EDITOR’S LETTER: Making The Grade

Corporate governance is continuing to develop in New Zealand according to the fourth annual “Directions – Understanding Governance” survey. That’s the good news. The not so good news is that, according to the latest results, an alarming 35 percent of New Zealand shareholders are not satisfied with the job done by company directors. Survey authors Jens Mueller and Sandy Maier unveil the latest “Directions” findings in our cover story and award some bouquets and some brick bats. See page 64.
Governance expert Doug Matheson discusses the strategic impact of the recession for the country’s directors. The economic downturn is affecting all organisations – public and private companies, the public sector, not-for-profit organisations, trusts – meaning directors are grappling with uncertainty of magnitude few have experienced before. To meet the challenges many boards must change the way they work, he says. The most important aspect of dealing with the impacts of the recession is the mindset of the directors – their reaction to the situation the organisation faces will determine how the board considers the issues and how it acts. Read more on page 68.
Iain McCormick continues the theme on page 70, saying that the demands the global economic crisis is making on strategic input from the board are even more important than these have been in the past. There are wide range of practical actions boards can take to improve their utility in these troubled times. At the heart of improvements is the ability of the board to reflect on its own performance in critical but constructive manner. Every director should challenge themselves at the end of each board meeting with the question – “Did the board meeting add value to the strategic direction of the organisation?” If members are courageous enough they can also ask – “What is the use-by date of this board?”