What are Thought Leaders saying is top of mind for boards

Ruth Medd is Chair of Australian Ethical Superannuation Ltd, Executive Chair of WOB Pty Ltd (Women on Boards) and a director of the National Foundation for Australian Women.

Governance Evaluator caught up with Ruth Medd as the first of our thought leader interviews for understanding what is top of mind for directors right now and tips for managing these key risks. Her conversation with us was incredibly interesting and her key insight were incredibly valuable and applicable for all boards.

What’s top of mind for Directors?

Increasing regulation and good governance – is top of mind.

What are the top of mind challenges?

  1. Understanding current risk issues, in particular IT leading to sabotage and security issues, social media impacting on reputation; and disruptive innovation leading to competition.
  2. Doing the right thing by our members. Understanding what our members/customers want.
  3. Conducting board evaluation – chair led, regular and comprehensive.

Do you have some tips for all boards for managing these key challenges?

1. Understanding current risk issues, in particular IT leading to sabotage and security issues, social media impacting on reputation; and disruptive innovation leading to competition.

Continually upgrading the quality of systems combined with the use of wisdom. Wisdom comes from asking the right questions.

We need to be careful the system doesn’t become overpowering. Directors need to think of those issues not picked up in the systems. We need to think about what our members/clients are most worried about.  In relation to risk there is whole series of new questions boards need to ask.

For example in the superannuation industry members/customers are worried about poor returns from investments. This means members go elsewhere. DIY Super funds have grown in Australia to be 1/3 of the market place. Did we anticipate this –no and it is a surprise. Do we fully appreciate the risk of DIY? DIY is a new risk to add to the list.

Also there has been the entry into the market of new companies with new innovative technology. Will they come and steal our market place? Are we too comfortable? Do we have the capacity to think about new entries? The new media and digital economy has risks and opportunities for boards.

There are of course the inherent risks that arise from the new IT era of sabotage both of data and information. The risk for directors is not only not understanding this but also carrying their own technical devices with all the organisations information and board papers around in a safe and secure way. These issues will apply across all sectors and I would recommend that there are some new skills which are worthy of a spot on boards in the future:

  • Understanding new risk systems, risk and compliance and professional endeavour
  • The digital director – new media/digital economy, someone who understands impact of technology on business models you operate under and marketing.

2. Doing the right thing by our members. Understanding what our members/customers want.

Customer service is of great importance. It is the sole purpose test, in that we only do things that add to value for our members, customers and/or clients. Boards need to really focus on this.

In the past in the superannuation industry everything was paper based and it took a long time for things to get done. This meant all processes for our members, even changing funds, was extremely time consuming and laborious. Ruth laughed as she recalled a very funny quote on the radio about a survey done that asked people what they feared most in life.  The Answer was death, public speaking and changing superannuation funds.

In my own case I actually had 3 goes at moving from a superannuation fund. It was way too hard as I could never fill out the form properly. There is therefore a real opportunity to facilitate doing things more easily but make sure it really is easier for the members, customers and/or clients.

There are some very popular advertisements at the moment by companies for insurance, health cover and so on promoting simplicity for terms and conditions that meet your needs. I have tried to join and receive some of these advertised improvements but I find the endless forms and conditions impossible to complete therefore still haven’t benefited from the promoted simplicity. Therefore whilst there is an opportunity in the market for appealing to customers through advertising simpler processes, boards need to ensure from a customer service perspective that they really are!

Another example is banks asking how do we serve customers better? The advertisement of many types of apps has assisted and given customers what they want. This however leaves the door open for competition for banks from disruptive innovation in the IT space. Boards therefore need to understand the risk of not understanding clients’ needs alongside the ‘sleepers ‘of disruptive solutions for your customers created by others and therefor stealing your customers.

Customer service is a key focus for all boards across all sectors; and directors don’t think enough about it. Organisations and boards need to think more broadly about how to meet customer needs better. Keeping people informed is essential and how organisations evolve to the point of being there to meet and serve the needs of the customers is a big challenge that must be met.

Conducting board evaluation – chair led, regular and comprehensive.

This is very important from the perspective of regulatory requirements and the need for the chair to lead the process. Presently this is not a perfect activity. It is the derivative of age old conundrum of performance review and is reasonably new within the last 10-15 years.

Originally the chair had a quiet chat with each board member. Then the advent of the self-assessment questionnaire which was followed by a chat from the chair who pretty much knew the outcome. Then the advent of many and varied self-assessment questionnaires. These have increased the comprehensiveness of the review and the standardisation of the process. Also there has been the externally led reviews but these are not useful if it is the wrong person.

Board evaluation is still a work in progress but is an extremely important process for board development. In fact it is a risk if it is not attended to. We review our budgets, strategic plans and risks annually so why not review our boards as well. A full blown review every three years is advisable. It is important to have a yearly board action plan based on the results from the evaluation.  We need to review ourselves more broadly. Our evaluation questionnaires should be comprehensive and include key focusses and risks for boards now, such as service quality and customer service.

There are however some new issues that have been highlighted through present evaluation processes that Women on Boards have identified. There is room for improvement in recruitment of directors as recruitment is not a core skill of many boards. There are many boards advertising for the first time and there is a need to improve the recruitment process.

Women on Boards has been assisting with this and are there to help.  They have 15 selection criteria. Of note super-man or super-women were not available today! Therefore organisations need to contact WOB for assistance with this one.