She began with the humdrum litany of what boards of directors needed: financial skills (crucial); legal nous, ditto. Yawn… hadn’t we heard all this before? Still, after dawn start for this, the last of Sheffield’s seminars on governance, it was perhaps what we needed so we could discreetly nod off.
But corporate consultant and company director, Juliet McKee’s opening at Auckland’s Heritage Hotel was considered, deliberate recitation of the conventional. The rest of her presentation jolted directors into new awakening of the skills needed around board table.
McKee, an economist and director, demolished many of the myths and misconceptions held about the people who should serve on boards. First, the notion that there should be technological expert. True? False, said McKee.
“I say you need every member on your board to understand it [technology].”
Then she challenged the idea that boards needed young blood. “It’s not young blood we need, it’s new blood.”
Well, gender balance then? Not necessarily. The statistics show 70:30 percent split favouring men on state sector boards, compared with 90:10 percent male/female representation around private industry board tables. This might be meat and drink to women intent on redressing the balance, but for McKee merit criteria come first.
“Women are as competent as men, so ignore gender. It’s not gender balance we want, it’s balance – balance of skills. Go in search of the best talent regardless of sex.”
In the new and sometimes confusing multicultural New Zealand, boards should appoint cultural experts, shouldn’t they?
Nope said McKee, qualifying her comments by adding that culture was “both complex, and poorly understood”. Was culture, for instance, the difference between Auckland and Wellington? Or what lay behind the real estate palisades of Remuera and Otara? Or pork in vegetarian pizza delivered to Hastings Muslim? Or all of the above? McKee concentrated on the similarities we share, and the sensitivities we perhaps should.
“We all share similar desires – desires to prosper and not be ripped off. The commercial imperative is universal but to respect the cultural imperative is completely different,” she said. “Cultural sensitivity must be evident in every board decision. It exists both at the personal level and the level of countries.”
By now McKee had everybody’s attention with her pitch for balanced, eclectic boardroom teams. It was time to introduce her own provocative wish list of virtues for director selection.
For the ability to ‘manage change’ – read surviving turmoil. For accounting skills – financial acumen; for people with ideas – the ability to recognise good ideas; for depth of experience – people willing to be pioneers; for those with imagination – people who could execute blueprint; for conservatives – to be innovative; for the prudent – willingness to take risks.
McKee wanted entrepreneurs capable of recognising corporate social responsibilities. She welcomed international perspectives for the cultural literacy they often brought. Opinion had its place, she said – providing it came with discernment. So too did heroes, because once they were also trouble-makers. And finally, there was diversity. If nothing else, diversity allowed board decisions to be enriched by debate from different perspectives.
Much attention has been paid to the notion of diversity, and for good reason. We are now much more multicultural, and ostensibly, gender sensitive society. Diversity also means different personal backgrounds. But what is the evidence for increased diversity and increased shareholder value?
There is none according to Nick van der Walt, Massey University’s chair of International Business, and an expert on emerging governance issues.
“Meta analysis of more than 40 years of data from 159 studies found no evidence of substantial relationship between board composition and financial performance… irrespective of the type of performance indicator, the size of the firm, or manner in which board composition is measured,” he told the seminar.
But diversity has its own virtue because boards have traditionally been made up of homogeneous group of elites with similar backgrounds and views about business practices. “Appointees with different backgrounds and bases of expertise may result in greater diversity, improving board decision making,” said van der Walt.
Like McKee, he prioritised the need for merit criteria. Diversity was all well and good but boards should ideally comprise qualified individuals reflecting range of experience, gender and ethnicity. The challenge for those representing minority voices – for example an academic alone on board of commercial heavyweights – was to make his or her views heard.
That may be difficult when board culture is so heavily influenced by managerial elites. Van der Walt’s research also showed that the background of male directors was: accountancy, 23 percent; agricultural business, 21 percent; financial services/law, 12 percent; other, 44 percent.
Perhaps the key finding here was the last professional status of directors. Thirty percent were retired CEOs of other organisations, two percent were current CEOs of other organisations; three percent were retired CEOs of the same organisations and 33 percent were current executives of other organisations. In this monoculture, diversity is an exotic worth cultivating.
Paul Smith is an Auckland-based writer, [email protected]