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A note from the editor
The beautiful image on our cover this issue is courtesy of Te Papa. It was taken by Jo Moore at the opening weekend of Te Papa’s Toi Art exhibition. In this issue, The Agenda Te Papa chair Evan Williams talks about AUGUST / SEPTEMBER 2018 the museum’s goal of honouring the past while looking to the future, and we feel INSIDE IoD this photo captures that spirit. Former All Blacks captain David Kirk BoardRoom details gets philosophical about duty and morals. 01 Drawing on his philosophy degree from 07 02 CEO letter the University of Oxford, he explains why directors and business leaders need 03 UpFront to go back to basics and rethink moral frameworks if they want to build trust. 03 DirectorVacancies New Zealand Trade and Enterprise (NZTE) has contributed a piece on why 21 GLC Update companies that want to globalise need a global board. 41 Out and About Climate change is becoming top of DAVID KIRK / Rethinking mind for directors and other business moral frameworks in 43 Events leaders and it’s a topic we’re exploring order to build trust. in this issue. The New Zealand chief FEATURES executives of 60 organisations recently formed the Climate Leaders Coalition, 07 David Kirk gets pledging to reduce emissions and to play philosophical a leading role in transitioning the country to a low emissions economy. Submissions 11 11 Te Papa chair Evan Williams also recently closed on the Zero Carbon talks museum governance Bill. The IoD put in a submission on this, something our Governance Leadership 15 Mahuki: Culture tech Centre (GLC) talks about in its GLC at the museum Update. Two of our national sponsors also tackle climate change this issue. 27 IoD Directors’ Fees MinterEllisonRuddWatts, which is a new Survey results national sponsor of the IoD, looks at three different types of climate change 29 Private equity governance risks for businesses, including physical TE PAPA / An angel at the board table risks, economic transition risks and Governance 33 liability risks. Meanwhile Marsh provides at the museum Developing future talent a practical approach to how companies 34 can build climate resilience and gain 35 Going global starts a competitive edge. at the top We’re also pleased to be able to present findings from our recent IoD 39 Mentoring for diversity Directors’ Fees survey, and introduce 29 the latest intake of mentees for our Mentoring for Diversity programme. FROM OUR PARTNERS
Kate Geenty 17 The rising tide / BoardRoom editor MinterEllisonRuddWatts 19 Climate change resilience: The challenges ahead / Marsh PRIVATE EQUITY / 25 What’s currently top BoardRoom is the magazine Private equity investors’ of mind for your CEO? / of the Institute of Directors approach to governance KPMG in New Zealand iod.org.nz BOARDROOM DETAILS
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Cover image credit: Toi Art Opening Weekend Events and Programmes, 2018. Photograph by Jo Moore. Te Papa. When you have finished with this magazine, please recycle.
BOARDROOM August/September 2018 1 CEO LETTER
Malo e lelei Dame Margaret noted that a culture change of the magnitude envisaged by It was Mahatma Gandhi who said “a this review takes a long time to effect. nation’s culture resides in the hearts and She estimates it will take 10 years and minds of its people”. But where does the notes the essential role that the board culture of a company reside? will play in ensuring the culture is The One of the most requested sessions monitored, measured and reported for our leadership conferences each on if the momentum and priority is to year is ‘war stories’ or case studies of be maintained. culture governance ‘failures’ so we may learn from The transparent and public release others’ mistakes. Yet it can be difficult of the report was a brave and courageous to find examples where people are able, move by the firm and has the opportunity change or prepared, to speak about times when to have impacts beyond their own governance was hard, tricky, and where transformational culture change. things have not gone as intended. A recent Law Society survey revealed The recent release of the Independent that there are bullying and harassment Review of Russell McVeagh by Dame issues across the entire legal profession. Margaret Bazley is a glimpse into one of Just as people behave within a company these examples that we as a governance context, companies themselves also exist community cannot afford to waste. within an industry context. We would be Failings were found in the firm’s naïve to think that issues are restricted governance, structure, management, to one organisation or even one industry. policies, standards, and systems. The Good governance demands of us review references that the report “reflects that we are scanning across industries KIRSTEN PATTERSON the commitment to telling the story of for trends and messages that we should CEO, INSTITUTE OF DIRECTORS what happened and didn’t happen and adopt, or that could impact our own the dreams and disappointment of the organisations. people who have worked for the firm Gandhi not only gave us the well- in recent years.” known and often quoted “be the change The Bazley report speaks to you wish to see in the world,” but he independent review of governance also importantly expressed that “action structures, the tenure of board chair and expresses priorities”. board members, the role of the board It may be time to reflect if our actions chair, the role of the board in driving and questions as directors are expressing transformational culture change, the the priority of culture change that we all appointment of independent board wish to see. members, and the adequacy of board reports. The report also recommends Faka’apa’apa atu, that board committees and appointment processes be reviewed. All important and Kirsten (KP) relevant messages for many organisations beyond those just in the legal fraternity.
BOARDROOM August/September 2018 2 UPFRONT UpFront
Director Vacancies
DirectorVacancies is a cost- APPOINTMENTS Douglas McKay, ONZM effective way to reach our extensive Chartered Member, has been appointed membership pool of director talent. George Adams to the board of Fletcher Building. We will list your vacancy until the Chartered Member, has been appointed application deadline closes or until to the board of Cavalier Corporation. you find a suitable candidate. Karen Price Contact us on 0800 846 369. Chartered Member, has been Barbara Chapman appointed as independent chair Unless otherwise stated, the following Chartered Member, has been appointed of The Learning Wave. positions will remain open until filled. to the board of Fletcher Building.
HANSA PRODUCTS LTD Cathy Quinn, ONZM Role: Independent Director Mary Devine, ONZM Chartered Member, has been appointed Location: Hamilton Chartered Member, has been to the board of Fletcher Building. Closing date: 31 August appointed as an independent non-executive director of YHA NEW ZEALAND Hallenstein Glasson Holdings. Kevin Sceats Role: Board Member (Elected) Charted Member, has been appointed Location: National chair of New Zealand Certified Builders. Closing date: 7 September Abby Foote Chartered Member, has been SPORT NORTHLAND appointed as an independent Rowan Simpson Roles: Centrally-held list of Directors/ director of Freightways Ltd. Chartered Member, has been appointed Director Pool to the board of Sport New Zealand. Location: Auckland and Whangarei Diane Hallifax NEW ZEALAND AMERICAN FOOTBALL Member, has been appointed to the Denis Snelgar FEDERATION INC board of the Waikato Rugby Union. Chartered Member, has been appointed Role: Appointed Board Member non-executive chair of boutique project Location: Auckland management firm Pragmatix. Closing date: 31 August Mark Hamilton Member, has been appointed ARTSPACE AOTEAROA TRUST NZ to the board of Freshpork. Aaron Snodgrass Role: Trustees Chartered Member, has been appointed Location: Auckland chair of the Dilworth Trust board. Wendie Harvey AUCKLAND TRANSPORT Member, has been appointed Role: Independent Director to the Fire and Emergency Anne Urlwin Location: Auckland New Zealand board. Chartered Fellow, has been appointed Closing date: 23 September to the board of Tilt Renewables.
REGIONAL FACILITIES AUCKLAND Malcolm Inglis Role: Independent Director Chartered Member, has been Location: Auckland appointed to the Fire and Closing date: 23 September Emergency New Zealand board.
BOARDROOM August/September 2018 3 UPFRONT
MINTERELLISONRUDDWATTS A NEW NATIONAL SPONSOR
MinterEllisonRuddWatts and the Institute of Directors leadership papers on governance, providing strategic advice (IoD) are proud to announce a new partnership that will to boards and holding leading governance symposiums. further support the growth and expertise of New Zealand’s The national law firm’s Chair, Lloyd Kavanagh, says, governance community. “We understand the importance of strong governance to “We are delighted to announce MinterEllisonRuddWatts maximise opportunities and minimise risks to achieve the as an IoD national sponsor,” says IoD Chief Executive Kirsten very best business outcomes. Patterson. “As a full service law firm MinterEllisonRuddWatts “Our legal expertise and commerciality of our advice has a wealth of experience across a number of sectors complement the great work the IoD does to support New including energy and resources, infrastructure, government, Zealand’s business community, making our new partnership health, banking and financial services, managed funds and a natural fit. We are delighted to be working alongside the technology. We look forward working with the team there IoD to create better business for New Zealand through to provide thought leadership and insight and create events better governance.” and opportunities that build knowledge for our members.” MinterEllisonRuddWatts joins ASB, Aura, Marsh and MinterEllisonRuddWatts has long championed good KPMG as national partners or national sponsors of the IoD. governance in New Zealand, including publishing thought
Q: Who authorises director fees?
The board can authorise director fees in certain circumstances (see s 161 of the Companies Act 1993). However, a company’s constitution may provide that fees must be sanctioned by shareholders. NZX listed companies must obtain shareholder approval by ordinary resolution for increases in the director fees pool. MĀORI GOVERNANCE TRAINING
Iwi governance training courses developed Feedback from earlier TPK/IoD by the Institute of Directors (IoD) and Te governance programmes has indicated Puni Kōkiri (TPK) are running again over that the knowledge and experience the coming months to November. shared is highly effective for iwi boards Our three-day Ngā Pae Hihiri (Māori in achieving their outcomes. governance) training programme will be The first course took place in Wairoa in delivered to 12 boards across the country. mid-July. IoD’s Delivery Manager, Robbie Up to 20 trustees will attend each course. McDougall and Professional Development Ngā Pae Hihiri aims to enhance and Manager, Paul Gardner, travelled to Wairoa deepen iwi governance capability and for a pōwhiri to mark the occasion. contribute to long-term iwi success.
In picture above: (left to right) Robbie McDougall, course facilitator Susan Huria, kaumātua Hemana Eruera, TPK representative Kemara Keelan, Hera Koia, Paul Gardner.
BOARDROOM August/September 2018 4 UPFRONT
IoD approaching its 30th
Next year will mark 30 years since the Institute of Directors in New Zealand Inc was registered as an incorporated society. Until 1989, the IoD operated in New Zealand as a division of the IoD UK. As we get ready to mark the milestone, we’re getting nostalgic, with a look at some BoardRooms from the past.
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Call (03) 338 0013 or visit calderstewart.co.nz FEATURE
Moral duty and trust
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BOARDROOM August/September 2018 7 FEATURE
Former All Black captain and current t is not usual to talk about moral The All Blacks, Kirk says, need trust chair of several NZX and ASX- duties when discussing directors’ to function. “You have to trust other listed companies, David Kirk, gets Iresponsibilities but David Kirk says people to do the right things at the right philosophical about duty and morals. when it comes to building trust the time. Props trust that locks will push in Drawing on his philosophy degree concept of moral duty is an important the scrum, locks trust props will lift them from the University of Oxford, he consideration. He also says the All Blacks in the lineouts. You have to trust the tells Kate Geenty why directors and culture, the most powerful culture he has coach’s selection decisions, defence lines business leaders need to go back to ever been a part of, is grounded in duty. have to trust each other. There can be basics and rethink moral frameworks Kirk is based on the other side of no team cohesion without trust. The All if they want to build trust. the Tasman these days, where he is a Blacks have to trust each other and that co-founder and partner of the ASX-listed trusting behaviour builds trustworthiness growth-stage information technology in each member of the team.” investment fund Bailador. He’s still very connected to New Zealand, though, WHEN TRUST DISAPPEARS coming back every few weeks in his roles as chair of listed companies Kathmandu Trust is in short supply in the Australian and Trade Me. business landscape at the moment. Although he has had a long and The Royal Commission into Misconduct distinguished career, which includes in the Banking, Superannuation and working as a doctor, a political advisor Financial Services Industry has uncovered and CEO of Fairfax Media in Australia, for multiple instances of misconduct and many New Zealanders Kirk will always be toxic cultures. The fallout from the the fresh-faced captain of the All Blacks, Commission has already seen AMP’s holding the inaugural Rugby World Cup chair step down, alongside several board aloft in 1987. members. The ripples are also being felt in Kirk says his time in the All Blacks industries outside the scope of the inquiry. instilled in him valuable lessons about the “Directors are wrestling with this,” Kirk importance of duty and trust. “If you think says. “How can we build a trustworthy about the All Blacks, all we ever did was culture? What will cause people to start try and exercise our duty – our duty to the to trust institutions again?” All Black legacy, our duty to win the game, While the Commission is likely to our duty to our teammates, our duty to lead to some practical changes in the New Zealand and finally our duty to do way Australian businesses operate, Kirk the best for ourselves and to realise our says this will not necessarily affect the own potential as rugby players and a team. fundamentals that caused things to Being an All Black is all about duty, and go wrong in the first place. He thinks it’s not for everyone.” directors and other business leaders need Alongside duty, the second crucial part to reflect on the importance of the ethical of the All Blacks’ culture was trust. Kirk basis of trust, or nothing will really change. notes there are many academic studies “If we are to rebuild trust in politicians, that show a strong correlation between company directors, priests and all sorts people who are prepared to trust other of institutions that have lost the trust of people and their own trustworthiness. people, we need to understand that trust “If you’re a trusting person, and trust others is built by moral conduct not pragmatic to do the right thing by you, then you’re or even winning conduct,” Kirk says. much more likely to be the type of person A man with many feathers in his cap, other people can place their trust in.” Kirk isn’t talking flippantly about moral >>
01: David Kirk with the Rugby World Cup 1987.
BOARDROOM August/September 2018 8 FEATURE
Props trust that locks frameworks; it’s a subject he’s familiar has retained the trust of many Americans with. After retiring from international because he has tried to keep his promises, will push in the scrum, rugby after the 1987 World Cup, he took that is, he has done his duty by the voters locks trust props will lift up a Rhodes Scholarship at the University who voted for him. He has set out to build of Oxford, where he gained a degree in the wall, change trade agreements, make them in the lineouts. Philosophy, Politics and Economics. Kirk the Europeans pay more for their own draws on this academic knowledge of defence and so on. Whether you like the You have to trust philosophy as he talks about different policies or not, his sticking to them after the coach’s selection moral frameworks and how they influence the election has made him trustworthy the development of trust. He notes there for his base.” decisions, defence lines are two broad frameworks governing Kirk says consequentialism as a moral have to trust each other. moral behaviour. framework does not instil trust any more. Consequentialism is the moral “For many people outcomes are too open There can be no team framework that most of the business to manipulation and varied interpretation. and political world has followed for a Businesses need to think more carefully cohesion without trust. long time. Under this framework, the right about communicating a duties-based David Kirk thing to do is based on the outcome of moral framework. Boards need to be clear your actions. “Which in many contexts that whatever the outcome, some duties makes a lot of sense, because if you look are inviolable.” at the outcome, and the outcome is good, Kirk says, “Unless we are prepared to then you must have done the right thing take a pretty rigid approach to a duties- people think,” Kirk says. based moral framework, we’re not going But he gives an example of how to get ourselves out of this massive utilitarianism, the consequentialist moral trust deficit.” theory that says the right action is the action that produces the greatest good DOES DISCLOSURE LEAD TO for the greatest number, has undermined TRANSPARENCY? trust. “Globalisation has meant that what is good for the world economy in One of the ways regulators and politicians aggregate is often not good for particular have tried to improve trust in institutions people in particular countries. Decisions has been to demand more disclosure. that produce the greatest good for the They have turned to paperwork in a bid greatest number undermine the trust of to create trust, requiring more and more the people who do not see the benefits disclosure from business. But Kirk says of the decisions.” more disclosure does not equal greater “Free trade is a good example of this. transparency. He says while disclosure It’s inarguable that trade increases the helps to some extent, after a certain net economic wealth of trading nations. point it can do more harm than good. But the benefits of trade are not evenly “Take remuneration for senior executives,” distributed. In the USA the technologists he says. “Detailed disclosure has resulted in Silicon Valley are huge winners, the in the exact opposite of what proponents steel makers in Pittsburgh are big losers.” of disclosure wanted. Disclosure has The second moral framework Kirk caused salaries to go up, not down. Boards references is Kant’s theory that the right never go to chief executives who are at action is the action that fulfils your moral the top of pay bands and say ‘Oh, it looks duty. In this theory it doesn’t matter what like you’re being overpaid, you’ll have the outcome of the action is; so long as to go down’, that doesn’t happen. It all it fulfils a moral duty then it is the right gets benchmarked up, nothing gets thing to do. Kirk notes, “Donald Trump ratcheted down.”
BOARDROOM August/September 2018 9 FEATURE
In Australia, banks already face hefty disclosure requirements, but that hasn’t stopped the bad behaviour that is being highlighted by the Royal Commission. “There’s a stupendous amount of information banks have to give to their boards and their regulators. There’s just no way in the world that all of that increasing disclosure has resulted in increasing transparency. It just overwhelms regulators and befuddles boards. Instead of directors being able to focus on say, 50 pages of reading that is actually important, they have to wade through 500 pages, 450 pages of which are merely disclosure for the sake of it.”
THEORIES IN PRACTICE
Kirk admits that until recently he has approached trust and morals in “much the same context as I suspect most other board directors have been thinking about it. ‘Think about what the right outcome looks like and do what will deliver that’.” However he now believes, while that’s still an important way to think, it’s probably not enough to build and maintain trust. “As directors we need to be more explicit about what we understand our duties to be and always act according to them.” The next step is working out how to put these theories into practice. 01 “I don’t think it’s impractical to talk about ethical theories in the context of business management and board directorship. Maybe the Institute of Directors should mandate a course in moral philosophy for directors”, he laughs.
01: David Kirk, present day. 02: David Kirk holding the Rugby World Cup 1987. 02
BOARDROOM August/September 2018 10 Governance at the museum
As the Museum of New Zealand Te Papa Tongarewa celebrates its 20th anniversary, Kate Geenty talks to its chair Evan Williams about the challenges and rewards of governing the national museum, which included blurring some governance lines to guide the institution through tough times.
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Toi Art entrance, 2018. Photograph by Kate Whitley. Te Papa. FEATURE
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hen Evan Williams first became “[Weta Workshops founder] Richard CHALLENGES AND REWARDS the chair of Te Papa’s board [Taylor] and I sat and looked at each other OF MUSEUM GOVERNANCE Win 2013, he admits he was across a room in July 2013 and knew that much more hands-on than is usual for a we had to open on Anzac Day in 2014. We While the Gallipoli exhibition was a triumph, governance role. It was a tough time for didn’t have any designs, we had a concept it isn’t always straightforward to define the museum, which was facing an annual only. Essentially we made a schoolboy success in a museum environment. deficit of up to $14 million after two loss- pact. We said, ‘We are going to honour the As well as weighing up the commercial making exhibitions and a turbulent time. memories of the men who died and their considerations needed to ensure Te Papa Te Papa’s chief executive resigned, and families, in a manner that they would be remains financially viable, its directors Williams was effectively in the hot seat really proud of’. We walked a really fine also have to take into account cultural, until a replacement was found. line of not glorifying war, not shying away scientific and public service concerns. “I got brought on originally because from the horrors and reality of war, not “They don’t always sit in the same box there was a clear set of signals that there making it into some romanticised love and they don’t always point in the same was an issue, and I sorted that issue out,” story, and helping people to understand direction,” Williams says. Williams says. “But in order to do that I what it was like to be there. That’s what In business terms, Te Papa is no had to dive very deeply, roll my sleeves up those big figures were designed to do. minnow, with nearly $2 billion in assets. and actually get personally involved. This They were designed to produce an Economic studies show it drives a large walked past all the normal governance/ emotional connection.” proportion of Wellington’s tourism, executive distinctions, but it had to The Gallipoli exhibition went on to contributing around $100 million a year happen at that point.” become Te Papa’s most popular ever, net GDP to the capital. Te Papa has an Williams describes this first phase with more than two million visitors. More operating business of around $64 million of his term as a time of reconstruction, than 90 per cent of people who visited it and has to earn around half of that itself, reorganisation and financial discipline, said their view of war had fundamentally through things like ticketing, events as the board clawed back the deficit to changed as a result of seeing the exhibition. and conferences, retail merchandising $8.7 million, and stabilised the museum. and exhibitions. >> One of the projects which Williams was deeply involved with during this period was the Gallipoli: The scale of our LEGISLATION war exhibition, a collaboration with Weta Workshops. The project took just nine Te Papa was established by the Museum of New Zealand Te Papa Tongarewa Act months to complete – a mammoth effort in July 1992. Under the act Te Papa is mandated to provide a forum in which the considering exhibitions of that size would nation may present, explore, and preserve both the heritage of its cultures and typically take years. knowledge of the natural environment in order to better:
understand and treasure the past enrich the present, and meet the challenges of the future.
01: Evan Williams, Chair of Te Papa, 2018. Photograph by Michael O’Neill. Te Papa. Source: Te Papa’s Statement of Intent, 2017–2022 02: Visitor at Gallipoli Opening, 2016. Photograph by Kate Whitley. Te Papa.
BOARDROOM August/September 2018 12 FEATURE
From a cultural standpoint, Williams BOARD COMPOSITION CONTROVERSY AND CRITICISM describes Te Papa as a bicultural institution with a multi-cultural mandate, Museum governance requires a diverse Te Papa has occasionally attracted which makes it unique in terms of skill set to be able to balance the mix controversy in the 20 years it has been global museum practice. He says it also of commerce and culture. In his time as around, copping criticism about issues combines a number of museums in one Te Papa chair, Williams has worked with ranging from the shape and size of – a national art gallery, a natural history three different government ministers to its building, through to accusations and science museum, an ethnographic build what he calls a portfolio board. Te of dumbing down exhibition and museum, and a history museum. Papa’s board has an even gender split, content choices. “It’s a very rich and rewarding something Williams says he has actively Williams says while some of that environment, but you do find you get driven, and there’s also a diversity of criticism has been valid, some hasn’t. into these multi-faceted issues where skills and experience. “If you think about “Te Papa has mis-stepped here and there, you can’t simply say ‘well, we’re going to governance, it represents a multiplicity but it’s always been in sensitive areas. sell x number of that product which will of people, multiple people from multiple In the arts it’s very unusual for people to bring in so many dollars, and it costs z to backgrounds, who have different agree, especially if you are at the forefront make, and the result is this.’ All businesses experiences to offer, and in this job, of things.” have complex pieces around them, but people who can bring experiences Te Papa isn’t shying away from this one happens to have some very, of different cultures.” potential controversy in the future, and very intangible values that are very hard Williams says Te Papa’s board is currently working on a project that to measure but are actually almost the members need to be able to have a view Williams says will provide a safe place strongest drivers to the value that the on national issues over many subjects, for difficult conversations. “That concept museum delivers.” deal with complex specialist areas in a is in itself highly controversial. It will be real way, and make choices. “Creating an conversations, and not debates, and not effective governance culture and holding with politicians. People will talk about 20 YEARS OF TE PAPA the organisation to account requires difficult issues, the ones we don’t talk BY THE NUMBERS bold choices, often within conflicting about calmly as a country.” strategies. What is not done is usually Williams can’t go into details about the 170 exhibitions have opened harder to define than what is done. content or timeline for these discussions, The debate and discussions within the but says planning is well underway. 1,580 works of art have been board, senior management and specialist Providing a forum for ideas and treated by conservators staff is rich, complex and value-laden. discussions is just one of the ways 700 scientific expeditions With such questions on the table Te Papa is meeting its mandate of governance is exciting and demanding. “understanding the past, enriching the 1.3 million shakes of the From my perspective the single biggest present, and meeting the challenges of the earthquake house contribution to the future of Te Papa at future”, which is outlined in the Museum of a governance level has been the quality, New Zealand Te Papa Tongarewa Act 1992 3,500 children have been lost diversity and reach of the board members (see box on previous page). Education is (and found) at the museum with whom I have been privileged to serve.” another. Hīnātore is an education project Williams likes working with directors that the museum is rolling out in schools who aren’t afraid to ask questions and throughout the country, in conjunction push boundaries. “As a chair my briefing with the Ministry of Education. Drawing on to incoming board members starts with Te Papa’s digital and traditional resources, exactly the same statement, which is: Hīnātore uses culture to turbo-charge ‘My favourite questions start with the learning, says Williams. “The way I put it, words ‘this might sound like a dumb as a non-specialist, is if you have someone, question, but…’. When I chair I really say a young teenage Māori boy who is encourage people to venture out of their not interested in maths, and you expose comfort zone and not stay safe. You have him to the learnings of his ancestors with to be able to say ‘I’m sorry but I don’t navigation and waka, and he can see understand this, could you run that one digital footage of some carefully curated by me again?’ Invariably those kinds things from travelling waka from the of questions uncover an issue.” day, as well as some actual taonga, the chances of that teenager scoring 60 or 70 per cent in maths instead of 20 are quite high. What we’ve found is these cultural approaches to education motivate people really, really strongly.”
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BOARDROOM August/September 2018 13 FEATURE
EXPANDING THE REACH TE PAPA’S MOST POPULAR PAID EXHIBITIONS The national museum is looking to extend its physical footprint beyond the Exhibition Dates Visitor numbers initially somewhat controversial edifice that has graced Wellington’s waterfront Lord of the Rings 19 Dec 2002–21 Apr 2003 219,539 for the past 20 years. Planning is well underway to open new premises in Monet and the 14 Feb 2009–17 May 2009 152,094 Manukau, Auckland. Impressionists Williams says this project will take the interactivity that is a hallmark of its Whales Tohora 1 Dec 2007–10 May 2008 140,207 Wellington base and build on it. “It’s what we call the platform for participation. The Bug Lab 10 Dec 2016–17 Apr 2017 137,741 audience, the community, curates or co- curates what we do.” Te Papa is looking to Dreamworks 12 Dec 2015–28 March 2016 135,107 put a funding case to the Government for Source: Te Papa. NB: Gallipoli: The scale of our war is the most popular exhibition the Auckland project within the next year. in Te Papa’s history but is free to visit. Williams’s term as chair will end next year. He expects Te Papa to continue to innovate and develop, keeping an eye on the future, as much as the past. “One of the things that has been fantastic to watch is just the pace at which the organisation is moving. People associate museums with slow and steady; it’s not true at all, not at this place. These guys move with lightning speed.” He says the most exciting opportunities for the future of Te Papa lie in continued research within the natural history collections, contributing to new developments in science, pushing further into community and formal education at a national level, and standing out as a guardian of cultural and religious 02 tolerance in New Zealand. “I think the next period of Te Papa’s development will be even more exciting than the last.” FACT BOX
Te Papa opened on 14 February, 1998 When I chair I really Its busiest day was opening day, encourage people to with 35,000 visitors 03 venture out of their There have been more than comfort zone and 28 million visitors to the museum over the past 20 years not stay safe. Te Papa receives around $30 million a year in Crown funding, and earns about the same again from non- Crown sources including commercial 01: Child with headphones at Toi Art, 2018. Photograph by Jo Moore. Te Papa. enterprises (corporate functions, 02: Toi Art visitors view t by Rebecca Baumann, food and retail outlets, car parking, 2018. Photograph by Jo Moore. Te Papa. museum tours); exhibition revenue, 03: Visitor views Indra’s Bow by Tiffany Singh, 2018. Photograph by Jo Moore. Te Papa. grants, and investments; and 04: Toi Art spatial view of build design, donations and sponsors. 2018. Photograph by Kate Whitley. Te Papa. 04
BOARDROOM August/September 2018 14 FEATURE
Culture tech at Te Papa
Culture meets technology at Te Papa’s innovation accelerator, Mahuki. The museum’s tech hub aims to help digital entrepreneurs develop business ideas for the culture, heritage and education sectors.
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e Papa chair Evan Williams CULTURE AND COMMERCE information. For this reason, we need to says Mahuki is an example of include the voices of our communities, the museum pushing the boat Museums are complex and sizable enable conversations and sharing, and out into unchartered waters businesses, so would-be innovators provide places where audience-generated T– mixing traditional museum skill-sets and entrepreneurs need to display content can sit alongside more traditional with high-tech specialists, innovators commercial savviness. “We are actually and authoritative narratives,” Te Hau says. and entrepreneurs. Mahuki has its own a big business, so we are interested in Since its inception more than two advisory board, which includes former enterprise solutions that will help us run years ago, ideas developed within Mahuki Te Papa Chief Executive Rick Ellis, our business more efficiently. We are very include virtual reality tours of artists’ and Te Papa board member, Fran Wilde. interested in data, insights, analytics and studios, digital treasure hunts and “Te Papa has been able to maintain ideas around that,” says Mahuki General animated portraits of historical characters direction and discipline in a governance Manager, Tui Te Hau. that come to life to tell their stories. sense while letting the organisation But the business aspect is just one explore uncharted water. Overall risk of the considerations Mahuki takes into THE PROCESS control lies with Te Papa and the dual account when choosing participants for structure has allowed Te Papa to take the programme, with cultural and social To apply for Mahuki, teams go through risks in a controlled fashion but create drivers equally important. a selection process that starts with an new knowledge and skills and absorb “We are all about being a world- online application, followed by interviews, those into the main board,” says Williams. leading accelerator and producing great and finally an invitation to join the commercial outcomes, but at the same programme. time, we’re interested in a much wider Te Hau says it’s important to Te Papa range of results, in social enterprise and that the teams taking part reflect the ideas that actually empower communities, community. “We’ve grown Māori and and create prosperity through cultural Pacific participation in Mahuki from about opportunities,” Te Hau says. 7 per cent to 41 per cent over the past two Mahuki looks for ideas that can help years,” says Te Hau. “We are a mainstream Te Papa grow and retain its audience, programme but we’ve managed to achieve and tell New Zealand’s stories in new and really great results in terms of diversity.” exciting ways, including through the use Mahuki provides $20,000 in financial of emerging technology such as virtual assistance to teams that go through reality, holograms, gaming, gamification the programme. The teams also get a and animatronics. four-month residency at the Mahuki hub “Contemporary audiences want to be in Te Papa, which gives them full access empowered to contribute to their national to the museum’s resources, experts and story, rather than simply being served networks. “For the entrepreneurs we have
BOARDROOM August/September 2018 15 FEATURE
Challenges How can culture and heritage institutions: Mahuki is create a more multi-lingual experience encourage and inspire life-long for visitors? learning for different age and looking to solve community groups? improve the navigation experience for visitors? streamline their venue hire and event management systems? create more opportunities for dialogue between visitors, staff or curators? create better staff inductions and learning opportunities for staff? create a more inclusive experience for visitors with cognitive, developmental, better track their collections and intellectual, mental, physical, or sensory objects without having to individually accessibility needs? tag them? enable more New Zealanders to improve operational practices to have participate in important and difficult a better environmental impact? conversations with galleries, libraries, archives and museums, such as invent sustainable solutions that care discussions about post-Treaty for the natural environment? settlements? Source: Mahuki.org
content. We are digitising our collection Mahuki’s start-up teams access to INCO’s items and we need stories told,” Te Hau Jump Seat Express Programme – where says. “We have this great content teams can have a one-week learning that those technologists can use for expedition to explore new avenues for their stories.” growth in a foreign market. At the end of the programme, Mahuki Access to these global networks hosts an event where participating teams was one of the things that attracted can showcase their work to potential recent Mahuki alumni Collaborate to investors and customers. the programme. An all-women team, Te Papa also has the option to take Collaborate is creating a volunteer- 02 equity in the teams. “We don’t do that matching programme, which aims lightly,” says Te Hau. “What it means is to streamline the process of finding Te Papa has skin in the game and and screening skilled volunteers and hopefully those teams go on to do really connecting them with community well and we benefit from that and can organisations and not-for-profits. “They reinvest back into the museum.” could have gone to a number of different places but their interest in coming to GLOBAL NETWORK Mahuki was that museums around the world can have anywhere up to 2000 As well as giving access to Te Papa’s to 3000 volunteers on their database, resources, the programme also hooks so in that case it’s a really great platform participants into the global GLAM for them to launch from,” Te Hau says. (galleries, libraries, archives and “And who doesn’t want to have Te Papa museums) network. Te Hau says or the Smithsonian or the Louvre as Te Papa has a strong global reputation, your customer?” and through this network there’s not a Te Hau says Mahuki was the world’s market in the world it can’t reach. “At 1.8 first culture accelerator, but since its million visitors per annum, Te Papa is very inception other museums have set up 03 sizable on the international stage, and it their own incubation programmes. “What 01: Mahuki showcase dinner, 2016. provides really interesting opportunities we’re seeing now is a growing network Photograph by Michael O’Neill. Te Papa. for entrepreneurs and innovators.” of cultural institutions setting up similar 02: Mahuki visits Hīnātore Learning Lab, 2017. Mahuki has also signed up to the INCO types of programmes, so that provides Photograph by Te Papa. 03: Tui Te Hau at Mahuki showcase dinner, 2016. network, a French non-profit organisation all sorts of amazing opportunities in the Photograph by Michael O’Neill. Te Papa. with a global network to help social and future for us to link up.” environmental start-ups. This gives
BOARDROOM August/September 2018 16 CONTRIBUTION BY MINTERELLISONRUDDWATTS The rising tide Lloyd Kavanagh, Chair of MinterEllisonRuddWatts assesses the risks and implications of climate change on business models and assets.
PHYSICAL RISKS ECONOMIC TRANSITION RISKS LLOYD KAVANAGH CHAIR OF MINTERELLISONRUDDWATTS Physical risks are the issues we think of More subtle, but broader, are the economic first. Several are helpfully listed on the transition risks as regulations and market Ministry for the Environment’s website. forces respond to the threat of climate They include higher temperatures, more change. These are not yet as widely wave of consciousness of the extreme weather, rain-pattern changes, discussed, even though they arise whether global impact of climate change and rising sea levels. or not the physical risks eventuate. Ahas inundated directors. But some Farming and horticulture are obvious are still coming to terms with the financial sectors impacted in New Zealand. As New regulation implications for their own businesses. the climate shifts, so do viable land uses. Our new Government has flagged the One of the fundamental duties of Tourism may also be affected, as seasonal priority they will be giving climate change, directors is to exercise the care, diligence weather patterns shift and biodiversity which will result in regulatory change. and skill that a reasonable person would is impacted. They have already ruled out new exercise in the same circumstances. This But there are broader impacts – for permits for offshore oil and gas involves actively considering three types example, flooding on property portfolios exploration, and announced fuel-tax of climate change risks on businesses: or supply-chain networks. New Zealand increases. The Zero Carbon Bill is has the seventh largest coastline in the currently being drafted, after more physical risks world, with much of our infrastructure than 10,000 submissions were received. on the coast or rivers. It may be in force as early as April 2019. economic transition risks, and The implications also flow through to Regulatory measures need not all be liability risks. lenders and insurers who have exposure negative, as there could be significant to other business in the front line, and carrots in the form of subsidies for clean This is not about whether one thinks therefore the availability of finance and tech and revenue from the Emissions climate change is a moral responsibility, or insurance in future may be affected. Trading Scheme. But there are likely to whether it is caused by human activity; it is Addressing these risks involves be some sanctions. about the commercial and financial impact. reviewing business models, assets and While obligations are yet to be clarified, supply chains to understand where there it’s important for directors to think about is exposure to physical risks of climate their businesses’ carbon footprints, and the change and potential for damage to assets. impact of new regimes on the bottom line.
BOARDROOM August/September 2018 17 CONTRIBUTION BY MINTERELLISONRUDDWATTS
Investor and consumer reaction LIABILITY RISKS SO WHAT TO DO? Economic transition risk also flows from the reactions of investors and consumers. Internationally there are cases using the For directors, it doesn’t necessarily mean An example is the New Zealand Super courts as a way to hold central and local elevating climate-related issues to the top Fund reallocating close to a billion dollars governments accountable for climate of the priority list. However, it does mean away from companies with high exposure impacts. Groups are also looking at being explicit that climate change is being to emissions and reserves, into lower-risk whether individual companies may have considered to see if it is likely to have companies, to ensure its portfolio is more liability for their environmental impact material and financial implications. resilient to climate change risks. The or failure to adequately disclose risks Directors can ask their management New Zealand Super Fund is open about to investors or customers. teams for reports on implications of its motivation – it does not yet think the In Australia recently, ecology graduate climate change for their business model market has fully priced the impact of Mark McVeigh filed a claim in the Federal and assets in board meetings. Scenario climate change. Court against his superannuation scheme planning is useful, as it highlights the Consumers are also asking questions provider REST for failing to disclose its consequences of climate change on the about the carbon footprint of the goods strategies to deal with climate-related business are being considered as events and services they buy, with Tesco risks – the case is yet to be heard. unfold. Scrutiny of risks and opportunities labelling its milk since 2009. Liability risk could also be personal. is key, as well as both management and But the transition towards a greener In a widely published 2016 memorandum, disclosure. economy isn’t all downside risk – there leading NSW barrister Noel Hutley are also opportunities for agile and SC argued that Australian company well-placed businesses. For example, directors who fail to consider and disclose Climate change risks there is opportunity to promote New foreseeable climate-related risks could for business Zealand as an international leader in low- be held personally liable for breaching emission production of export goods and their duties under the Corporations Act. services. We are already seeing television Hutley warned that it is “only a matter advertisements promoting the benefits of of time” before Australia sees litigation 01 Physical risks paper from sustainable forests processed against a director. Additionally, regulators using geothermal power, and of electric from ASX to APRA and ASIC have all vehicles powered by New Zealand’s high emphasised that climate change presents proportion of hydro-electric generation. financial risks, rather than ‘ethical’ or ‘environmental’ risks. Stranded assets and business models In New Zealand, regulators have not Changes of this magnitude will shift the yet been so vocal, but the issue is coming. 02 Economic value of assets and of businesses. A 2015 Section 137 of the Companies Act sets out transition risks study published in Nature estimated an equivalent duty to the Corporations a third of oil global reserves, half of gas Act, requiring directors to exercise care, reserves and more than 80 per cent of diligence and skill. Though this is a duty known coal reserves would remain unused owed to the company, shareholders can if targets under the Paris Agreement are bring derivative actions for the company. met. The value of companies that extract, Failure to comply with disclosure 03 Liability risks distribute, or rely heavily on fossil fuels requirements is also a risk. For listed could drop when this risk is priced in. companies, they include NZX Listing On the flip-side, businesses with Rules for non-financial disclosure of renewable energy sources may become environmental, economic and social more valuable. Some New Zealand sustainability risks. Inadequate disclosure businesses are moving to clean energy of risk under the Financial Markets to avoid having stranded assets. For Conduct Act when issuing financial example, Z Energy has rolled out seven products may also bring responsibility Lloyd Kavanagh leads MinterEllisonRuddWatts’ fast-charge electric vehicle charging for companies and directors. financial services practice, and is a commentator stations at sites in Auckland, Turangi, on key governance issues. In December 2017, he presented at the Tokyo UNEPFI Regional Wellington and Christchurch, and Ports of Ports of Auckland Roundtable for Sustainable Finance in Asia Auckland is planning to be New Zealand’s Pacific on Investors Duties and Obligations first zero emission port by 2040. is planning to be to Integrate ESG Issues. A key responsibility of directors is to New Zealand’s first require their businesses to re-evaluate operations to assess the impact of changes. zero emission port by 2040.
BOARDROOM August/September 2018 18 The challenges ahead Steve Walsh, Chief Client Officer, Marsh, looks at what boards can do to build climate resilience and use climate change scenario analysis.
he issue of climate change is Initiatives such as the 2018 Paris Further, it is widely accepted that becoming more prominent on Agreement on climate change have drawn corporate risk profiles are changing under Tthe boardroom agenda. In fact, even more attention to this issue, with environmentally driven pressures, and 35 per cent of those surveyed in our more than 190 countries indicating their three associated trends have arisen: recent Directors’ Risk Survey report said commitment to limiting the rise in global that environmental issues/climate change average temperatures to less than 1. The growth of responsible investing would have a potential impact on their two degrees. has led investors and credit-rating business in the next 24 months. As businesses globally look to address agencies to focus on companies’ This finding aligns with the immediate and rising climate-related exposure to climate change impacts. World Economic Forum’s Global Risks pressures, it is acknowledged that Report 2018, which ranks climate proactive and forward-thinking companies 2. Growing requirements for disclosure and environment-related threats as that look to build climate resilience will be on sustainable practices. the most likely and most damaging those that gain a competitive edge. It is 3. Shifting customer preferences over the next decade. imperative that companies move from cascading through B2B and B2C a primarily defensive corporate and social supply chains. responsibility (CSR) focus to an offense- oriented mind set, which embeds climate- In June 2017, the TaskForce on Climate- related risks, their financial impact(s) and related Financial Disclosures (TCFD) opportunities in the company’s strategy released a report which focused on the and operations. accelerating needs for financial disclosure. Some of the challenges ahead are The recommendations of the TCFD in the form of understanding: identified four areas for adoption:
the impact of climate change on your governance company’s financial performance strategy the framework for financial disclosures risk management how to generally report on climate risk issues. metrics and targets. These are detailed further in graphic 1.
Steve Walsh
BOARDROOM August/September 2018 19 CONTRIBUTION BY MARSH
BREAKING DOWN SILOS Determining the best approach to modelling the financial impact of climate Graphic 1: Core elements of Managing climate risk cannot be the sole scenarios and mapping a pathway for the TCFD recommendations responsibility of an individual or group incorporating climate risk into future within an organisation. planning can be a daunting process, but Research by the MMC Global Risk reference back to the TCFD report will Center flagged disconnects between be helpful to you. Governance corporate finance modelling/risk Organisations first need to determine management and corporate sustainability which climate scenarios are best suited for departments. Their research showed understanding their risks. They must then Strategy how climate risk assessments can be translate climate economic scenarios into significantly impacted by a lack of clarity meaningful financial terms. Risk around defining the risks and on which Next, scenario analysis should be management function ‘owns’ them. integrated into existing risk reporting, Most organisations know how to again raising the question of processes. Metrics and mitigate conventional risks, which can be For example: is scenario planning for targets relatively easily isolated and addressed climate change integrated with other with standard risk-management corporate scenarios’ planning? Who approaches. The problem lies when it should lead this analysis? And what is comes to complex risks embedded in the language of scenario planning for interconnected systems, such as those climate change? The organisation’s governance related to climate risks and the changes Finally, organisations need to describe around climate-related risks associated with a transition to a low- how top-down scenario impacts link to and opportunities carbon economy. Standard approaches future business performance, mapping The actual and potential simply don’t work in instances such out direct and quantifiable impacts. impacts of climate-related as this. risks and opportunities on the organisation’s businesses, Short-term and limited climate risk INCREASING RESILIENCE strategy, and financial planning analyses will not be sufficient to provide IS FUNDAMENTAL organisations, investors and other The processes used by the stakeholders with a mid- or long-term As directors and leaders begin to organisation to identify, assess, and manage climate-related risks view of the potential direct physical, examine how climate change is affecting financial and transitional impacts of their organisation, the critical need to The metrics and targets climate opportunities and risks. increase climate resilience as a business used to assess and manage relevant climate-related Broad ownership and understanding fundamental is evident. risks and opportunities of climate risks and opportunities and the Those who can successfully identify financial impacts and input from across physical and transitional climate risks the organisation will be required. and integrate these risks into operational Source: TCFD, “Recommendations of the and strategic planning, can better position Task Force on Climate-related Financial TO HELP: USE CLIMATE CHANGE their companies to improve climate Disclosures,” June 2017 SCENARIO ANALYSIS resilience.
By defining and separating external scenarios, such as changing weather patterns and evolving political and Graphic 2: Pathway to incorporate climate-related risks regulatory environments from the internal into corporate planning process business plans, scenario analysis ensures that the corporate strategies and plans are robust and viable under different 01 02 03 plausible outcomes. Determine climate Interpret climate- Integrate The effects of climate change scenarios economic analysis with on specific industries, sectors and scenarios risk reporting organisations are highly variable. Organisations should therefore apply scenario analysis in strategic and Source: Marsh & McLennan Companies, 2018 financial planning, as well as in their risk-management processes.
BOARDROOM August/September 2018 20 GLC UPDATE
FELICITY CAIRD GENERAL MANAGER, GOVERNANCE LEADERSHIP GLC Update CENTRE (GLC)
Transitioning to a low emissions economy Business taking the lead First step towards hief executives of 60 organisations, forming a Zero Carbon Act New Zealand’s Climate Leaders Coalition, Cpledged in July to reduce emissions and he first round of public consultation on play a leadership role in New Zealand’s transition the policy behind what the Zero Carbon to a low emissions economy. The members of the T Bill may look like took place in June/July. Coalition contribute around 50 per cent of New It is anticipated that the Bill will: Zealand’s carbon emissions and include Z Energy, Fonterra, Ngāi Tahu Holdings, Air New Zealand, NZ set targets to reduce emissions by 2050 Post, The Warehouse Group, Vector, KiwiRail, and Spark. The Coalition has highlighted its support introduce stepping stones (or budgets) to reach of the Paris Agreement on climate change and the those targets need to establish an independent Climate Change set up the institutions to provide independent, Commission and carbon budgets set out in law. expert advice and hold governments to account introduce ways to assess risks and create a plan to adapt to the impacts of climate change.
The development of a Zero Carbon Bill is largely in response to recommendations from the previous and current Parliamentary Commissioner for the % Environment and the Productivity Commission. 60 50 The Government has indicated that it is looking to have legislation in place by mid-2019. The IoD’s submission (available at iod.org.nz) emphasises that business needs clarity and certainty about the approach and commitments to climate CEOs have joined Making up nearly 50% of change and we supported the introduction of a Climate the coalition New Zealand’s emissions Change Commission to provide strategic leadership. We submitted against introducing mandatory reporting on climate change matters at this stage. We will continue to monitor and keep members up to date on developments.
Te Aroha Morehu of Ngati Whatua Orakei and Mike Bennetts, Z Energy Chief Executive, at the Climate Leaders Coalition launch on 12 July.
BOARDROOM August/September 2018 21 GLC UPDATE
The Governance Leadership Centre (GLC) is the IoD’s research, policy and thought leadership hub.
Focus on whistleblowing
histleblowing should be top of mind for Our DirectorsBrief Whistleblowing, Speak Up directors, amid keen media interest in culture and the board, published in July, explored Whow organisations manage misconduct whistleblowing and Speak Up arrangements and and unethical behaviour. However, the 2017 IoD/ASB looked at the board’s role in ensuring ethical Director Sentiment Survey found that only 32 per conduct in the organisations they govern. cent of boards had discussed whistleblowing and The Chief Ombudsman, Peter Boshier, also Speak Up provisions in the 12 months prior. provided his insights for the brief. Boshier Recently, New Zealand’s legal sector has come encouraged directors to consider four key points: under scrutiny, after allegations of sexual harassment and misconduct at one of our largest law firms, 1. Have a policy, make it accessible, and Russell McVeagh. The allegations led to Dame talk about it frequently. Make sure your Margaret Bazley, ONZ DNZM, Distinguished Fellow staff know how to speak up and what will of the IoD, conducting a review of the law firm. Dame happen if they do. Margaret found that at the time of the allegations Russell McVeagh had a “work hard, play hard” culture 2. Develop a strategy for supporting staff who that encouraged young staff to drink to excess and blow the whistle. If someone does make in some instances led to “crude, drunken and sexually a disclosure within the organisation, consider inappropriate behaviour”. the risks they face from speaking out and Dame Margaret noted a series of governance take appropriate action. Keep them informed and leadership failures and set out detailed – ‘check in’ with them, and make sure they recommendations aimed at changing Russell are not mistreated in any way for making McVeagh’s culture. the disclosure. In response, Russell McVeagh’s chair, Malcolm 3. Make sure the whistleblower’s confidentiality Crotty, apologised for the incidents and the way the is maintained in accordance with the law firm handled them. “We believed that we had Protected Disclosures Act 2000. a speak-out culture and it is clear from this review that we were misguided in this. We are committed 4. Finally, recognise the value to your to working with our people to create a true speak- organisation of a culture that encourages out culture across our organisation.” speaking up. He went on to say that the firm was “determined to challenge every part of our management practice The State Services Commission is currently leading to ensure our people feel comfortable to speak out a review of the Protected Disclosures Act to make sure to ensure unacceptable behaviour is eradicated.” it is still fit for purpose and is in line with international best practice. >>
BOARDROOM August/September 2018 22 GLC UPDATE
First ever global director survey for GNDI set for release
he first ever global survey of directors for the Global Network of Director Institutes T(GNDI) is set for release later this year. The IoD in New Zealand has led the survey, which received 2,159 responses, from 17 participating GNDI member organisations around the world. The IoD is a founding member of the GNDI, which collectively represents more than 130,000 directors and governance professionals globally. The survey aimed to tap into what is top of mind for directors around the world, focusing on key governance issues. It covered regional and economic issues, business confidence, shareholder and stakeholder engagement, environmental and social issues, board evaluations and technology and information governance. The GNDI is an association of sovereign state director organisations. It provides a global forum to share experiences, case studies, leading practices and current or emerging corporate governance issues impacting the boardroom and its stakeholders.
All DirectorsBriefs, submissions, guides and other governance resources are available at iod.org.nz
BOARDROOM August/September 2018 23 Level One, Press Hall 80 Willis St Wellington 6011, New Zealand +64 (0)4 894 1856 [email protected]
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New Zealand CEOs’ expectations of What’s currently growth within their own organisations has declined since the 2017 Survey – with most now forecasting less than top of mind for 2 per cent top-line revenue growth over the next three years. your CEO? Buckley views this as a somewhat unambitious result, given that our 2018 GDP growth rate is already above 2.5 KPMG New Zealand’s 2018 per cent, with forecasts higher for next year. “As a board, you would expect to CEO Outlook Survey results be driving your organisation to at least outperform the national GDP growth rate. Or, to put it bluntly, if you’re not growing faster than the national economy, you’re going backwards.” Buckley points out that New Zealand ROSS BUCKLEY has a tranche of high-performing EXECUTIVE CHAIRMAN KPMG companies that set high growth ambitions – and fulfil them – regardless of changing economic conditions. KPMG New Zealand has recently released its 2018 Customer Experience Excellence Report. It shows that globally the top-performing brands who focus on New Zealand CEOs are still focused on realistic growth – despite a number customer excellence have 54 per cent of uncertainties impacting their landscape in 2018. KPMG New Zealand’s higher revenue growth (in aggregate) Executive Chairman, Ross Buckley, provides comments and context on than their lower-performing counterparts. the firm’s annual CEO Outlook Survey for 2018. “This report identifies the six pillars of an outstanding customer experience … and The 2018 KPMG New Zealand CEO Outlook Survey is run in conjunction those brands that capitalise on this to with a KPMG global survey of 1,300 CEOs across 52 countries. Locally, differentiate themselves in the market are 50 CEOs from different industries were surveyed. seeing clear revenue and profit increases.”
The ‘Six Pillars of Customer Experience The latest survey showed a slight “This is a big one, and it’s not unique Excellence’ include: softening of confidence among New to New Zealand,” says Buckley. “Many Zealand CEOs – with just 64 per cent organisations are struggling to find the personalisation: using individualised expressing confidence in our outlook right skills to grow. There are two ways attention to drive an emotional for the next three years (this compares of looking at it – do you need to see connection to 74 per cent 12 months ago). growth before you hire, or do you secure the people you need in order to grow? integrity: being trustworthy Ross Buckley believes there are various Organisations with a growth strategy like and engendering trust factors contributing to this – and it’s ourselves will take the latter approach.” expectations: managing, meeting and essentially a continuation of the VUCA In addition to the global vagaries such exceeding customer expectations effect Volatility,( Uncertainty, Complexity as Brexit and the Trump administration, and Ambiguity) that today’s CEOs are New Zealand leaders have also faced the resolution: turning a poor forced to grapple with. “Leaders have uncertainties of a new government. This experience into a great one to make decisions while multiple factors has included the increase in the minimum are shifting around them – some they wage, removal of the 90-day employment time and effort: minimising have influence over, some they don’t.” trial and greater requirements for customer effort and creating One factor which has a significant overseas investors, as well as regional frictionless processes impact on business confidence is the impacts such as the Auckland fuel tax, empathy: achieving an understanding growing skills shortage. mycoplasma bovis, and the freezing of of the customer’s circumstances to Taranaki oil and gas permits. drive deep rapport.
BOARDROOM August/September 2018 25 KPMG
The 2018 survey highlights a “return Just over half of New Zealand CEOs A further 76 per cent think their to territorialism” as the greatest (58 per cent) felt “personally prepared board’s expectations of return threat to growth, with nearly two- to lead their organisation through a on investment (ROI) from digital thirds of New Zealand CEOs identifying radical transformation of its operating transformation is “unreasonable”. this threat. model to maintain competitiveness”, compared to 71 per cent of global CEOs. Digital is not just about maintaining In releasing its survey findings, KPMG your market position – if you don’t have New Zealand has invited feedback and When advising clients who are embarking a digital footprint, you will not be relevant. commentary from industry leaders. This on a transformation project, perhaps It is really important for those in leadership includes Sam McIvor, CEO of Beef and for the first time, KPMG New Zealand and governance to understand the new Lamb New Zealand, who says that his recommends starting with a series of economy. There are many examples where industry is “facing its most disruptive time smaller investments that have clear scope companies are holding on to data tightly, since the economic reforms of the 80s.” to quickly deliver first wins. “Jumping into expecting to generate extra profits, and He agrees that Brexit and the US a large-scale project is old-world thinking,” are not doing so as it really only becomes Government’s protectionist trade direction says Buckley. “Digital transformation is valuable when shared and integrated with – coupled with other disruptors such as about people, process and technology. other data sets. alternative proteins – is testing trading There are likely to be pockets of agile confidence. capability in your organisation – consider Yet McIvor remains excited about how you can extend those out to introduce the future, saying the New Zealand new ways of thinking and acting.” red-meat industry has “positioned itself Buckley is also a strong believer in for exactly this time”. The industry has the value of the in-house challenger made solid efficiency gains over the past model. “This means having a team of your two decades, has strong fundamentals own people, working in an incubator- in place, and has a perfectly positioned type environment, who are tasked with market offering for New Zealand’s disrupting your organisation’s business premium natural products. model – before someone else does it “This is our time to shine, and our to you.” farmers and exporters are definitely up for it.”
WANT TO KNOW MORE?
You can access more information on the 2018 KPMG New Zealand CEO Outlook Survey report from our website kpmg.com/nz, and download a copy of the 2018 KPMG New Zealand Customer Experience Excellence Report. We are happy to share further insights – including benchmarked data by industry sector – with interested parties.
Please feel free to contact Ross on 027 279 6544. kpmg.com/nz/ceooutlook18 kpmg.com/nz/customer
BOARDROOM August/September 2018 26 FEATURE Increasing challenges for directors 2018 IoD Directors’ Fees Report
It’s a “challenging and exciting time banks and financial services and an to be involved in governance,” says inquiry into the Commonwealth Bank EY Partner Una Diver. of Australia by the Australian Prudential Regulation Authority’s (APRA), shows peaking after the release of the how a director’s livelihood and reputation 2018 Institute of Directors (IoD) can be affected by their role. SDirectors’ Fees Report, which was Diver says APRA’s report into the carried out in partnership with EY, Diver Commonwealth Bank of Australia said being a director was “not for the contained insights for all directors, faint hearted”. regardless of industry sector or She says the focus on directors’ geography. APRA’s report focuses 01 obligations and accountabilities rose on effective board operation and the sharply after the implementation of requirement to ensure there is direct NZX’s corporate governance code last management accountability for both December. “At the same time directors financial and non-financial risks. While were required to grapple with tough, new boards have typically been good at compliance obligations under our updated providing oversight of financial risk, Health and Safety law and to manage the Diver says there has historically been increased risk to their businesses. And less focus in non-financial areas. Boards there is increasing shareholder pressure are now being urged to monitor non- on directors to be accountable for financial risks. “This may require boards business performance.” and management to change their risk Diver says directors’ fees have yet to management frameworks to ensure they 02 reflect these changes. The Directors’ Fees are closer to what is happening at all 01: Una Diver Report shows that the median fees for levels of the organisation.” 02: Kirsten Patterson non-executive directors rose modestly last year, up 2.3 per cent to $45,000, from $44,000 in 2017. Directors are also under increasing Median fee growth for public scrutiny, with climate change, a non-executive director ethics, culture, reputation, and conduct $45,000 $44,000 all becoming important considerations $42,994 $41,610 for boards. $40,000
IoD Chief Executive Kirsten Patterson $36,000 $36,000 says it’s important to look at the growing demands of directors’ roles and consider that as part of discussions around fees. “As the importance we place on directors increases, and the skills they require continue to expand, it is vital that we assess how we fairly remunerate directors for their expertise and contribution.” Diver says the situation in Australia, where directors have come under scrutiny 2012 2013 2014 2015 2016 2017 2018 thanks to both a Royal Commission into
BOARDROOM August/September 2018 27 FEATURE
Directors satisfied with Average length of a Average number of their remuneration directorship service directorships held
FEES SCRUTINY SURVEY AT A GLANCE THANK YOU FOR TAKING PART
Patterson says there aren’t many Fees increased modestly over the year. This is the fourth year that EY and the professions that receive the same level Most directors (58.3 per cent) said they IoD have partnered to conduct the of scrutiny on their remuneration that were satisfied with what they received. survey and this year’s report includes directors face. “It is important that Directors of listed entities were the most data collected from 2,158 directorships, boards support and justify fees with good satisfied (73.5 per cent), while directors 792 members of the IoD and 1,546 disclosure, governance and accountability working in government administration organisations across the country. practices. It means demonstrating that and safety were the least satisfied More than half the respondents fees are transparent, fair and reasonable,” (37.2 per cent). (60 per cent) were non-executive she says. Annual reviews of director fees are directors, 13 per cent were executive Updated corporate governance the most common, with 41.1 per cent of directors, 20 per cent were non-executive guidelines in New Zealand, both the 2017 respondents saying fees were reviewed chairs, 3.8 per cent were executive chairs, NZX Corporate Governance Code and yearly, 39.8 per cent said reviews and 3.9 per cent were deputy chairs. the 2018 FMA Corporate Governance in happened when market conditions The IoD would like to thank all our New Zealand: Principles and guidelines, justified it, 13.0 per cent said reviews members who took part in this survey. recommend that directors fees are happened every two years, 5.3 per cent Without your input we would not be able transparent fair and reasonable. every three years, while 0.7 per cent said to produce such an extensive and in- “Like all good reporting it also means fees were reviewed by the Government. depth report. thinking beyond compliance to what The median number of directors on is meaningful and tells a fuller story. a board is six. Just under half (49 per cent) Stakeholders want to know that boards of respondents indicated that their boards IF YOU WOULD LIKE TO are focused on continuous improvement meet between six and 10 times a year, PURCHASE THE FULL REPORT and that they are evaluating their 44.8 per cent of directors said their board performance regularly. Stakeholders meetings took four hours, while a quarter YOU CAN BUY A COPY OF THE also need assurance that there is of directors said they attend full-day LATEST REPORT FROM OUR ongoing succession planning to ensure board meetings. SURVEY PARTNER EY AS FOLLOWS: the board has the diversity, depth of skills Directors said they generally spend Complete the online pre-order form and experience needed to anticipate and four hours preparing for board meetings, on the IoD website iod.org.nz respond to challenges and opportunities unchanged from last year. now and in the future,” Patterson says. The average length of a directorship Email [email protected] Directors play a critical role in building was four years. The longest-serving Call EY on +64 9 377 4790 strong organisations, vibrant economies director who responded to the survey had and sustainable long-term value. “It is been elected to their current board in 1971. Institute of Directors important that fees are set at the right Directors’ Fees level, underpinned by robust data and Report 2018
A joint publication between the processes, to enable the attraction and Institute of Directors and EY retention of directors with the right skills and experience to lead our organisations now and into the future,” Patterson says.
BOARDROOM August/September 2018 28 FEATURE
Private equity governance
BoardRoom editor Kate Geenty takes a look at how private equity investors approach governance, and what they look for in board composition.
BOARDROOM August/September 2018 29 FEATURE
irst and foremost, private equity in what we think the board should look investors look to build value in like. It’s about what we think is in the Fcompanies they invest in, says best interests of the company. We need Institute of Directors (IoD) Chartered to know there’s a good mix of skills and Member Peter Tinholt, the Chief Operating experience around the board table. Officer of Oriens Capital Fund. “It’s about Ideally we don’t want a whole board creating good strong businesses, that are full of investors.” much stronger and sustainable than they When it comes to skills, Vivian says were when we came in,” he says. industry experience is important, but He says poor governance leads to poor not critical. What he looks for in an performance and poor returns, so getting independent director is the ability to the board right is important. “Good make decisions quickly, be able to deal governance can enhance a company’s with a dynamic environment where things reputation and credibility. Companies that can change from week to week, and be have good governance and transparency willing to step up and help when times are more marketable.” are difficult. “We’ve seen a number of experienced and well-known directors In any of these BOARD COMPOSITION step away from the board table and journeys there will essentially go missing when things IoD Member Mark Vivian, a partner at get tough.” be ups and downs venture capital firm Movac, says ideally He likes a ‘noses in, hands out’ approach he likes companies he invests in to already to governance. “What I mean by that is, along the way. have some sort of governance structure you’ve still got a chief executive running Mark Vivian in place. That might be just the firm’s the company but the directors really do lawyer or accountant acting as its board, need to know what’s going on. They all but it’s a start. “Often it will be a smaller, need to be compelled to find out what’s more casual board, and we look to develop going on and understand the different like to have a skills review done, and a that into a truly professional board, complexities rather than rely on others gap assessment made to make sure that where members are remunerated, there’s around the table to do that.” we get good people on there to drive the a recruitment process that goes on to Personality also plays a part in who business forward.” identify and attract those board members, will make a good fit as an independent He says the discussions about board and a full analysis is done of skills and director. “In any of these journeys there composition can start early on in the experience that’s needed around the will be ups and downs along the way, so negotiation process. “Typically in heads board table.” we need to know that the others around of agreement negotiations, when you’re Movac, which invests in businesses the board table are people we can build shaping a deal you talk about that. Some with some sort of technological aspect strong robust working relationships with, of those things can sometimes get a bit to what they are doing, typically takes one and that ideally those relationships will contentious, but the key is that it’s part board seat when it invests in a business. ride the good times and the bad times,” of a due diligence process.” In the space in which Movac works, Vivian Vivian says. “You’ve also got to be a bit careful, says an ideal board size is between three Oriens Capital Fund, which invests because if there’s an existing board, to five members. “It would be us, and mainly in privately owned businesses that board will ultimately decide on the two to four others, depending on the that are regionally aligned, also requires investment opportunity. So you’ve got size and complexity of the business. at least one board position when it invests to navigate your way through that.” The entrepreneur may or may not be on in a business, but depending on the scale In terms of how much say a private the board as a director, they normally are.” of its investment that can sometimes equity investor has in board composition, He says Movac is pretty upfront in the rise to two. “The first director, typically, a lot depends on how big a stake they initial conversations it has with potential is one of us. If we get a second one, then are looking for. “A private equity owner partners about what it expects in return who fills that position will really depend coming in and buying 70 per cent is very for its investment. “A board position is on the skills needs around the board,” different from someone looking to invest part of that. We will also have some say says Tinholt. “Accordingly, we certainly 20 per cent,” Tinholt says. >>
BOARDROOM August/September 2018 30 FEATURE
Private equity strategy
1 Focus – clear agreement with management about what is important.
2 Decisiveness – a preparedness to act. 3 Results orientation – a drive for strong returns – time bound.
4 Engagement – robust regular communication within the board and the executive team. Source: Oriens Capital
Peter Tinholt
INDEPENDENT CHAIRS RELATIONSHIP WITH FOUNDERS is required to have a board, some sort of governance structure, and the additional Rather than take the helm themselves, Vivian says the founder or owner of any workload that comes with that.” private equity investors generally prefer business they look at is one of the critical For some owners, what initially to see independent chairs on the boards components Movac considers when sounds like an attractive proposition they are involved in. “We don’t want to evaluating an investment opportunity. loses its appeal once they consider the be an adjudicator, we’d much rather have “People are probably the key factor in realities of other people having a say a mediator who makes sure we navigate our decision making, the founder – what’s in their business. “We’ve walked away a path that’s acceptable and gets buy-in his or her background, what have they from opportunities and, vice-versa, from all other parties. That takes a lot of done before, what have they achieved entrepreneurs have walked away from skill, and a good chair who can manage in the past?” us. They liked the principle of external that has to be someone with experience,” He says that, when going into a capital but didn’t like the practicalities says Tinholt. business, it’s important to respect what of it,” Vivian says. “An independent chair is really the founder has done. “The founders and Tinholt has experience as a chief important,” says Vivian. “As part of entrepreneurs who run these companies executive and managing director of that, we want someone who has a strong are often absolute experts in what they do.” companies that have been owned by professional relationship with the CEO, “A lot of their financial worth and their private equity companies, so he has or the potential to grow one. We do plenty personal and professional profiles are built also sat on the other side of the deal. of reference checking of potential chairs up in these businesses. Getting private He says it’s critical to figure out a way of organisations, their skills and experience, equity in will be a major transition, going of working together that works for all their strengths and weaknesses, what from owning the business to having parties. “Sometimes you see businesses they are like as mentors and guides, a share in the business, and that can be where the chief executive has really particularly when things get tough – and an emotional rollercoaster for them.” delegated and empowered their teams they will get tough at different points in “When it’s your own company you can very well, but then others are very the company’s journey.” do what you like. When there are external autocratic and ‘it’s my way or the highway’. investors that’s when things get more We certainly spend a lot of time making complicated. So, yes, the idea of getting sure that we can actually work with the external investors sounds really attractive owner–founder to make sure there’s but obviously other factors go along with good alignment there.” that. All of a sudden the business owner
BOARDROOM August/September 2018 31 FEATURE
EXECUTIVES AND INCENTIVES STRATEGIES, GROWTH started to see is, if the next generation AND SUCCESSION or the management team don’t want to When working with smaller companies it’s take over, what happens to the business? important to have everyone on board with Private equity board members typically Unless there’s another option, these are its direction and strategy – particularly want to make sure the organisation has businesses that will literally die with their if things are changing. For this reason, a good, executable plan and a timeline. owner, and that’s a real challenge.” private equity investors generally like “It’s often quite focused, because to see the executive team on the share we’re about value creation. Whereas register. “With everyone having skin in sometimes the companies we’re working the game, there is a sense that we are all with haven’t had the same focus and At the end of the day, working on this together,” says Tinholt. systems,” says Tinholt. Vivian also thinks incentivising He likes the use of board tools, which it’s all about having executives helps align everyone’s can capture all of the policy documents, people aligned in a interests. “Often, depending on the size of format the board papers, and can keep the company, employees won’t be getting everything well-organised and easily common goal, and true market rate, or what they think the accessible by all directors. market rate might be. Having equity or Vivian says private equity can be one that’s about building options on offer to executives is a way way of solving succession planning issues value in the company. to top them up in a non-cash way. At the in the New Zealand SME market. He says end of the day, it’s all about having people a lot of business owners seem to expect aligned in a common goal, and that’s their children or management team to about building value in the company.” eventually take the reins. “What we’ve
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BOARDROOM August/September 2018 32 FEATURE An angel at the board table
Angel investor Janine Manning When Manning first got involved with Crimson Education is one of four tends to be a hands-on director when Crimson, Beaton and Kushor were just boards that Manning sits on as an she sits on the boards of companies teenagers, so initially her role was that angel investor, through the New Zealand she is invested in. She gets involved of mentor as well as investor. “When you angel investment group Ice Angels. in the early stages of a company’s have young founders, they aren’t always Manning thinks it important to review development, helping entrepreneurs old enough to have developed all of the the skills that are required on a board as turn their dreams into reality. knowledge they need to effectively run a company scales up, or as it changes. a business. So it’s providing that broad “I think sometimes, particularly in the s an angel investor, Manning’s role oversight about how you might deal with angel space, you can end up getting is not that of a typical director. issues you’ve never had to deal with stuck on the board as a lead investor. AOften she’s working with just the before when you’re a young founder.” That might not be what you want to do, founders, helping them set up the basics She takes a ‘show, don’t tell’ approach but if nobody steps up to take over, you of business and governance structures. to her relationships with entrepreneurs. can be left holding the baby. I think it’s That was the case in 2014 when she threw “It’s not about always being instructional, good to agree some terms upfront, as in her lot with young Aucklanders Jamie but helping them see the way that things to how that is going to work.” Beaton and Sharndre Kushor, founders are done, rather than being told the The other boards Manning sits on are of Crimson Education. For the first three whole time.” the UK-based curtain-making company years, the company’s board consisted Early on, her board role at Crimson was Stitched, which enables customers to of just the three of them. very hands-on, as she focused on putting take photos of their windows to get Crimson Education offers coaching in place structures and programmes, measurements for their window coverings; and tutoring to help students get into elite and making sure compliance needs were Career Engagement, an internal career- universities like Yale, Harvard, Cambridge being met. As time has moved on and engagement product for companies and Oxford. Apart from any financial the business has expanded, she says with thousands of employees; and pay-offs, Manning says being involved executives have moved into those roles, Rebecca Page Ltd, run by a London- with Crimson Education is immensely taking day-to-day responsibility off the based New Zealander who produces satisfying. “Because it’s in the education board’s hands. “We’ve been able to move PDF sewing patterns. space, there’s an impact side to what we’re into more of that governance and special While she hopes for a long-term doing that’s quite fun to be involved in. projects work, rather than the hands-on, involvement with Crimson, for her We look at the number of New Zealand day-to-day duties.” later investments she has agreed on students now who are going overseas Crimson Education has now expanded timeframes to review her involvement. because Crimson has shown them there into Australia, the United States, Singapore, “For my newer ones, I generally say let’s is that opportunity, because Kiwis can go Vietnam, Thailand, Russia and the UK – review it after a year, and then we’ll see overseas and perform well against other where Manning is now based. There are what the business needs.” top students from around the world.” now 23 shareholders in the company, including private equity firm Tiger Global Private Investment Partners. Working with young people offers a fresh perspective on doing business, Manning says. “Young people have all the energy and vision, so if older people on the board can provide some structure that can be quite helpful.”
Janine Manning
BOARDROOM August/September 2018 33
FEATURE
Developing future talent
When Dr Chelsea Grootveld was appointed as a Future Director on the board of Sport New Zealand, she was told not to worry if she didn’t feel confident speaking up for the first few months. “I said ‘call me out if I don’t say anything after my first month, because that’s just a waste of my time and yours’. It has always been my intention to contribute as fully as I can. The board has definitely created space for me to do that.”
Future Director rootveld, who runs Aiko “I’m able to bring a level of analysis and placements Consultants and has worked in expertise to the board. I will challenge Geducation policy, research and in terms of equity, not only for Māori (Made between evaluation for more than 15 years, gained and Pacific Islanders, but equity for June 2017–June 2018) her Sport NZ internship through the women. I’m also a little younger than Institute of Directors’ Future Directors most of the other board members, so I programme. The programme selects bring that perspective too, and hopefully PRIVATE SECTOR talented potential directors to sit with challenge their thinking. I bring a different the board of a New Zealand company or cultural lens.” Amanda Smith – Argosy state sector organisation for 12 months. The Future Directors’ placement was Michael Jefferies – Augusta A triathlete and former netballer, for one year. “I need to have a conversation Capital Limited & Augusta Funds Grootveld has a passion for sport as well with the chair actually,” Grootveld laughs. Management Limited as prior governance experience, having “I’m pretty sure my year is up. For the Siobhan McKenna – Ports sat on the board of a philanthropic trust moment, though, I think it’s a mutually of Auckland as well as chairing a school board of beneficial partnership. I’m being exposed Jen Bunbury – Scales Corporation trustees. “Having a policy background, to lots of different opportunities.” So Kirikaiahi Mahutariki – Service IQ running my own consultancy and also far, those opportunities have included Nagaja Sanatkumar – Spark having a doctorate inevitably thrust me presenting at conferences and awards Vena Crawley – The Warehouse into a position of leadership and people ceremonies. John Paul Tocker – Wellington started asking me to be on boards and Looking ahead to where her governance Museum Trust to contribute.” career might head, Grootveld says her Dr Claudia Wyss – Fisher & Paykel Future Directors provided an skillset and experience lends itself Healthcare opportunity to gain deeper governance towards public-sector roles, particularly Sharleen Nathan – Chiefs experience and to build her networks. in education and research, but she is Rugby Club “Working on a board with experienced keeping an open mind. Anna Lissaman – Mercury Energy directors, from a range of public sector Rangimarie Price – Northpower and commercial backgrounds, with a skilled and experienced chair and a professional PUBLIC SECTOR and capable chief executive is a nice space to be in. You can actually focus Founded by Sir Stephen Tindall, Carol Cheng – Financial on strategic issues.” Michael Stiassny and Des Hunt Markets Authority Grootveld says Sport NZ’s board in 2013, Future Directors is about Linda Clark – NZ on Air members have all been helpful and willing developing the next generation of Dr Chelsea Grootveld – Sport to share their knowledge and expertise. directors and ensuring the director New Zealand “I consider them all my mentors. I listen pool is wide enough to support Ariana Paul – National Advisory and learn, and ask questions and have New Zealand’s economic growth. Council on Employment of Women a conversation with them all.” In June 2016 the programme was (NACEW) It’s not a one-way street, though, and extended to state sector boards Jennifer Moxon – Transpower Grootveld believes she has also added allowing public sector boards and Kim Dirks – Metservice value to the board. She holds a PhD in committees to benefit from the Education from Victoria University of programme, as well as develop a Wellington, and her thesis looked at the larger and more diverse pipeline. effect of higher education on Māori.
BOARDROOM August/September 2018 34 CONTRIBUTION FROM NZTE
Going global starts at the top
Are New Zealand boards as global as their businesses? New Zealand Trade and Enterprise (NZTE) looks at why international experience matters.
here’s growing consensus EXPERIENCE MATTERS She has worked in senior executive that global boards help make and business leadership roles in Australia Tglobal companies. When menswear label Rodd & Gunn and New Zealand, including with IBM and While age, gender and ethnic diversity started wholesaling its clothing in North is an Institute of Directors’ Future Director are important considerations in board America six years ago, there were no with Transpower. appointments, companies also need American shareholders on its books. As one of NZTE’s Beachheads advisors, international experience if they want Now the retailer has six stores there she offers her expertise in governance and to grow globally. and another four planned, after attracting change management to help companies Last year the World Bank once again US private equity firm Winona Capital as shape the direction of their business. named New Zealand as the best place a majority investor and shareholder in 2015 She says many businesses stumble in the world to start a business, so it’s (the company has two representatives on on the complexity of entering new no coincidence this country has half the board). international markets and thinking a million businesses. Rodd & Gunn chief executive Mike outside of their home culture. As one of the most globalised Beagley says the company’s expansion “You can’t assume the business economies in the world, we rely on export into bricks and mortar and online retailing model you’ve got locally is going to be revenue. In fact in the year ending March is a direct result of having directors with the same business model you deploy 2018, our exports alone were valued at retail experience in the US. internationally,” says Moxon. over $77 billion, while our GDP totalled “That’s come about due to financial “As a business scales, the enemy $270.6 billion. resources that our investors have put is always complexity and if you don’t Given the customers of our exporting in, but also their experience and them confront it, in my experience, it will eat businesses are scattered in every allowing us to focus on a small part of you,” says Moxon, explaining how it is corner of the globe, it’s worth asking, our business, knowing it’s going to be important to have experience mastering do our boards reflect the diversity of a big part of our business,” he says. international markets around the the customer base they serve? Although the majority of Rodd & board table. Gunn’s business is in Australasia, Beagley “You need to focus on having the says “we spend 80 per cent of our time right systems and processes in place. talking about America”. That means you need someone focused This focus on where to invest time and on the structure of your organisation … resources is one of the main benefits that and that’s a very different kind of mindset directors with international experience can than someone actually creating something bring to the table, says NZTE Beachheads from scratch.” >> advisor Jennifer Moxon.
BOARDROOM August/September 2018 35 When you’ve got a board and you’re all aligned on the purpose and vision, it makes it so much easier. Jennifer Boggiss CONTRIBUTION FROM NZTE
They had industry knowledge and that helped a lot. Getting a business partner is probably as hard as getting a life partner – how they behave in difficult times is what matters. Mike Beagley, Rodd & Gunn CEO
FINDING GLOBAL DIRECTORS “As a founder director, sometimes KNOWING THE TRIGGERS you underestimate your ability and by Tauranga-based Heilala Vanilla co-founder giving us support and objectivity they Exactly when to seek international and chief executive Jennifer Boggiss is give us confidence to go and tackle experience on the board depends on also an executive director of the fast- international markets.” the company and how it’s tracking. expanding company. Hitting a sweet spot in governance, For Heilala Vanilla, the trigger was In the decade since she left her full- where there is an agreed vision and wanting to grow the business and brand time accounting job to build a sustainable direction, is not always an easy path. in international markets, and for Rodd & vanilla brand alongside her father, Heilala Boggiss says Heilala’s first capital Gunn it was to help the company expand has become a well-known name for vanilla raising in 2011 attracted directors from wholesaling into its own retail stores products in New Zealand, Australia, who were focused on compliance in the US. Singapore, Japan, Brazil, Denmark and rather than growth. “If you’re not achieving your growth the US. It achieved 40 per cent growth “They weren’t really aligned to what plan [or financial metrics] then you need in revenue last financial year. we were wanting to do. I didn’t understand to look critically at your business and ask Heilala’s three directors with then what a good board was and what yourself what areas you need to focus on,” international experience came on board it can add, so we have been on a journey says Moxon. on Valentine’s Day last year. in terms of governance.” She says boards will provide oversight Boggiss says she spent a lot of time Boggiss says having the experience and focus with a ‘noses in, fingers out’ networking and finding the right people at board level is crucial. approach, steering the executive team to join the board, looking for those with “When you’ve got a board and you’re in the right direction. experience exporting New Zealand food all aligned on the purpose and vision, it “It is difficult to keep evolving your and beverage products. makes it so much easier. With consultants strategy and approach from the same Those she shoulder-tapped were it’s really hard for them to understand set of eyes.” former Griffins chief executive and Spark what you’re doing and why you’re doing it.” As Moxon concludes, “It takes a lot director Alison Barrass, chief executive When Beagley realised Rodd & Gunn more than a founder to build a successful of the NZ Manuka Group Karl Gradon and needed people with US retail industry business. When they get to a point Marmont Capital MD Matthew McKendry. experience on its board, he also looked where they want to scale, they need a “They are very aware of the pitfalls around to find the right partner and complement of skills on the board and and what to be aware of in international approached Winona Capital. in their senior executive team to take markets, so we have some very robust “They had industry knowledge and the business global.” discussions about how much we’re that helped a lot. Getting a business investing and what resource we’re putting partner is probably as hard as getting into which markets,” says Boggiss. a life partner – how they behave in difficult times is what matters.”
BOARDROOM August/September 2018 37 CONTRIBUTION FROM NZTE
We asked NZTE Beachhead advisor Jennifer Moxon why global boards make global companies.
1 It takes more than a founder to build a successful business across borders. Directors with a strong growth mind set and international experience will help build a network of partners, suppliers, customers and channel partners.
2 Directors with relevant experience in international markets will give you confidence to execute your growth strategy.
3 Learning from global best practice is important, then tailoring that locally is critical.
4 As a business scales, whether manufacturing, services, or new products – the enemy is complexity. If you don’t confront it, it will eat you.
5 Good governance and independence is critical in gaining continued investment. A fresh perspective from independent directors is important in evolving a sustainable and profitable business direction and strategy.
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BOARDROOM August/September 2018 38 FEATURE
Mentoring for Diversity
The Mentoring for Diversity nstitute of Directors (IoD) Chief Patterson says the more diverse an programme was established in 2012 Executive Kirsten Patterson says organisation is, the more likely it is that to boost the diversity of board diverse boards are important as we different perspectives are heard, and it members on NZX-listed and large move into the future and negotiate is this contribution of ideas that leads company boards in New Zealand. Ichanging demographics. to more innovation. Initially focused on supporting “When we drop our preconceptions of As well as benefiting mentees, women to gain places on large boards, what talent looks like, we are more likely to the programme has also had positive the programme widened its diversity recognise it and celebrate it. And it is clear feedback from the mentors who’ve taken scope in 2015 to include ethnicity, from the level of generous support from part. “Business leaders see it as a way age, skills and experience. The aim mentors since the programme began that of extending a ladder to allow diverse of the programme is to help enhance this is a view that many of New Zealand’s candidates to step up into their full mentees’ knowledge and skills to senior directors share as they build their potential,” says Patterson. help them get director appointments, organisations for the future,” she said. increase their knowledge of how large “Research shows that having diversity OPPORTUNITIES company boards work and add to the on boards drives long-term shareholder diversity of the director pool. value through creating inclusive Each year the IoD pairs members who organisations that are more innovative. believe their diversity can add value to Since the programme began, a number large company boards with experienced of participants have gone on to large directors through its Mentoring for company or NZX boards.” Diversity programme. Research from the Centre for Suneil Connor, who was part of the Talent Innovation in the US showed 2017–2018 Mentoring for Diversity intake, that companies that prioritise diversity says the programme is a great opportunity in leadership are 45 per cent more likely for learning and networking. to have grown in market share in the Connor sits on three boards as well as last 12 months and are 70 per cent more being the Chief Financial Officer at global likely to have captured a new market. brokerage firm LINK.
BOARDROOM August/September 2018 39 FEATURE
“There is no other programme that ADDING VALUE I have seen like Mentoring for Diversity. THROUGH DIVERSITY It is an opportunity to learn from the best,” Connor says. This year 20 new mentees were chosen “The opportunity is not only in terms for the Mentoring for Diversity programme of meeting a listed company director from a competitive pool of 76 applicants. and getting their views on your journey, To be considered they had to have a solid but also meeting the other mentees. track record in executive management A lot of the mentees who come in are very or professional advisory roles, plus experienced at what they do and hold board experience. They also needed to good board positions or directorships show they are currently seeking NZX or as well.” large company board roles, and have the Paula Jackson is also a recent alumna capability and capacity to be offered of the programme. Her positions include a place on the board of a NZX company being a director of Quotable Value and or organisation of a similar size. a board trustee of the Wellington Culinary Each mentee is matched with a senior Events Trust. She says she gained some director, who commits to meeting with 01 valuable insights from spending time them and mentoring them throughout the with an experienced chair and director. year. The mentees also commit to meeting “I was able to run a couple of situations up with each other to share what they I was facing with board dynamics past have learnt. him, and he was able to give me some Since Mentoring for Diversity great advice.” was established, 154 mentees have She says the programme gave her participated in the programme. the chance to really reflect on and distil her value proposition. “I think it has given GOVERNMENT FOCUS me more confidence in what I have to offer. The only thing that will be holding Diversity is also top of mind for the me back will be myself. It is not easy, it is New Zealand government, which recently not a matter of sitting back and waiting for announced a target of women making up someone to knock on your door, you have 50 per cent of members of state-sector to be proactive.” boards and committees by 2021. Currently, women make up 47.5 per cent of state- sector boards and committees. After announcing the target, Minister 02 for Women, Julie Anne Genter, told TVNZ’s Q+A programme that more effort 01: Suneil Connor 02: Paula Jackson needs to be put into making boards more diverse. “The reason we have no diversity on boards is because we haven’t actively sought to overturn the status quo, which is the result of historic discrimination and Congratulations to Mentoring for bias and unconscious bias. So we just have to make an active effort to find those Diversity’s 2018/2019 mentees: talented people.” Elle Archer Cathy Parker Pamela Bell Jignasha Patel There is no other Tracey Bridges Hilary Poole Angela Bull Jana Rangooni programme that I have Joanna Davidson Amanda Santos Toni Ferrier Scott Tambisari seen like Mentoring Dean Fraser Melanie Templeton for Diversity. It is an Jo Goodhew Judith Thompson Michelle Henderson David Tse opportunity to learn Sarah Park Louise Ward from the best. Suneil Connor
BOARDROOM August/September 2018 40 OUT AND ABOUT
Auckland The Auckland branch hosted a special post-Budget Out & breakfast with Hon. Grant Robertson, Minister of about Finance on 29 June.
Mentoring for Diversity The IoD hosted a Mentoring for Diversity function at KPMG in Auckland on 25 June to welcome the new intake of mentees, and meet Auckland up with 2017 and The Auckland branch hosted an evening panel former mentees. 01 on 18 June about getting involved with Council Controlled Organisation (CCO) boards. Panellists were Auckland mayor Phil Goff, directors Kylie Clegg and Mike Taitoko and Peter Kerridge of Kerridge and Partners.
02
03 01 (From left) Natasha Harvey, 2017 mentee, with IoD Chief Executive Kirsten Patterson, IoD President Auckland Liz Coutts, and fellow 2017 mentees Rachel Afeaki- Professor Ingemar Dierickx Taumoepeau and Daniel Shore. presented at an After 5 function in Auckland on 3 July. 02 Mary Gardiner, 2017 mentee, with Mentoring for Diversity mentor Don Huse, IoD Registrar and Governance Leadership Centre General Manager Felicity Caird, and 2018 mentee Hon. Jo Goodhew.
03 Professor Ingemar Dierickx.
BOARDROOM August/September 2018 41 OUT AND ABOUT
04 05
Canterbury The Canterbury branch hosted Nicole Rosie, the CEO of WorkSafe NZ on 20 June, in a joint presentation with the Business Leaders’ Health and Safety Forum. Nicole spoke to 130 attendees about the importance of having a responsible culture of health and safety. Her talk was complemented by relevant observations by Francois Barton from the Forum, and personal observations from Jono Brent, CEO of Connetics. Otago Southland Chair of the IoD’s Otago Southland branch committee, Geoff Thomas, presents Paul Moodie with his 06 Chartered Member certificate.
04 Former All Black captain Richie McCaw and WorkSafe CEO Nicole Rosie chat to a forum attendee.
05 Guy Nelson (presented with his Chartered Fellow certificate), IoD National Branch Manager Ian Stronach, Geordie Hooft, Chris White (presented with his Chartered Member certificate).
06 Jono Brent and chair of the IoD’s Canterbury branch committee, Geordie Hooft.
Nelson Marlborough Member Karen Draper and Nelson Leading director Traci Houpapa, MNZM Marlborough branch chair Sarah-Jane JP, gave an engaging talk on managing Weir at a branch networking event held diverse shareholder and stakeholder at Wither Hills Vineyard in Blenheim where interests at a Nelson Marlborough Sheffield South Island shared the results branch lunch on 5 July. of its latest leadership survey.
BOARDROOM August/September 2018 42 EVENTS Eventsdiary August September October
22 Tauranga 2 Auckland 19 Wellington 9 Wellington Finance Essentials Company Directors’ Not-for-Profit Governance Essentials Course Governance Essentials 22 Wellington 9 Auckland The blockchain – 4 Auckland 20 Wellington Board Dynamics Intensive a director’s guide to How to build your Finance Essentials all the important bits board career 10 Wellington 23 Queenstown Finance Essentials 23 Tauranga 4 Wellington Company Directors’ Strategy Essentials After 5 with Michael Ahie Course 11 Wellington and Toko Kapea Strategy Essentials 23 Hamilton 24 Dunedin Lunch function with 5 Wellington Mercy Hospital site visit 12 Cromwell Nick Dangerfield Building Sustainable Fellows’ dinner at Long-Term Value 24 Christchurch Carrick Winery 23 Mount Maunganui Evening event with ASB’s Annual awards dinner 5 Auckland Kirikaiahi Mahutaraiki, 14 Queenstown with special guest Welcome Cocktails and Executive Manager, Māori Company Directors’ speaker, Tā Mark presentation of 2018 Banking Services Course Solomon, KNZM Emerging Director Award 25 Christchurch 17 Wellington 24 Blenheim 10 Nelson Rural Governance Chairing the Board Lunch with Introduction to Te Reo Essentials Sir Graeme Dingle with Olivia Hall 18 Hamilton 25 Queenstown Working with the Board 26 Wellington 11 Wanaka Governance Development Company Directors’ Lunch event with Programme starts 24 Nelson Course Richard Lauder Finance Essentials 25 Auckland 28 Auckland 12 Hamilton Breakfast with David 25 Nelson Governance Essentials Cocktails with Ross Hearn, Chair of The Reporting to the Board Buckley, Executive a2 Milk Company 29 Auckland Chair of KPMG 25 Auckland Finance Essentials 26 Christchurch Director Accelerator 13 Rotorua Finance Essentials lunch 29 Tauranga (also in Chartered Membership Whakatane and Taupo pathway luncheon 27 Christchurch 28 Queenstown via ZOOM) Strategy Essentials Company Directors’ Lunch event with 14 Christchurch Course Allan Scott Breakfast with 27 Auckland Dr Rod Carr Working with the Board 29 Auckland 29 Palmerston North Governance Essentials After 5 with Sam Stubbs 16 Queenstown 28 Christchurch Company Directors’ New members’ lunch 30 Auckland 30 Auckland Course Digital Essentials Breakfast with 30 Auckland Simon Bridges, Leader 17 Invercargill Company Directors’ 31 Auckland of the Opposition Lunch event Course Finance Essentials with Bill Moran 30 Christchurch 31 Wellington Breakfast with How to build your Prof. Ian Williamson board career
BOARDROOM August/September 2018 43 EVENTS
November Webinars Live webinars are facilitated by subject matter experts, and themes from 1 Auckland your questions and comments are addressed live during the sessions. Strategy Essentials September 11 Chairing Fundamentals 1 Tauranga Next Generation workshop Branch manager contact details
2 Auckland Auckland Otago Southland Risk Essentials Shirley Hastings Vivienne Seaton P: 021 324 340 P: 021 152 2809 4 Wellington [email protected] [email protected] Company Directors’ Course Bay of Plenty Taranaki Laura Gaveika Julie Langford 6 Auckland, P: 027 588 8118 P: 021 806 237 Board Dynamics [email protected] [email protected] Intensive Canterbury Waikato 7 Wellington Sharynn Johnson Megan Beveridge New member welcome P: 03 355 6650 P: 021 358 772 event – invitation to all [email protected] [email protected] branch members Nelson Marlborough Wellington 11 Waiheke Island Karen Goodger Colin Yonge Company Directors’ P: 027 525 7400 P: 021 545 013 Course [email protected] [email protected]
12 New Plymouth BRANCH EVENTS After work with For information on member events in your area, see iod.org.nz Shaun Twaddle
20 Auckland Welcome cocktails – invitation to all branch Online Learning members Any time, anywhere. Offering convenience and flexibility, our self-paced courses 20 Auckland provide focused online learning. Progress through the course slides, interactive Audit and Risk diagrams, videos and reflective exercises at your own pace. Committees Health and safety governance Directors’ and Officers’ insurance 21 Auckland 3 CPD points 2 CPD points Governance Essentials Ethics – how directors do business Not-for-profit fundamentals 22 Auckland 3 CPD points 3 CPD points Finance Essentials (free until 30 September) Cybersecurity 25 Queenstown 3 CPD points Company Directors’ Course For more information visit iod.org.nz, contact the director 30 Christchurch development team or contact your local branch manager. New members lunch
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