OPINION
IMHO: I don't care where, as long as I'm chair
Can a successful director translate their success to another board? Maybe.
Boards are facing increasing complexity, including climate change, supply chain difficulties, regulatory changes, many compliance requirements while talent shortages continue to loom large.
Yet only 59% of directors in last year’s Director Sentiment Survey were confident that their boards had the right capabilities around the table to deal with increasing business complexity and risk. Directors were even less confident in board capability to lead their organisation’s digital future (37%).
These gaps lead to a focus on transforming from “know it all” boards to becoming “learn it alls” as focal area within “board agility” as one of the top 5 issues for directors in 2023.
Bridging these board and, possibly management, capability gaps will, in many circumstances, require expert advice to support the best possible decision-making by boards.
Directors and boards who seek professional expert advice need to ensure that they act in good faith if they rely on that advice and also assure themselves about the qualifications and calibre of the advisers. Almost all legislation (eg Incorporated Societies Act 2022 s. 60 Use of information and advice, Companies Act 1993 s. 138 Use of information and advice, and Crown Entities Act 2004 s. 61 When members may rely on certain information and advice) related to directors and boards requires this. The Four Pillars of Governance Best Practice provides more specific guidance on directors relying on the advice of third parties.
There are quite a few examples of directors and boards seeking professional and expert advice, including:
While this is quite a list, there isn’t that much guidance available about how boards should ask for, commission or take the advice provided by professional advisers and experts.
The limited advice available on this suggests that boards securing outside advice should use a process that includes the following:
There are also suggestions that receiving advice is an “art”. In addition to getting the right advisors, David Garvin and Joshua Margolis suggest in "The Art of Giving and Receiving Advice":
Finally, there is a question of what boards do with the advice after it’s been received and a decision is made. It is notable that the MediaWorks, PwC Australia and New Zealand Rugby reviews have all been published. The MediaWorks board took a further step and commissioned a follow-up review and PwC Australia has developed an action plan. Both of these have been published.
The New Zealand Rugby board has confirmed unanimous agreement with the review panel’s recommendations (as has the New Zealand Rugby Players Association) and has begun consultation with relevant stakeholders through to the end of October to reach broad consensus on implementing the recommended significant structural changes to the governance of NZ Rugby.