“Overall, we want to raise the standard of governance in New Zealand. That means improving standards across the board, in the NZX top 100, NFPs and SMEs. We see strong need to professionalise so that ‘professional director’ means something more than just than just label people can give themselves.
“And we need to improve the reputation of the director profession which has taken substantial hit due to finance company collapses and prosecutions.”
Chivers acknowledges that these are challenging times for directors. “The GFC and finance company failures have placed focus on roles of directors and there are greater calls for holding to account. Directors are being reminded that the standard of care is very high and there are serious consequences for failing duties.”
And they are likely to become more serious, he says. The Financial Markets Conduct Bill proposes increased civil and criminal penalties for persons (directors included) who breach their duties.
“While the news appears negative, senior directors say that we are simply being reminded of what the standard has always been – that when you are custodians of other people’s money high standard of care is required. Overall it’s salutary reminder that being director is an active role not passive one, and that the level of skill and knowledge required is high.”
So how can boards meet the required standard? robust director recruitment policy is good foundation, says Chivers, as is commitment to professional training by directors at all stages of their career. He also believes that there should be mechanism in place to regularly review board effectiveness.
“It would be rare organisation that didn’t have regular appraisals of its key contributors,” says Chivers.
Chivers thinks there is growing recognition among SMEs that formal governance is vital at certain stage of their growth. This could be an advisory board or full board.
“Certainly, when they are looking for serious money from banks or the market, the funders will look hard at the standard of governance and often require structures to be put in place before money is forthcoming. For company that is looking to sell or list, good quality board is essential. I still think there is need to raise awareness within the SME community of how good governance can help them grow, and to provide them with the appropriate toolkits.”
He says that the not-for-profit sector has much to gain from improving its standard of governance. “Frequently, this sector is managed and governed by enthusiastic volunteers who have passion for what they are doing, but perhaps have less knowledge of governance. Good governance does require some structure and discipline, but the results are worth it.”
Asked if there is New Zealand governance perspective or cultural influences on governance practice here, Chivers responded: “There is strong alignment in what is considered good governance practice between Australia and New Zealand, which differs significantly from the US and Asia. It’s unclear or maybe too soon to tell whether there is distinctly Kiwi flavour of governance.
“There is certainly uniquely New Zealand element to iwi governance. Good governance is ultimately framework for making good decisions, and there is inevitably cultural element to that. Interestingly, two of the most commercially successful iwi, Tainui and Ngai Tahu, have implemented structures for the management of their assets that would be considered good practice in any large corporation – and they are clearly benefiting from this.”
Chivers says the IoD sees need for stronger competency validation framework building on the existing accreditation regime, widening and deepening the range of professional development available, and ensuring that there are effective toolkits to meet the needs of SMEs and NFPs.
He says historically directors have not had strong voice. “When it comes to the Financial Markets Conduct Bill, which will have material impact on the role of directors, it’s important that directors are held to account but without impinging on normal business risk-taking. Issues around insurance and director remuneration are part of that balancing exercise.”
Improving diversity around the board table is another key focus for Chivers: diversity of thinking, approaches, perspectives, life experiences, and skills. “Research is clear that diversity improves quality of decision making and financial performance.
“As part of that mix we are keen to see an improvement in the number of women serving on NZX top 100 boards – that’s the rationale behind the launching of the Mentoring for Diversity programme. We strongly believe there are capable women ready and able to serve on these boards. It’s not about making up numbers – no one wants that. Women want to be there on merit, and boards want skilled people to diversify thinking and improve decisions.”
The IoD’s new CEO says that ultimately, there is no substitute for dedicated directors, with high professional and ethical standards, who have passion for the business and are relentlessly focused on performance.
Ralph Chivers – Career to date
Much of Chivers’ career has been in the telecommunications sector, most recently as Telecom’s Christchurch Earthquake Recovery programme director. He was ultra-fast broadband (UFB) programme manager during Telecom’s negotiations over the $1.35 billion UFB project. Prior to that, he was involved in setting up Crown Fibre Holdings for the Ministry of Economic Development and was the inaugural CEO of the Telecommunications Carriers’ Forum (TCF).
Chivers is member of both the IoD and the Australian Institute of Company Directors (AICD) and has held number of governance roles in community and voluntary organisations.
He holds Bachelor of Engineering and Master of Public Policy.
The Institute of Directors (IoD) promotes best practice in corporate governance, represents directors’ interests and encourages their professional development through education and training.
It is membership organisation of over 5500 individuals drawn from the spectrum of New Zealand business, from the public and private sectors.
• BetterBoards – an online board appraisal tool to help evaluate and develop boards, chairmen, directors and chief executives
• governance advice and review
• DirectorSearch – an impartial and professional director recruitment service, balancing skills and competencies of potential candidates with those of existing board members
• not-for-profit director vacancies – cost effective access for not-for-profit and charitable organizations to advertise board vacancies to members
• director remuneration advice
• annual director remuneration survey.
Only members can register on the board appointments database and be identified to organisations as candidates.
Director Development: Courses to suit all levels of governance experience, from entry level (Governance Essentials) to training senior directors looking to take on the chair’s role. Courses cover everything from strategy and leadership to assessing and managing risk.
• For more information:
www.iod.org.nz or ph: 04 499 0076