boardroom The voice of the Institute of Directors

MAY 2010 Rod Drury Embracing Social Media: Is it good for governance? Social media is a new term that refers to the conversations occurring over the internet in forums, blogs, comments, videos, FaceBook and Twitter. Over the last two years this flow of conversation has moved into the mainstream as many businesses use these new media devices to attract customers and influence behaviour.

What has been the domain of the Large companies are beginning to brands embrace it wholeheartedly. communications and IT departments is understand that they can no longer If FaceBook was a country, by the now becoming an area that boards need control the message tightly. The smallest end of 2009, it would have been to think about. Consider the example of customer can have a loud voice. These the fourth largest in the world. the ‘United Breaks Guitars’ video where a customers, suppliers and even competitors relatively unknown country and western can talk about your business in a highly Back in the early 2000s we saw the rise singer saw his guitar being thrown across visible way. of the web log or ‘blog’. Some internet the tarmac while getting ready for a United enthusiasts started to broadcast what Airlines flight. As a protest, he composed History was happening in their daily lives. Quickly a song and loaded it onto YouTube. That Social media has evolved very quickly that moved to people expressing their was quickly seen by millions of people and over the last few years. Beginning in the thoughts on all manner of subjects. resulted in the United Airlines share price technology world, it has now crossed Next, comment functionality was dropping 10%. to the mainstream and new global introduced, enabling readers to respond

In this issue: Leadership in Troubled Times Agribusiness Sector under Threat On Becoming a Director Life Can be Taxing at Times A Useful Warning for Directors Tips on Interviewing 2 boardroom

“The impact of large corporate failures is increasingly mitigated by the use of social media, because the medium allows the company to be up front, empathetic and to connect with the customers affected.”

with their own thoughts. Suddenly, very Poor service and product faults are debated interesting discussions across a plethora visibly outside of the business. No longer of topics exploded on the internet. are customer support questions confined to very private internal support systems. New sites with a specific angle quickly shot up. Flickr for photos, YouTube for video, Suddenly, individual customers with a Wordpress for blogs, LinkedIn for business problem can cluster together. And if you contacts and FaceBook for keeping track don’t join the conversation they still keep of people in your network. These are some shouting. of the more well known examples. The rise of social media for corporate While these sites come and go, we’re communications has been rapid. Twitter, seeing a common pattern of engagement a micro-blogging service where users can among individuals and businesses as they post anything, started off as a pretty banal Contents get involved: thing a few years ago. In 140 characters 1 Embracing Social Media: Is it • passive consumption – reading subjects people simply answer the question: “What good for governance? of interest and consuming information are you doing?” 4 branch initiative • joining the conversation – beginning to 5 Governance Notes comment on other people’s blogs and Twitter accelerated quickly and now has 6 On Becoming a Director stories more than 75 million users. Companies 8 Leadership in Troubled Times • starting the conversation – creating started to use Twitter to find customers 10 Putting ICT in its Place your own blog or social media activities because you can monitor Twitter to 11 Life can be taxing at times that initiate discussion hear when someone is frustrated with 12 Agribusiness • creating the venue for conversation – your competitor or if they’re looking Sector Under Threat providing the place where discussion for a new product or service. But late 13 Annual General Meeting takes place. last year Twitter changed profoundly. 14 A useful warning to directors but The question that Twitter asked was no cause for alarm KiwiBlog in New Zealand is a great example “See what people are saying about?” 16 Branch News of creating the venue. Run by David Farrar, Using search, Twitter is a way of 19 Interviewing candidates for a KiwiBlog is the country’s most read political finding out directly what people are directorship blog. David’s audience has become so saying about … your company! 20 Branch Events and Courses valued, he’s now approached by individuals and businesses to publish guest posts. Twitter has become a real-time social graph Institute of Directors in New Zealand (Inc) on almost every business of significance. Mezzanine Floor, Tower Building, The governance question While a year ago companies may have 50 Customhouse Quay, PO Box 25253, The impact of large corporate failures is decided not to engage in social media, Wellington 6146, New Zealand. increasingly mitigated by the use of social there is now a greater risk in not engaging. tel: 04 499 0076, fax: 04 499 9488, media, because the medium allows the Significant companies in New Zealand email: [email protected] company to be up front, empathetic and like Telecom and Vodafone engage to connect with the customers affected. in social media to deal with customer www.iod.org.nz www.firstboards.org.nz boardroom 3

Be transparent Be honest – don’t be afraid of feedback or criticism

issues. Banks like ASB and BNZ actively engage in social media to get closer to customers. pushes the envelope by using social media as an integral part of its marketing strategy.

Boards have this new risk surface to consider. The executive team should have “Before a board meeting you Many markets may feel protected by high a social media plan that: customer acquisition costs. But if a new • measures what is being said online might just do a Twitter search competitor unlocks the true network about the business and be armed with the perfect effect of social media, you may learn that • covers risk minimisation strategies for “it’s not the big that eat the small but the dealing with social media question for the CEO.” fast that eat the slow”. • makes it clear who in the business is authorised to engage information on our blog as we ourselves If you are a well established, large • provides the resources to work with were updated. company how do you deal with it? If social media your business has been around for a • aligns the social media strategy A few days later we posted a more long period of time, it’s likely there will with other parts of strategy such as detailed explanation of the problem from be some dissatisfied users who have marketing, customer care, investor our hosting provider. Customer feedback the potential to be very noisy. That relations and so on. was overwhelming positive, with many said, businesses such as Telecom and customers jumping to our defence and Vodafone have embraced many aspects Before a board meeting you might just do recommending our product. In effect our of social media and now have a very a Twitter search and be armed with the investment in an open social media policy engaging social media presence. perfect question for the CEO. was putting money in the bank for a rainy day when we needed to communicate a I suggest being honest and putting in Benefits bit of bad news. place processes to gather the feedback Our strategy at Xero has been to engage. so you can report on it. I think customers That’s a real commitment but we feel it’s Making the transition understand that it can take a while to an investment we need to make. Many existing businesses see customer turn the ship around. If you provide a way care as a cost and a long way away from for customers to engage and have the Last year we had a near worst-case sales. Social media has the potential to be dialogue, they may understand and can at scenario take place. Our US-based hosting a significant marketing tool that provides least get some satisfaction from venting. provider went down which meant our a practical way to close the loop between I also suggest diverting some of your customers could not access the Xero customer care and sales. Your existing customer care staff into monitoring your application. We knew at that time of customers can be turned into your most twitter and blog exposure. day only a few hundred customers were enthusiastic sales people. likely to be affected, but our policy is Much of the time it’s the communications to communicate openly. We emailed Further, this dynamic fundamentally department that needs to change. all of our customers and kept posting changes the space for new entrants. Traditionally a communications 4 boardroom

department is used to controlling the of directors and the values they bring to Perhaps once a year at your normal board message. But due to the process involved, a business will shape many interesting meeting you might ask for a technology the moment can be lost. Perhaps they conversations. update from inside the business. What are would be better served developing internal the technology trends and opportunities passionate champions, at all levels in the How to keep up affecting the business? Most managers business, to engage. This will result in a Some directors and senior executives are would love the opportunity to present to more authentic and faster engagement no doubt fearful of this brave new world the board and have that discussion. while developing the talent within. and its ever increasing jargon. Conclusion What happens next? At a personal level, I think a great way to It’s hard to think of a time when so much We are still in the early days of social engage is simply to buy an iPhone. You’ll is changing, and the concept of control media. Information is becoming streams see that computers have finally become has been so challenged. The borders of of status updates where consumers can easy enough to use. The availability of your businesses have been broken down, be continually connected to the people new applications allows you to see what’s with the whole world able to influence, they care about, both in a business or going on and be exposed to the magic of both positively and negatively, the personal sense. Computing is moving this new technology. companies you look after. towards the phone. Location is becoming a standard of information. Your phone Make sure you get a laptop or home I hope you’ve gained a few ideas to jump knows where you are, which allows a computer with a built-in camera. Simply into the conversation and learn a few myriad of services that will enhance being able to talk to your children new things. The words frightening and or sabotage productivity and drive anywhere in the world over Skype is a rewarding spring to mind. Perhaps they engagement. Sitting down in café and motivator for learning a bit more about are the two sides of the social media coin. knowing if any of your colleagues are technology. within the same few blocks is an example Rod Drury is co-founder of Xero and a of the sort of new applications that are Begin to monitor what’s being said about member of the NZX board available right now. the companies you are involved in. Google’s alert service is a good start. This sends Like Google, privacy versus revenue will be you an email once a day with links to new a conversation that many boards will have mentions of your business. Your IT resource over the next few years. The experience will be able to set this up for you quickly.

Wellington branch initiative The Wellington branch committee arranges two new members’ events each year. Members are invited to attend a luncheon at National Office and view a presentation on the benefits of membership. After the formalities and presentation they have the opportunity over lunch to meet fellow new members, National Office staff and the branch committee. These luncheons have been very successful and are a great way to start a lasting relationship between the IoD and its Wellington members.

Top: Brigadier Tim Gall, Phillip Meyer Bottom: Kate Barr, Bryan Gundersen, Kevin Bryant, new member, Frank McCarthy Governance Notes with Dr William Whittaker boardroom 5

London Calling: Britain’s Election

By the time this goes to print the election So who are the players? In the red corner of course, will be deciding where to apply campaign in Britain will be all but over. is the current Labour PM Gordon Brown, the knife and how: in full amputations or who won only qualified praise for rescuing into salami slices almost everywhere. Not all elections are of equal importance. the UK banking system via the $NZ1800 Some boil down to who is preferred to billion bailout, and he also presided over Meantime, the parties will bombard the implement an agreed set of policies that ‘The Rotten Parliament’, following the electorate’s emotions with rhetoric: Labour command wide support. Others are won MPs’ expenses scandal. stirring fears of neo-Thatcherism should at a canter by the incumbent on the basis the Conservatives win, the Tories trying to that things are ticking along nicely. But Mr Brown is positioning himself as inspire hope through regime change and every once in a while comes a general ‘an ordinary man from an ordinary the Lib Dems pedalling a fine line between election that marks a fork in the road. This background’, trying to portray David the two, sensing that they may play the is such a time. Cameron, leader of the Conservative party, role of kingmaker. and a man who bears a number of striking Make no mistake, Britain is in a deep similarities to our own Mr Key (comparative The wobbles may occur, even in malaise. The Bank of England has youth, a background in business and a campaigns that appear to be entirely recently pumped over $NZ400 billion of disarming manner) as a privileged toff with predictable, which incidentally this isn’t. ‘quantitative easing’ into the economy, a natural bias towards the wealthy. GDP figures for the first quarter are due the budget deficit is a huge $NZ350 to be published a few days before the billion and, for the first time since records Nick Clegg is the impossibly youthful election and could tip it either way: they began, state spending accounts for more looking leader of the Liberal Democrats. could show that the economy is still in than half the economy − an unsustainable Manifestos used to be weighty, worthy, recession or doing better than expected. 52% of GDP according to 2009 OECD plodding documents. Nowadays, they are In a close contest dominated by the figures. So, whoever is elected will have impressive, glossy magazines pandering to economy, this could be a pivotal moment. to introduce a comprehensive package short attention spans. of measures that not only address the Miles Templeton, Director-General of the deficit but are also designed to improve This approach not only provides a IoD (UK) believes that people, especially performance. Cause unemployment to smokescreen to avoid spooking voters those in business, are disenchanted with rise, and the weak recovery will falter, with the grim reality of spending cuts Labour and are waiting to be enchanted tipping the country back into recession. but also allows plenty of wiggle room for by Mr Cameron. The latter faces an uphill fine-tuning, fancy footwork and, in the task, requiring a record swing in over 100 Taxation and public spending dominate event of a hung parliament, which is a marginal seats. the debate with the armed forces, care possibility, horse trading. for the elderly, pensions, the health However, he will be hoping that May 6 system and immigration following. A The vagueness of all parties’ policies over is some enchanted evening when he will coherent strategy must include measures cuts has not impressed business. Labour meet many strangers across a crowded to strengthen productivity and restore has made the bold promise of halving the booth. And, in the desire to deny Labour a competitive edge and confidence. Without deficit over the next parliamentary term, record fourth term, whether they choose radical change the nation is likely to slip but has not spelt this out in detail. It is not to vote Tory or Lib Dem, many will be into a steep decline from which there is alone. As the parties argue over relatively hoping that there is something prescient no escape. Inward investment will dry small sums, all have a $NZ65 billion hole in in the name of this year’s Grand National up, the most productive people will flee their pledges according to Financial Times’ Winner: Don’t Push It. overseas, wealth will be similarly relocated calculations. and international lenders will demand high Whatever the outcome, pundits believe rates of interest in return for propping up The scale of this gap amounts to a quarter that the current economic sickness will the national finances. of spending on the NHS. The hardest cut, take a generation to cure. 6 boardroom

On Becoming a Director With the IoD’s Fresh Thinking: First Boards initiative to encourage better governance within the SME market well under way, boardroom talks with Giselle McLachlan, a barrister and experienced executive manager with a background in corporate law and the insurance sector, about her personal pathway to becoming a company director.

Giselle runs her own management Q. When in your career path did it in your career with a mix of experiences to consulting business, was General Counsel happen and at what age? contribute confidently and usefully – rather and Head of Corporate Services for IAG My first directorships were when I decided than having climbed a narrow corporate or and was a partner in legal firm Phillips to leave an executive role at 42 years professional ladder. It also helps to be able Fox. She is a Commissioner on the of age, as I was looking for broader to climb in different directions across the Earthquake Commission, an independent challenges. spectrum. director with the Institute of Financial Advisers Inc and chairman of the Silver Q. How do you rate the satisfaction Q. Was the IoD process helpful? Ribbon Foundation, a charity dealing with level of being a board member? I found the IoD pathway to directorships gynaecological cancer. Really, really rewarding. It’s good to structured and supportive. It was one operate at a level where you’re dealing of the routes I took towards getting Q. What gave you the initial spark to with strategy risk issues, particularly appointed. The initial 12 months’ think about becoming a director? reputational risk. It brings a nice variety to membership requirement is useful – to When I switched directions from a law be in a governing role along with other settle in and commit to the director roles, firm partner to a corporate leadership roles which are more hands-on. It is a huge and do some initial training. I’d already role, I came into contact with a board responsibility but a privilege. done the one week residential course and and enjoyed the strategic conversations so was well on the way. I also did some and issues addressed around the table Q. When do you think is a good “Essentials” course training – which gave as much as the day to day management time to be thinking of possible me confidence that I had all the skills issues. I particularly enjoyed the directorships? needed. The process towards provisional challenges – being stretched and pulled When people have the energy and accreditation was good too – clear, with into many directions to ensure the board self-determination – and financial base requirements and a formal interview had all the information it needed. This independence. This is important, because (good practice for appointment interviews!) was enough to spark an ambition it will mean a significant period of earning See page 19 within me. I was given a chance to less, particularly in the first five years. It’s re-evaluate when IAG NZ restructured also important to be realistic about when Q. Have you had experiences with in 2006 – I leapt at the opportunity to your CV has the essential ingredients other processes? choose a new path, even though I’d for directorships. I liken a good CV to a Yes, I can compare it with the CCMAU loved my role and my teams there. strong scaffold - having built a solid base and Ministry of Women’s Affairs pathways boardroom 7

Congratulations The Institute of Directors wishes to congratulate two of its members who have been elected as Companions of the Royal Society of New Zealand. Christchurch-based businesswoman Sue Suckling and company director Rick Christie from Wellington both had the honour bestowed on them last month. Both are former Crown Research Institute chairmen. – both about ensuring you provide my capabilities, and a determination to excellent and up to date information make a difference on boards of companies The title of Companion of the for their registration data. But the IoD’s – they really encouraged me to persevere Royal Society of New Zealand accreditation process is unique. It will with seeking director appointments. recognises outstanding leadership be interesting to see how the updated in science, and contributions to process is used. Q. What advice would you give to the promotion and advancement others? of science and technology in New Q. Is there a ‘perfect’ director Be organised and focused in seeking Zealand. The President of the Royal development pathway? appointments – definitely use the IoD Society of New Zealand, Dr Garth No. Each person is different. This is processes and the others such as CCMAU Carnaby, said the election of Sue particularly so when it comes to networks and Women’s Affairs. Network with others and Rick as Companions was formal and CVs. But I think the key is to be flexible and make sure your CV is engaging and acknowledgement of the significant and persistent – to keep on applying and relevant. An experienced female director impact they have had on science and networking in order to get there. Taking suggested that I work on a five year career technology in New Zealand. a little more time can be healthy and plan, to take a long term view on my more effective in the long term. Also, it goals and to recognise that it would take Sue Suckling is a former chairperson seems to be fairly common to do some time for me to build a new career, new of NIWA and Rick Christie was voluntary governance roles along the way, qualifications and a new reputation. This chairman of AgResearch and they are to demonstrate commitment and to gain was great advice. I am three years into the both Fellows of the IoD. experience and credibility. five year plan now and am definitely on track at this stage. I am really enjoying the Q. Did you encounter an ‘old boys’ diversity of roles and of experiences. network’ mindset along the way? Fresh Thinking: No, the people were dynamic and For tips on interviewing see page First Boards impressive. 19 and for more information on Visit our new website aimed the IoD recruitment process please strategically at SMEs. Find out more Q. Where did you get most help and contact Ian Niven, Sally Jarvis or Kelly about governance and how we can encouragement? McGregor on 04 499 0076 or email help you reach your goals. From professional colleagues who knew [email protected] www.firstboards.iod.org.nz 8 boardroom

Leadership in Troubled Times Even in the best companies, things do not always go well. Crises develop; the death or sudden departure of the CEO; discovery of a serious fraud; a downturn in the market, putting pressure on bank borrowings; a product safety issue exploding onto the public domain causing reputational harm. Well-run companies usually know how to deal with such issues and where that leadership should come from. Crises define leaders.

A good leader will have to possess the The function of the chairman is one of the by the fact that they chair shareholders timeless leadership qualities as well as most fully studied aspects of corporate meetings. In general the CEO fronts the those unique to the time. During the week governance. It has been said that chairmen media whilst the chairman is reserved of the Lehman Brothers collapse Barack must have leadership skills, the patience for shareholder issues. Inevitably, in some Obama declined to abandon his campaign of Job and the sixth sense that leaders organisations this distinction becomes and join the stampede to Washington possess in order to steer a board to blurred, as was the case with TVNZ. because he said that at any one time the effective decisions. It is a rare set of skills – president will have more than one issue to not hard to indentify, but difficult to find. A chairman’s skills are those of a deal with and you cannot be in all places conductor, someone who can lead the at once. That, he claimed, was a measure Shareholders in the normal course of setting of the agenda, run meetings of leadership and he was right. It was a events have little control over the actions effectively enabling discussion and defining moment of the contest. Cometh of the board they have appointed or dissent, moving towards consensus and the hour, cometh the man? acquiesced to. The safeguard on which communicating with colleagues and they are relying is that the board keeps management, especially the CEO. Taking But who provides what and when? Is their interests in mind and monitors an adversarial approach to decision- it the CEO, chairman, or in the US the management to that effect. This is making by pitching different points of combined chairman/CEO. “Where’s Henry structurally weakened if the chairman view against each other is a good way (van der Heyden)?” was the question Fran of the board is also responsible as chief to understand several sides of the same O’Sullivan raised in the NZ Herald when executive for the management of the issue. President Clinton was reportedly was first beset by the San Lu business, a situation which has been the adept at this kind of openly contentious issue. And why was TVNZ chairman Sir norm in corporate America and which is decision-making and was well on his John Anderson called upon to pour oil common in closely-held companies, for way to being an extremely well-regarded on troubled waters when the media were example in many SMEs. president until the Lewinsky scandal hit. all over the Veitch affair? Weren’t both The successful leader, be it the chairman jobs essentially the CEOs’ responsibility? Separation of the two roles builds in or president, also needs to have a strong Fonterra CEO Andrew Ferrier was valiantly a check and balance. The chairman is ability to resist temptation. In other fronting up but some clearly felt that this responsible for ensuring that the board is words, they need to actively demonstrate was a governance issue that also needed mindful of shareholders’ interests whilst the positive values that should form the the involvement of the chairman. With acting in the best interests of the company company’s culture. They, along with the TVNZ, because questions were raised over as a separate legal corporeal entity. In fact, board are the custodians of the company’s managements’ performance, the calming a principal role for chairmen is external reputation, hence the call for Henry in the hand of Sir John was required on the tiller. shareholder management, as evidenced contaminated milk scandal. boardroom 9

Obituary The Institute of Directors offers its condolences to the family of Mervyn Charles Probine, CB, who died recently in . Mervyn worked as a physicist at the then DSIR, becoming Assistant Director General in 1977. He But these skills should not be applied to board at a particular time. The chairman was a commissioner at the daily management of the company which always needs to be a superb relationship State Services Commission is the chief executive’s domain. The power manager, seen by stakeholders of all hues and became Commission of the chairman added to the power of as a moderating influence and heard the chief executive presents a formidable as the voice of well-informed reason. In Chairman in 1981. A string combination. No company is likely to run difficult economic times where uncertainty of Government appointments effectively and efficiently unless there is a and fear prevail, the two most important followed during the nineties, good working relationship between the senses a chairman needs to instil are and on his retirement he chair and the chief executive and unless realism and confidence. The IoD believes became a director and each respects the other’s abilities and that every chairman should use every personal qualities. endeavour to ensure that this responsibility chairman of several private and is discharged in the best interests of the public entities. Mervyn was There are those who lead from the front company. chairman of the Legislative by force of personality and there are Advisory committee, a senior those that fit the classical description: Dr Nicki Crauford, CEO, “he that governs sits quietly at the stern Institute of Directors fellow at Massey University and scarce is seen to stir”. A particular and a Distinguished Fellow of kind of chairman will suit a particular the IoD. 10 boardroom

Putting ICT in its Place If you read only one of my columns, read this one. In this column, my final I am completing a circle, of sorts, returning to the start and my original intention – to debunk certain IT mythology and position company directors to ask the right questions when facing ICT decisions. No one can know everything, but asking the right questions goes a long way.

The recent eruption of Iceland’s Mount • How up-to-date is the software? Is the Glossary Unpronounceable is a great example of software licensed? Technicians: Usually ‘change junkies’ just how best laid plans unravel. Outside • Who covers us when the IT guy isn’t who want to continually develop and the hallowed halls of university research around? alter what was created last week. Next departments, which for a moment week’s stuff is always better than last factored into their plans the potential Our job is to also ensure that the company week’s. chaos of an inconvenient volcanic ash is performing optimally, so as directors we Sales people: These are the same cloud, the mountain’s activity record should know: purple-suited, green-shoed, gold- should have put it on the radar of • Are there any processing bottlenecks? bangled guys that you already employ everyone now affected. • Are we dependent on any individuals? in your sales team. How can we mitigate that? Programmers: All a bit nutty and And so it is with ICT, which these days is • Are computer systems making us dogged in their approach to getting the thread running through the fabric of operate in a silly way? a machine to do what they want it everyday life. However, while catastrophic • Who is driving the company, the to do. one-offs, like fires and molten lava, are ICT department, or the company Project managers: Organised Nazis fascinating (and should be considered in management? normally, who bring order to chaos business continuity planning), it is often the created by programmers, technicians simple things that derail business as usual. When changes are afoot (acquisitions, and sales people. expansion, new lines of business) that IT managers: Very important people All our companies rely on ICT hardware, dreaded word comes in to play – projects. who ‘once did’ something technical. software, support staff and people who Directors must be aware of company- Tend to be luddites. They like to tell use the stuff to do their jobs. Operational changing projects, progress made, you why you can’t do what you want interruptions do from time-to-time arise financial status and the overall forecasts to do rather than finding out how to from natural disasters, but are much more regarding completion: do it. likely to come from a simple component • Has the scope changed? CIO: No, not ‘Career Is Over’ as often failure, the support guy on leave, last night’s • Are we on time? Are we on budget? stated by IT managers. These are bad change or an expired software licence. • Have outstanding or expected problem the new breed of business people areas been identified? How are we that understand how to exploit ICT Our job as company directors is to ask the planning to overcome these? without being trapped by sales staff right questions about continuous business • Will the outcome provide what the from suppliers, or held back by IT operations: company wants to achieve? managers wanting to preserve the • Are we too reliant on a single status quo. provider? ICT in a business nowadays is much Industry elders: Old blokes like me. • How old is the hardware? Is it less about wires, plugs, computers and maintained? gadgets, and much more about outcomes

Continued on page 17 boardroom 11

Life can be taxing at times The Taxation (International Taxation, Life Insurance, and Remedial Matters) Bill comes into effect on the 1st July 2010. As a result, life insurance premiums will be increased to take the impact of the new tax rules.

The Government has decided to change What does this mean? 1. If you have existing life insurance, there the way life insurance is taxed as the It has been well documented that the cost is the option to do nothing in which current rules are out of date − they were of buying life insurance could be raised by case your current annually-stepped last amended in 1990. This has seen people up to 25% after the 1st July 2010, though premiums will increase by the new who save through life insurance products this will vary depending on each insurer. tax implications after five years − in over-taxed on their investment income, most instances. (Normal age-related relative to people investing directly through From 1 July, life business will be taxed increases will still take place each year.) other means offering the benefits of the using two bases, which are different from 2. In the event you do not have life new PIE (Portfolio Investment Entity) rules. the current bases: insurance, there is now the opportunity 1. Shareholder base − representing to lock in the lower rates for up to Currently, standard tax rules apply for income derived for the benefit of the five years or longer, if you take it for a life insurance policies that also include a shareholders of the life insurer. longer guaranteed term. savings component. As these policies collect 2. Policyholder base − representing income 3. If you have existing life insurance savings, the interest portion is taxed. The derived for the benefit of policyholders. there is the opportunity to review profits from term insurance, which provide and upgrade your annually-stepped a payment on the death of the policyholder, There is relief for those policy holders with premium insurance now and lock in are under-taxed. This is because they do not existing life insurance cover, or take out life those rates for up to five years. have a savings component. insurance cover before the 1st July, as the 4. In the event you have an annually- legislation has allowed ‘grand parenting’. stepped premium policy, there is the In summary, life business is currently taxed Grand parenting is a term used to describe option to convert this type of policy using two bases: transitional provisions in the tax legislation, into a level premium that locks in 1. Life office (insurer) base − which is that have the effect of applying the old tax today’s premium for a fixed term up subject to tax on investment income rules to the grand-parented policy, in most to a maximum of age 80. In most less expenses plus underwriting income. instances for up to five years. Those clients instances this can be done without the 2. Policyholder base − which is income that have guaranteed ‘level’ premium life need for medical evidence. accruing to policyholders determined insurance will also have this grand parented by applying a prescribed formula. for the period of the guaranteed premium This change in taxation only affects life term. ‘Level’ means that this does not insurance. All other insurance products The new tax rules will ensure that all life increase by inflation but remains the same. are unaffected. As the deadline for this tax insurance premiums are taxed, regardless change is 1 July 2010 we recommend you if they have a savings component or not. What are my options? review your insurances soon to maximise It also aligns tax rules with the same way As there is a time limit imposed by the the benefits from this legislative change. that other businesses are taxed on their Government, there are options available to profits, thus creating a level playing field take advantage of and be able to save on Simon Fisher is Principal, Marsh for businesses in New Zealand. future premium increases: 12 boardroom

New Zealand Agribusiness Sector Under Threat New Zealand agriculture has as little as five years before underdeveloped agricultural regions such as South America, Western China and Central Asia’s large scale intensive farming practices erode New Zealand’s cost advantage in producing bulk commodities, according to the inaugural KPMG Agribusiness Agenda report released last month. The report observes that as the world’s needs and requirements around product Investing in connected rural communities population continues to expand, these presentation, sustainability and traceability will also be essential to placing New historically marginal agricultural regions to deliver these in advance of competitors Zealand at the forefront of the global are opening up to large scale intensive and lock in price premiums. agribusiness stage. Only 1.6% of the farming. These regions have the benefit of new money the government initially lower cost land and labour and normally Sustainability is a priority for agribusinesses. proposed to invest into broadband and have less complex regulatory regimes. Also The adoption of global best practices fibre networks that were targeted towards they are traditionally closer to key markets, creates a significant business opportunity the 13.8% of the population that live enabling them to deliver food to the for the industry where first mover in rural communities, and yet this group customer at a significantly lower cost than advantage is still there for the taking in grows, processes and exports 66% of New a competing new farmer or grower in New many premium, niche product sectors. Zealand’s merchandise exports. Zealand could achieve. Failure to adapt to sustainable practices will, in our view, leave the industry facing a Traceability is another area in which there This gives New Zealand companies a future competing in low price, commodity has been under-investment compared short buffer, maybe as little as five years, markets with producers from countries that with other peers. Many of our key before low cost regions are producing bulk have increasingly got a significant low cost export markets for meat have already commodity products in significant volumes advantage over our producers. implemented identification schemes or and undercutting New Zealand’s pricing are in the process of implementing such in our traditional commodity markets. Government policy also needs to be schemes. International developments Because of this, now is the time to start prioritised toward better investment, around animal traceability suggest that revising industry structures, practices management and use of water resources. New Zealand will be out on a limb if a and products to ensure the industry is Water is New Zealand’s liquid gold. national animal identification scheme is not established on a path up the value chain Development of a policy framework implemented in the short-to-medium term. and well in advance of base commodity that provides certainty over the access, products coming in large volumes from quality and cost of water to agribusiness Success in our new markets depends on new suppliers into international markets. is important if the industry is to have the how intimately our exporters are able to confidence to make long term investments understand their new customers and that To adopt a more efficient producer model, in improving productivity and increasing its will only come from doing the hard work New Zealand needs to invest heavily in contribution to the New Zealand economy. to build the personal relationships on science, technology and infrastructure to the back of the Government’s free trade gain a competitive advantage in producing We believe there is a need for national agreements and negotiations. Volatility will the quality food products customers in co-ordination of water management continue to be a challenge and investment premium markets are demanding. The strategy. This would ensure its value in new research and development via co- farming sector of the future will have as a key contributor to New Zealand’s ordinated science strategies is vital. the ability to deliver food solutions economic future is handled in a consistent all year around through adoption of manner. It would also be in the best Ross Buckley is Agribusiness Chairman advanced global sourcing and logistics interests of the New Zealand economy and Ian Proudfoot is Lead Agribusiness methodologies. and not delayed or blocked by local Partner, KPMG political issues, while ensuring that Companies need to be constantly talking the risk of unintended environmental with customers to understand their future issues is appropriately managed. boardroom 13

Annual General Meeting Around 80 members attended the Institute of Directors’ AGM last month Not-for-Profit to hear President Kerry McDonald and CEO Nicki Crauford report on Board Vacancies the year’s progress, while guest speaker Hon Pansy Wong, Minister of Organisations with current Women’s Affairs, spoke on the momentum of change. board vacancies: “Change is in the wind as more Kiwi Competition is tough and appointees get companies start to realise the benefits of there on merit, not just on gender. The Auckland Bowls Inc (ABI) – seeking gender diversity,” she began. A change reality is that there are experienced women independent board member (2 year that was sparked last May when the directors out there; you just have to ask for term), applications close 15 May 2010 IoD, the Ministry of Women’s Affairs and them”, she said. Business New Zealand together produced The New Zealand Drug Foundation the Women on Boards initiative – looking Pansy Wong added that women are not – seeking trustees for the board of at the contribution women can bring always prominent in the networks that the New Zealand Drug Foundation, to the diversity of skills, experience and many organisations use to make board applications close 30 June 2010. perspective that all boards need. She said appointments, so companies need to start the question for us in New Zealand is thinking outside the usual pathways to find NFP boards can advertise governance how to fast-track the process of boosting qualified women. According to recruitment vacancies to IoD members for a small gender diversity in the boardroom to gain agencies she had spoken to, many have fee ($250+GST). These opportunities competitive advantages without resorting access to women who are board-ready, and are published in the secure members’ to legislation. that having more women both on boards area of the website, listed in and at senior executive levels, ensures that boardroom and promoted through “Government can lead by example and I’m everyone will benefit. branch emails. For more information interested in the quality of governance in and to download a template for your the companies that government owns and Kerry McDonald reiterated that the IoD advertisement please refer to the Board have been working to increase the pool of believes all appointments should be merit- Services pages at www.iod.org.nz or talented women available to government. based. email [email protected]

Recently Accredited Directors The Institute of Directors congratulates the following members who were awarded accreditation or provisional accreditation in April 2010 Nicki Crauford, Hon Pansy Wong Landa van den Berg, Philip Gaunt Abernethy, Melanie, P; Carroll, Lynda Margaret, P; Crauford, Nicola (Nicki) Lane, A; Farron, Robert William Henry, P; Hammond, Desmond (Des) Ronald, A; Hoskins, Terence (Terry) John, P; Jacobi, Stephen Robert, P; Kearns, Paula, P; Lockie, James Roderick, P; Towers, Dale Jeffery, P; Watson, Robert (Keith) Hamilton, A; Wood, Denis Michael, A; Bruce Holland, Alison Renfrew, Mele Wendt Don Baskerville, Jackie Lloyd, Suzanne Snively 14 boardroom

A useful warning to directors but no cause for alarm Media coverage of the Luvit Foods decision in which the Court of Appeal ordered a director to refund investors for shares allotted illegally, even though the woman was not on the board at the time the money was raised, may have alarmed some directors unnecessarily.

Yes, it’s a useful reminder of the Luvit Foods went into liquidation in June Associate Judge Faire entered summary importance of carrying out due diligence 2007, prior to which Mr Chean was judgment for $150,000 claimed in relation on a company before accepting a adjudicated as a bankrupt on his own to the Securities Act and $573,195 for directorship. But the judgment will petition. knowing receipt. probably have a fairly narrow application and does not break new ground. Instead, Luvit in the courts Ms Chean appealed this decision. it merely applies current legal principles to In the first case in the Luvit Foods saga, the a particular and infrequently occurring set High Court found that Luvit Foods, Tennet The issue before the Court of Appeal that of facts. International Limited (a related company) is relevant for our purposes was whether and James Chean were liable to repay there was an arguable case that Ms Chean Luvit Foods International Limited (Luvit $1.68 million of investor subscriptions for was not liable to repay subscriptions under Foods) was incorporated in 1999 with breaches of the Securities Act 1978 and section 37(6) of the Securities Act: James Chean as sole director. He held an losses caused under the Fair Trading Act • because she was not a director at the investor presentation in 2000 where a 1986. time of the share allotments, or business proposal for the company was • via application of the proviso to outlined. No prospectus was registered. The investors then brought a subsequent section 37(6), in that the default in the The investors bought parcels of shares on case for summary judgment against repayment of the subscription money various dates during 2000 and 2001. On Ms Chean (who was not a party to the was not due to any misconduct or 15 October 2001, after the share offers previous proceedings) alleging liability negligence on her part. and allotments had been made, Ai Nee under the Securities Act to repay a Chean, James Chean’s wife, formally portion of the subscriptions, and knowing ‘Director’ is defined broadly in the became a director of Luvit Foods. receipt of trust funds and breach of trust. Securities Act and could include someone boardroom 15 Board Services

Director Recruitment Service DRS specialises in finding non-executive directors and chairmen for companies and organisations of all types and sizes from the IoD’s independent and specialised database of candidates, using a broad, robust and cost-effective process.

Not-for-Profit board vacancies NFPs and charitable organisations can advertise board vacancies in boardroom and in the members’ area of the IoD website for a small administration who is not in office as a director but in regard to the $150,000 repayment. fee. Members can check information carries out the role of one. Ms Chean However, the $573,195 judgment in on what skills are being sought for played a part in preparing accounts, had relation to knowing receipt was set aside particular opportunities as well as signing authority and was otherwise and that matter was directed to proceed contact details and close-off dates, involved in the business. The investors to trial. by using their personalised login. therefore argued that she had been a director since Luvit Foods was incorporated What directors can take from BetterBoards even though she did not formally take this decision BetterBoards is an easy to use online office until she signed the consent in There is always value in being reminded system which has been developed to help October 2001. of the risks which can befall directors and boards identify opportunities for improved of the need to ensure that a company’s performance. The system comprises four The Court found that section 37(6) applied affairs are conducted at all times in full comprehensive sets of questions designed to Ms Chean because, whether or not she compliance with all relevant laws. to identify opportunities in the following was a director at the time the allotment areas: the board as a whole, the chairman, was made, she was clearly a director when In particular, persons taking up individual directors and the chief executive. the obligation to repay subscriptions arose, directorships during or shortly after this being specified as either two months the company issues securities need to Remuneration advice after the subscription receipt date or five remember that personal liability to repay The IoD provides independent analysis months after the date of the prospectus, subscriptions attaches to directors in office and advice to help organisations set depending on the nature of the issue. at the time of the repayment obligation remuneration policy. In conjunction with set out in section 37(6) and not at the Strategic Pay Ltd, the IoD conducts an The Court left open whether this section allotment date. annual survey of directors’ fees, and utilises applies to directors who were in office this data with a wide range of other when an unlawful allotment was made However, the decision is no cause information to recommend fee levels. but not in office when the repayment for alarm and turns on its (relatively obligation arose. uncommon) facts – Ms Chean’s close Board Advisory Services involvement in the business throughout, Within the context of its best practice Ms Chean’s argument that the default in and knowledge of, the capital raising principles, the IoD works with repayment of the subscription money was process. This case simply demonstrates organisations that need advice, support not due to any misconduct or negligence what can happen when a company acts and expert knowledge on a range of on her part (trying to use the proviso) was in breach of the law, and to new directors governance issues. Practical, professional also unsuccessful as there was no evidence who do not do their homework before and specific advice can be provided. supporting this assertion. taking office. For further information please email The Court of Appeal upheld the summary Chris Dann is a Principal and Shalindri [email protected] or phone judgment entered by Associate Judge Faire Silva is a Solicitor at Chapman Tripp 04 499 0076 16 boardroom Branch News

Canterbury with war stories from his years of angel governance changes within New John Judge gave his analysis of investing. Bill said that it is extremely Zealand as a result of the recession. New Zealand financial and business important for such investors to be well conditions from a banking viewpoint diversified owing to the high risk of In April, John Whitehead, Secretary to an audience of 110 at the AGM in each individual investment. He said to the New Zealand Treasury, spoke March. He outlined the effect of the that boards of start-up companies are to 40 guests who gained valuable bursting credit market bubble with often disorganised prior to the angel insight into Treasury’s plans to money priced higher and getting worse, investment being made and that improve New Zealand’s economic falling asset prices and less leverage for entrepreneurs are sometimes nervous performance through economic probably the next 10 years. of the influence a board or chairman growth, macroeconomic stability and may have. state sector performance. Otago Southland Around 30 members met at the SBS Waikato Bay of Plenty Bank in Invercargill in March to hear Dr Kerry McDonald was guest speaker Andrew Coker, CEO of Priority One – bank chairman Mr Acton Smith speak at the AGM in March. He discussed the Western Bay of Plenty’s economic about his organisation’s journey the imperative role that boards play development agency – spoke on his to becoming a registered bank. He in contributing to the success of vision for the region. From skills for outlined the governance structures New Zealand business, specifically industry to infrastructure development, in place within the bank and made a throughout today’s turbulent Andrew and his team have developed comparison of external supervision of economic times. And later in March, a collaborative model that balances compliance programmes pre and post Deloitte’s Associate Director Andrew the governance realities of their local obtaining registration. Boyd, and Partner Graham Naylor, councils with the expectations of offered invaluable insight into board Western Bay’s commercial sector to Leading US Angel Investor, Mr Bill effectiveness, talent management, deliver tangible value. Payne, addressed the April meeting succession planning and overall Branching out 1 2 3

4 5 6

7 8 1 | Gary Leech, Allan Williams (Canterbury) 2 | Andrew Ott, John Judge, Nicky Wagner, David Halstead (Canterbury) 3 | Sean Woodward, Christine McKenzie, Robin Campbell, David Shaw (O S) 4 | Warwick Cambridge, Pat Heslin (O S) 5 | Mary Cox, Brigetta Hewett, Rob Hewett (O S) 6 | Sophie Barker and Ross Grey (O S) 7 | Andrew Boyd, Margaret Devlin, Graham Naylor (Waikato) 8 | Curtis Edgecombe, Hayden Dillon, Erica Amon, John Whitehead, Gabriel Makhlouf, Erin King (Waikato) boardroom 17

Putting ICT in its Place continued from page 10 New Members from applications. In the same way a it appears to speed up. The difference Alexander, Kate, Dargaville; Anderson, Ree, really fast fibre network is useless without between ICT and real life is that ICT does Auckland; Asghar, Muhammad, Wellington; Baldwin, Gray, Putaruru; Barnicoat, Wallis, content to flash up and down, computers actually speed up! Wanganui; Blomfield, Esther, Auckland; and their related gobbledegook are Bonica, Andrew, Wellington; Bordignon, Bruno, Wellington; Bosworth, Peter, Christchurch; useless unless the work they do makes So here’s a thought: Why do something Bourne, Raewyn, Rotorua; Buchanan, Conall, your company faster, more reliable, and today if you can do it tomorrow cheaper Paeroa; Burghout, Pieter, Porirua; Burrett, Will, Auckland; Chaplin, Gareth, Wellington; provides information that supports good and faster? In mulling this advice, it’s Clark, Kaye, Hamilton; Clarke, Colin, New decision-making. worth noting the traits of the main players Plymouth; Coffey, Shaun, Upper Hutt; Conlan, Kathy, Christchurch; Doherty, Joe, Rotorua; working in ICT. Knowing whom you’re Dometakis, Androula, Wellington; Dorfman, Just as importantly though, computer dealing with is half the battle. Eric, Wellington; Doughty, James, Auckland; Douglas, Murray, Whangarei; Erenstrom, applications are of no use to anyone Karen, Lower Hutt; Feary, Sarcha, Christchurch; if they don’t provide what a company I trust these columns have helped to put Ferguson, Stewart, Christchurch; Finch, Robert, Christchurch; Fleming, Chris, Timaru; Floyd, requires – on time, reliably and you in the picture. Good luck with your Callum, Auckland; Govan, Bert, Christchurch; consistently. If they don’t drive efficient future ICT decisions. Look me up if you Greenwood, Nigel, Christchurch; Haddleton, and practical workflows then why bother? need a hand to see through the fog, or Giles, Auckland; Harman, Brent, Auckland; Hockley, Steve, Wellington; Hughes, David, just fancy a beer and a chat with an old Christchurch; Hutchinson, John, Napier; Jordan, There is much about ICT that can appear virtualiser. Arthur, Mt Maunganui; Jordan, Paul, Carterton; Kelland, Tania, Taumarunui; Kennerley, confusing, but that’s only because many Brent, Wellinton; Kershaw, Conor, North Shore people in this industry actually make it Roger Cockayne is Executive Director, City; La Salle, Ralph, Christchurch; Landon- Lane, Peter, Auckland; Lynch, Gerry, Auckland; that way. ICT is no different to the rest of Revera Maan, Prem, Auckland; McKernan, Stephen, life and as time passes we all notice that Auckland; Mickleson, Jo, Nelson; Millar, Toni, Auckland; Morris, Tracey, Whangarei; Morrison, Andrew, Wellington; Murray, Richard, Auckland; Nettleton, Ben, Dunedin; Nettleton, Rose, Dunedin; Ogilvie, Brent, Auckland; Ormsby, David, Christchurch; Reid, Robyn, Nelson; Company Directors’ Course, Roberts, Chris, Wellington; Rohrbeck, Carl, Hamilton; Ross, Chris, Wellington; Sanders, March, Wellington Jeffrey, Lower Hutt; Schischka, David, Auckland; Shadbolt, Mark, Akaroa; Sherry, Karen, North Shore City; Sibery, Graham, Auckland; Smith, Jason, Invercargill; Thompson, Roger, Auckland; Tompkins, Peggy, Dunedin; Tuckey, Andrew, Auckland; Van Der Jagt, Richard, Tauranga; von Dadelszen, Sarah , Waipukurau; Vryenhoek, Nicola, Queenstown; White, Earl, Auckland; Widdowson, Ian, Auckland; Winsborough, Dave, Wellington Membership Benefits and Facilities Benefits of membership include a complimentary copy of Principles of Best Practice and generous rates on D & O insurance, reduced rates on accommodation both nationally and internationally and Front Row: Androula Dometakis, Don Robinson, Ann Prendergast,Toni Millar, access to business facilities in six main Lorraine Stefani, Graeme Jarvis centres in New Zealand and the IoD (UK) in 2nd Row: Murray Douglas, Jane Farley, John Spurway, Steve Couper, Bruce Peden . Detailed information is available in 3rd Row: Hugh Cowan, Rod De Spong, Steven Saunders, Ben Palmer the members’ only section of the website www.iod.org.nz Back Row: Derek Baxter, Peter Thomas, Peter Grove, Adrian Gault 18 boardroom

The Institute of Directors in New Zealand (Inc) Accredited Directors Council 2010/2011 The following members have been awarded accreditation or provisional accreditation having Dr Kerry McDonald - President demonstrated to IoD’s Accreditation Board that they understand the role and responsibilities of a Denham Shale - Vice President director in New Zealand and have sufficient and relevant practical experience. Requirements for accreditation, including guidelines for practical experience, can be found online at www.iod.org.nz Lee Mathias - Auckland Michael Stiassny - Auckland Abel-Pattinson, John, P; Abernethy, Melanie, P; Adams, Tracey, P; Anderson, Nicole, P; Andrews, Shelley Thomas - Bay of Plenty Tim, A; Apanowicz, John, P; Appleby, David, P; Armstrong, John, A; Astor, Sarah, A; Atkinson, Kevin, A; Avery, John, A; Bain, Murray, A; Baker, Grant, P; Ballard, David, A; Ballard, Russ, A; Barnes, Margaret Devlin - Waikato Richard, A; Barratt, Eric, A; Baskerville, Don, P; Batcheler, Peter, P; Bay, John, P; Bayfield, Bill, Bryan Gundersen - Wellington P; Baylis, Bill, A; Belcher, David, A; Bellette, Carol, P; Bennett, Win, P; Bettle, Rick, A; Bishop, Phillip Meyer - Wellington John Mark, A; Bishop, Paul, A; Blair, Ken, P; Boland, Maurice, A; Boniface, Bob, A; Borren, Pim, John McCliskie - Nelson Marlborough P; Boven, Rick, A; Brabazon, John, A; Brennan, Royce, P; Briscoe, Anthony, A; Brown, David, P; John Barr - Canterbury Burgess, Raymond, P; Burns, Stephen, P; Calavrias, Nick, A; Calder, Alastair, P; Campbell, Robin, A; Stuart McLauchlan - Otago Southland Campbell, Tom, A; Carroll, Lynda Margaret, P; Carter, Tony, A; Carter, Victoria, A; Caughey, Tony, A; Cave-Palmer, Mary, A; Challinor, Rob, A; Chesterman, Gordon, A; Christie, Rick, A; Church, Don, National Office Staff A; Clarke, Alan, A; Clouston, Falcon, A; Coburn, Michael, A; Compton, Shane, P; Connell, Paul, A; Cooke, Peter, P; Coster, Gregor, A; Coupland, Barry, P; Coutts, Liz, A; Cowie, Don, P; Crauford, Dr Nicki Crauford - Chief Executive Officer Nicki, A; Cronin, John, A; Cruickshank, Lisa, P; Currie, Jane, P; Dahlberg, Bill, P; Dalzell, Warren, Dr William Whittaker - Research and Policy Manager A; Davidson, Bruce, A; Davies-Colley, Nikki, A; Dawson, Colin, A; de Bruin-Judge, Robyn, P; Ian Niven - Board Services Manager Denz, Frances, P; Devlin, Margaret, A; Dewes, Whaimutu, A; Dobson, John, A; Doolan, Laurie, A; Kelly McGregor - Board Services Executive Drummond, Peter, A; Ellwood, dean, A; Evans, Norman, P; Falconer, Bill, A; Farron, Robert, P; Sally Jarvis - Board Services Administrator Faull, Gavin, A; Fenton, Andrew, A; Fergus, Ken, P; Fisher, Craig, P; Fisher, Rodger, A; Fitzgerald, Nikki Franklin - Marketing and Membership Manager Ian, A; Fitzsimmons, Peter, A; Flannagan, Robin, A; Foote, Abby, P; Forward, Garry, P; Frankham, Ann den Boer - Membership Executive Tony, A; Fraser, Graeme, A; Fraser, Iain, P; Freeth, Alan, A; Friedlander, Tony, A; Gargiulo, Brian, Tania Rook - Membership and Marketing Assistant A; Garnett, Peter, P; Germann, Stewart, A; Gibb, Janet, P; Gibbons, Richard, A; Gibbs, Tony, A; Giesbers, William, P; Gilbertson, Warren, P; Gill, Trevor, P; Gleisner, Shenagh, P; Glover, David, P; Linda Cohen - Professional Development Manager Goodwin, Trevor, P; Goulter, John, A; Grant, Alan, A; Gray, Russell, P; Green, Ralph, A; Greene, Nicky Leadley - Professional Development Advisor, Larry, A; Gribben, Murray, A; Grimwood, Paul, A; Guitry, Henry, P; Gundersen, Bryan, A; Hagen, Northern Region John, A; Hague, Frances, P; Hammond, Des, A; Hargreaves, Paul, A; Harper, Alan, A; Harper, Paul, Lisa McMillan - Professional Development Advisor, P; Harrington, John, A; Harris, Peter, P; Heenan, Graham, A; Heesterman, Bruce, P; Henry, David, A; Southern Region Hill, James, A; Hogg, David, A; Holland, John, A; Hollway, Jan, P; Hook, Gary, P; Horsley, Graeme, A; Sue Scott - boardroom Editor and Hoskins, Terry, P; Hudson, Margo, P; Hughes, Paul, P; Hughes, Peter, P; Huria, Susan, A; Hutchison, Media Manager Craig, P; Hutchison, Peter, A; Irvine, Bruce, A; Irwin, Rob, A; Jackson, Andrew, A; Jacobi, Stephen, Frank McCarthy - Accounting Manager P; Jamieson, Alton, A; Janes, Richard, A; Jefferies, Jim, A; Jefferies, Pamela, A; Johnson, Kevin, P; Kate Barr - Accounts Administrator Jones, Clive, P; Judd, Gary James, A; Kayes, Terry, A; Kearns, Paula, P; Kelly, Chris, A; Kelly, John, Yvonne Tunley - Office Administrator P; Kennedy, Graham, A; Kennerley, Jeremy, P; Kensington, Bryan, A; Kerr, Trevor, A; King, Tony, A; Kinzett, Tony, P; Koh, Liz, P; Kreft, Brian, A; Larsen, Warren, A; Lawrence, Alister, A; Leck, Stuart, Branch Managers A; Lee, Bill, A; Leech, Gary, A; Leighs, Anthony, P; Lewis, Ron, P; Liddell, Ross, A; Lockie, James, P; Loughlin, John, A; Luxton, John, A; MacGibbon, David, P; Mair, David, P; Maling, Sam, A; Mander, AUCKLAND Steve, A; Mann, Robin, A; Marriott, David, P; Marshall, Tom, A; Mathias, Lee, A; Maurer, Hans, P; Shirley Hastings McArley, Simon, A; McAuley, Sid, A; McCliskie, John, A; McCracken, Keith, A; McDermott, Peter, PO Box 87409, Meadowbank, Auckland 1742 P; McDonald, Kerry, A; McElwain, Jim, P; McGregor, Bruce, P; McIvor, Sam, P; McKee, Juliet, A; bus: 021 324 340, fax: 04 499 9488 email: [email protected] McLachlan, Giselle, P; McLauchlan, Stuart, A; McLeod, Bill, A; McRobie, Ross, A; Meyer, Phillip, A; Milne, John, A; Montgomery, Peter, A; Mowbray, John, A; Moxon, Tureiti, A; Moyes, Warren, WAIKATO A; Mudford, Penelope, A; Mulvey, Phil, A; Munro, Noeline, A; Newell, Kyran, P; Newman, David, Leanne Summers A; Nicholas, Taari, A; Nicolson, Malcolm, A; Noakes, Rob, P; Norgate, Craig, A; O’Grady, Mark, PO Box 9008, Hamilton 3240 A; O’Neill, Ross, P; Olssen, John, P; Osborne, Graeme, P; Palairet, John, A; Palmer, John, A; Park, bus: 021 358 772, fax: 07 855 6712 Darryll, A; Parker, Dennis, P; Paterson, Alison, A; Paterson, Brook, P; Pickering, Mark, P; Polson, email: [email protected] Raymond, A; Poole, Hilary, P; Poole, Owen, A; Pope, Joe, A; Poppe, Philip, P; Porus, Jack, A; Price, Bay of Plenty Craig, A; Price, Felicity, P; Punter, Richard, A; Putt, Susan, P; Quinn, D’Arcy, A; Ractliffe, Anthony, A; Leona Smith Radford, Ginny, A; Rae, Bill, P; Rattray, Earl, A; Reilly, Bill, P; Richards, Bruce, A; Robertson, Colin, PO Box 5422, Mt Maunganui 3150 P; Robertson, John, A; Robertson, Linda, A; Robinson, Sam, A; Rolleston, Humphry, A; Roper, bus: 021 557 116, fax: 07 572 0018 Tim, P; Sandford, John, A; Saunders, Caroline, P; Saxton, Oliver, A; Scanlon, Jay, A; Scott, Ron, P; email:[email protected] Seton, John, A; Shale, Denham, A; Shaw, Owen, P; Sheridan, Bruce, A; Sherwin, Murray, A; Simm, Mike, A; Simmons, Norrey, P; Simpson, Tania, A; Smail, Sheryl, P; Small, Francis, A; Smith, Acton, A; WELLINGTON Smith, Mike, P; Smith, Nigel, A; Smith, Steve, A; Smith, Wayne, P; Southey, Christine, A; Sparrow, Jeanette Wogan Ken, A; Spicer, Richard, P; Spring, Mark, P; Staley, Susie, A; Stanley, Kevin, P; Stanton, Michele, P; PO Box 25253, Wellington 6146 Stanway, Judith, A; Stenhouse, Mike, A; Stock, Ormond, A; Storey, Graeme, P; Strong, Murray, A; bus: 027 566 8589, fax: 04 499 9488 Stuart, Gordon, P; Taylor, Keith, A; Taylor, Mark, A; Taylor, Peter John, A; Taylor, Vicky, P; Thessman, email: [email protected] Warren, A; Theyers, Colin, A; Thom, Denis, A; Thomas, Barry, A; Thomas, Geoff, A; Thomas, Shelley, NELSON MARLBOROUGH P; Thomson, Ray, A; Towers, Dale, P; Tremain, Carolyn, P; Tuck, Warwick, P; Valentine, Elizabeth, Julie Baxendine P; van der Lans, Helma, P; Vulinovich, Mario, A; Waddel, Richard, A; Walden, Rick, P; Watson, PO Box 1744, Nelson 7040 Keith, A; Watt, Bevin, P; West, Andy, P; Westlake, Richard, A; Whalley, Robin, P; Wicksteed, Kim, A; bus: 03 546 6768, fax: 03 546 6767, mob: 027 622 8188 Wilding, Tony, A; Williams, Lyn, A; Willock, Patrick, A; Wilson, Roger, A; Wilson, Will, P; Wiseman, email: [email protected] Martin, A; Withers, Joan, A; Withy, Alan, A; Wong, Rodney, A; Wood, Brian, A; Wood, Denis, A; CANTERBURY Woodard, Mark, P; Woolfield,Tim, P; Wright, Alistair, A; Wrightson, Jane, P; Wyatt, Craig, P; Sharynn Beaven Young Cooper, Adrienne, A; Young, Sam, P PO Box 36521, Christchurch 8146 A = Accredited, P = Provisionally Accredited bus: 03 355 6650, fax: 03 355 6850 email: [email protected] boardroom is published 11 times a year by the Institute of Directors in New Zealand (IoD) OTAGO SOUTHLAND and is free to all members. Subscription for non-members is $150.00 per year. Articles in Vivienne Seaton boardroom are designed to inform and stimulate readers in areas of interest for directors, PO Box 5868, Dunedin 9058 but they do not reflect IoD policy unless specifically stated. bus: 03 481 1308, fax: 03 481 1306 Editor: Sue Scott 027 4521 248 or [email protected] email: [email protected] Board Services with Ian Niven boardroom 19

Interviewing candidates for a directorship Is interviewing candidates for a director role different from interviewing candidates for an executive role? Yes and no. The role of a director is different from that of an employee in areas such as legal duties, accountability and personal liability. The starting point for any interview, however, is much the same – but here are some specific things to look for:

1. Has the candidate prepared well These could include the handling examples of how he or she has and how much does he/she know of confidential information and contributed as a director to the about the company, its products, disclosure and management of choice of strategic direction for an services and culture? conflicts of interest. organisation. Look for insight, not just general knowledge. A good answer would 5. Does the candidate try to ‘sell’ 9. Can the candidate provide examples show the candidate has insight himself or herself to you? of how their actions as a director into what drives success in the A candidate for any director role have made a significant difference organisation. Candidates should also should present well and keenly to a decision or course of action? ask about the nature of induction engage in the interview. As in any Given that directors need do much and ongoing programmes for other role, attitude is all-important more than just turn up to meetings, upskilling. and predictive of the level of the candidate should be able to engagement in a directorship. describe actual achievements that 2. Why is the candidate interested in show ability to add value. the role? What can they bring to the 6. Does the candidate ask probing board table that will be able to help questions about the operation and 10. Would the candidate be a good fit the organisation to be successful? culture of the board? with the culture and dynamics of Candidates need to show they The candidate should be keenly the board? identify with the organisation. interested in the style of the chair, This is the ‘million dollar question’ Experienced people often think the robustness of debate, tolerance when all others have been their CV speaks for itself, but the of dissenting views and avoidance of answered. But remember – culture key to being successful in a new ‘groupthink’. and dynamics are not static and directorship is how well they apply new blood should be brought in to that knowledge, and acquire new 7. Has the candidate ever taken an encourage change. knowledge. individual stand on an issue at the board table? If so, how was For any organisation, there will 3. What is the candidate’s time that received and what was the be many other questions to ask. If availability for this directorship? outcome? you need help in this area, contact Directors often have a portfolio Independence of mind is a key the IoD’s Board Services team by of directorships. If the director characteristic of a good director. At emailing [email protected] or is to serve the organisation well, the same time, the candidate should telephoning 04 499 0076. he/she must be able to dedicate be able to show a readiness to listen appropriate time to the role. and change his or her own views if necessary. 4. What ethical and cultural values would the candidate bring to the 8. Does the candidate know the board and its decision-making? importance of strategy in the role of The candidate should be able the board? to describe occasions when they The candidate should be able to have demonstrated strong ethical describe the role of the board values in difficult circumstances. in strategy and vision, providing 20 boardroom Branch Events Courses

MAY 27 May, Rotorua Function Governance Essentials 5.00 pm at The Heritage Rotorua 6 May Christchurch 4 May, Wellington Function Speaker: Sir Wira Gardiner, Chair, Ngati Limited spaces available Committee-led luncheon Awa Group Holdings Ltd 16 Jun Auckland 12.00 pm at IoD National Office Topic: Reconciling Western Best Practice Course full, waitlist operating Speaker: Mr Jim Donovan, director Model and Tikanga and Ahuatanga 13 Jul Wellington Topic: Good Strategy: Making Tough Maori in Governance 17 Aug Dunedin Choices and Meaning it 2 Sep Nelson JUNE 10-12 Sep Queenstown 6 May, Auckland Function By invitation only 7.30 am at the Northern Club 1 June, Wellington Function Not-for-Profit Governance Speaker: Dr Murray Horn, Chairman, 5.30 pm at IoD National Office Essentials Advisory Board for the new National Panel discussion, First Boards: Grown 12 May Wellington Health Board Focus Limited spaces available Topic: Meeting the Challenge in the 30 Jun Nelson 1 June, Nelson Function Health and Disability Sector 26 Aug Auckland 5.00 pm at Trailways Hotel Nelson 28 Sep Christchurch 10 May, Canterbury Function Facilitator: Dr Brian Rhoades, SME Special Interest Group independent director Company Directors’ Course (CDC) 5.30 pm at the Copthorne Commodore Topic: Working with a Board in a Small 9–14 May Auckland Hotel Company Course full, waitlist operating Speakers: Dr Nicki Crauford, CEO, IoD 13–18 Jun Wellington 15 June, Tauranga Function and Mr Andrew Plimmer, CEO, Motim Course full, waitlist operating Technologies Ltd 12.30 pm at The Sebel, Trinity Wharf 11–16 Jul Tauranga Speaker: Ms Patsy Reedy, director 8–13 Aug Auckland 12 May, Hamilton Function Topic: Women on Boards 7.00 am at The Ferrybank Reception and Chairing the Board 24 June, Auckland Function Conference Centre 25–26 May Queenstown 7.30 am at the Northern Club Speaker: Professor Roy Crawford, Vice 21–22 Jul Auckland Chancellor, University of Waikato Speaker: Mr Bill Payne, US Angel Investor Topic: Startup Boards Experienced Directors’ Workshop 12 May, Wellington Function 30 June, Dunedin Function 23–24 Jun Wellington 7.15 am at The Wellington Club Limited spaces available Sir Peter Blake Trust Leadership Week Speaker: Professor Bob Buckle, Pro Vice- Company Chairman’s Workshop Chancellor, Victoria University event 10–12 Sep Millbrook Resort, Topic: Reflections on the Process, 5.00 pm at Larnach Castle Queenstown Principles and Prescriptions of the Tax Speakers: Mr Hamish Saxton, CEO, 12-17 Sep Queenstown Working Group Tourism Dunedin and Mrs Margaret Barker, Director, Larnach Castle Ltd 21-22 Sep Auckland 20 May, Wellington Function Topic: Leadership in the Tourism Industry Finance Essentials 6.15 pm at the Wellington Club in Dunedin 25 May Hamilton Speaker: Ms Joan Withers, director This is an additional course Topic: The Reality of Life as a Director - JULY 2 Jun Christchurch the Good, the Bad and the Ugly 18 Aug Dunedin 7 July, Hamilton Function 20 May, Dunedin Function Strategy Essentials 5.00 pm at The Dunedin Club 7.00 am at The Ferrybank Reception and Christchurch Speakers include Dr Nicki Crauford, CEO, Conference Centre 3 Jun 19 Aug Dunedin Institute of Directors Speaker: Ms Jo Brosnahan, Chairman, Leadership New Zealand Effective Audit Committees 24 May, Canterbury Function 5.45 pm at The George 29 July, East Coast Function 18 May Auckland Speaker: Mr Rick Christie, company Venue to be confirmed 4 Aug Wellington director Speaker: Sir George Fistonich, Villa Maria Topic: Mergers and Acquisitions - Facts Wines and Fantasies Registrations for all courses can be made online at www.iod.org.nz

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