia and the Family Business Association. Our extensive publication record has positioned us as a leading voice in the evolution of corporate governance worldwide. We are especially versed and experienced in providing advocacy for indigenous and other special interest groups in the community.

15 Our Publications Research underpins all our governance advice and consulting activities.

16 Board Survey Approach Key standard topics include: Role Clarity Strategy CEO and Senior Executive Monitoring Risk Management Compliance Networking Stakeholder Communication Decision Making Board Dynamics Meeting Processes Committee Structure Policy Development

17 Board Survey Summary of Results Section Question Min Mean Max eg Rating Strategy CEO/Senior Management Team Oversignt 14. The extent to which the board ensures the organisation has the ability to deliver upon the strategic direction and the operational business plans (ie. human and financial resources) is: 15. The board s process for evaluating the CEO against the agreed criteria is: 16. The extent to which the board discusses CEO and senior management succession is: 17. The board s oversight of senior management s (excluding CEO) performance, including performance against KPI s is: Page Red Green Red Amber The quality 18. The of quality information of information contained in in the CEO s report is: is: Red Red Methodology FACE-TO-FACE Strategy 18. The quality of information contained in the CEO s report is: Number of Respondent CEO/Senior Management Team Oversight Very Poor 1 Min Mean Max eg Rating ONLINE SURVEY Very Dont Poor 18. The Average quality of Good information Good contained Know in the CEO s report is: Red Red The CEO s report provides the board with an update since the last board meeting and should contain: information on the current performance of the organisation; progress on strategy implementation, including reporting against agreed KPIs; any changes in the operating environment; compliance reporting; and operational activities including, for example, staffing and marketing activities. Very light on financial information too focused on human resource matters. To fulfil my duties as a director I require more than a 3 page CEO report ONLINE SURVEY DOCUMENTATION WORKSHOP Head Office Level 3, 16 McDougall Street PO Box 2140 Milton Qld 4064 Phone: Fax: advisors@effectivegovernance.com.au

18 CEO Survey Approach Key standard topics include: Leadership Management Working with the Board Financial Management Human Resources Personal Qualities Communication Stakeholders Decision Making Skills Problem Solving Community Ethics An assessment can be coupled and integrated with the KPI s included in the CEO s job description or contract of employment.

19 CEO Survey Summary of Results Question CEO Rating Min Mean Max eg Rating 1. The CEO is a model of the Organisation s Values: Red Red The CEO understands the concept of value creation 2. The CEO understands the concept of value creation and makes decisions on where to allocate resources based on maximising value to and the Organisation: makes decisions on where to allocate resources based on maximising value to the Organisation: 3. The CEO demonstates an understanding of the impact his decisions have on all areas of the Organisation: 4. The CEO has systems that effectively manage risk to the Organisation: 5. The CEO maintains the efficient and professional management of the Organisation: Gap Rating Red Blue 15 Page Red Blue Red Green Amber Red Amber Red 15 Methodology 180 CEO 360 ONLINE SURVEY 2. The CEO understands the concept of value creation and makes decisions on where to allocate resources based on maximising value to the Organisation: Number of Respondent Strongly Disagree 1 Disagree 2 Neither Agree nor Disagree 3 Self Rating Min Mean Max Agree 4 Strongly Agree 4 eg Rating Red Dont Know 4 Gap Rating Blue Too much focus on revenue and not enough on profit and cash returns needs more attention to developing sustainable shareholder value. Seems to lack confidence in presenting financial models, relies too much on the CFO to explain financial benefits for new product launches or acquisitions. FACE-TO- FACE Head Office Level 3, 16 McDougall Street PO Box 2140 Milton Qld 4064 Phone: Fax: advisors@effectivegovernance.com.au

20 Auckland Brisbane Melbourne Perth Sydney Head Office Level 3, 16 McDougall Street PO Box 2140 Milton Qld 4064 Phone: Fax: advisors@effectivegovernance.com.au