Jim Syme was voted QBE Insurance Chairperson of the Year at last year’s Deloitte/Management magazine Top 200 Awards. It was popular choice. Syme is considered “gentleman” in the sometimes tough and confrontational world of effective corporate governance. He sets himself and his boards high ethical standards. “Integrity is essential and non negotiable,” he says.
Today Syme is chairman of Kiwi Income Property Trust, Waste Management, Abano (formerly Eldercare), Software of Excellence, deputy chairman of ASB Bank and Sovereign Assurance and director of Metrowater. His management career, however, began in finance and merchant banking. But as general manager New Zealand operations at Marac he attended the company’s board meetings and in time became an alternate board member. The experience was invaluable and he was excited by the prospect of moving up to the top level of the management food chain.
At Marac he worked with and studied under his most “admired” mentor, chairman Sir James Fletcher. “He [Sir James] had an absolute focus on the future and the nation,” he adds. “These were the years when he was moving ahead creating Tasman [pulp and paper mill] and looking at all sorts of innovative enterprises. We had knowledgeable bankers and experienced directors on the board and I found the whole experience invaluable.”
The ASB Bank provided Syme with his first independent directorship. “When I joined the ASB board in 1988 I felt reasonably informed. I understood the structure of board meetings from my time at Marac and was comfortable of my knowledge of finance and banking,” he says. Syme was immediately immersed in the creation of the bank’s strategic plan, written to transform what was then savings and personal loan organisation into full service bank. Within couple of months of joining the ASB board he was made deputy chairman and chairman of the audit committee.
At ASB he worked with another valuable mentor, the then and current chairman of ASB, Gary Judd. “Again I learned great deal from very competent director. And he provided me with many of the skills required to operate as an effective chairman,” he says.
With his banking background Syme quickly settled in at ASB. His appointment to the board of Waste Management in 1998 was different story. Waste Management wasn’t bank. It wasn’t even financial institution. It was multi-disciplined organisation in the disposable collections, environmental resource and waste recovery business with many different markets and segments. “It took me year to feel comfortable, to complete my induction and to fully understand some of the drivers of the business,” he says reflectively. He was appointed chairman of Waste Management last year.
Syme is critical of organisations that do not have comprehensive induction plans. “New directors should look at all the planning and financial information, but they should spend time out in the field looking at all the various operations of the company, talking to people about the divisions and operations,” he explains.
In 1994 Mainzeal group appointed him chairman of its board. He had, by then, been deputy chairman at AMI Insurance. “Because I had deputised as chairman I think I embraced the role with reasonable confidence. I think I knew what skills I needed to employ to be effective, to maintain high integrity and high ethics. I resolved to work on the strategy to build the enterprise as successful business and to drive wealth creation. To facilitate that and make an effective contribution, directors should have rigorous and constructive debate at board meetings and with the CEO,” he adds.
The tone of board meeting is important to Syme. “It must move along nicely, drawing out directors that are not being drawn out. And it is not necessarily to confine [the meeting] to strict timetable. If there is more to be said and done about an important item, then let it move on,” he says. “One of the worst board constraints I have seen over the years is the timetable structure when everyone plans to leave at 2pm. They are looking at their watches and saying; ‘Well I don’t think I can talk too much about that – I know there are all these other things to cover on the agenda’.”
Syme works on the “important stuff” first. Lesser items are deferred or re-visited or handled with conference call meeting. “It is critical that an important issue in front of us is well debated so that we get the right decision. I work closely with the CEO on the agenda,” he adds.
Syme has now been chairman of five boards. But the “learning continues every hour and every day”.
Securities Commission
And he is delighted with the Securities Commission’s recently released “principles and guidelines” on corporate governance. He is not at all in favour of what he calls the “heavy handed prescriptive legislative approach” adopted in the United States. It is, he says, important that investors, particularly major overseas investors and stakeholders, have “confidence in New Zealand’s corporate governance practices”.
The Commission’s principles will, he believes, “improve [governance] standards and create more wealth in society”. In his opinion New Zealand is well advanced in adopting the principles and with “a little tweaking” we will have good governance.
“The problem in the US is integrity,” says Syme. “But you can’t legislate for that. You have to have governance structure and principles approach to get integrity. The concentration of power in one person – chairman and CEO – and one person getting the board he or she wants round him creates the opportunity for power to corrupt. Greed and collusion take over and the results are as we have seen,” he says testily.
Syme is, understandably, an advocate of independent directors. “Good independence will help to minimise some of these horror stories. predominance of truly independent directors on the board is more likely to work [than legislative restrictions].”
Education for directors
He is also in favour of ongoing education for directors. “It is important that new directors in particular go through comprehensive induction process,” he says. “I expect in future there will be increasing emphasis on both content and variety of training and education for directors. I am comfortable with the moves to have directors go through refresher courses and ongoing training and education. I always have been.”
The importance of the chair
And how important is the chairman of the board? “He or she is responsible for fostering constructive governance culture,” he says. “For ensuring high integrity and ethics and for leadership that produces best practice throughout the organisation. Good [board] leadership means creating framework in which all directors feel they are systematically pursuing the strategic vision and participating in the business decisions all based on sound organisational knowledge.”
The global debate centres on whether the board is “the pilot or the watchdog”, says Syme. “Each board needs to understand what their role is because it changes for different companies. big single purpose company that is mature and has its niches and market share worked out, is more likely to need watchdog. young start-up company, led by enthusiastic entrepreneurs who are moving ahead quickly, needs pilot approach. You get bit more involved with helping the executive team. No one shoe fits all.
“The chair sets the tone, and that tone is always governed by an atmosphere of integrity and high ethical standards – open and constructive. You don’t need to spell it out. It just develops. company has its own codes of behaviour with its governance manual. When directors come on the board you have the discussion about the company’s values and then periodically talk about it at directors’ sessions and exercises off board. You get to understand what the chairman and the organisation is about.”
Directors should also submit themselves to formal annual performance appraisals. Appra
