How do we Create and Sustain Effective Government Boards?

c. Specific expertise attributes – vary according to the nature of the board

Practice 7: Carefully Identify the Specific Experience and Expertise the board needs.

Government board members should encompass those with specific areas of expertise, noting that most of these organisations are complex. They operate in dynamic environments with multiple levels of stakeholders. 

The bottom line for some chairs was to ensure that their boards had the capabilities and the nous so as ‘not to embarrass the government’. It is important for board members with top level business management expertise to really come to grips with the nature of the remit of the public sector or statutory authority board. While they had some similar demands compared to commercial organisations, they also had significant differences: it was not ‘one size fits all’, or ‘what worked in here will work there’.

Key Expertise and Experience Areas for Government boards

Relevant domain experience
The Board chairs thought it was essential to have good experience at a senior level in the domain on the board. This could provide a perspective or a voice that was sometimes absent at critical points in discussions. They wanted ‘lived experience’ of those who really understood both the dynamics of the relevant industry and the people and culture who comprised organisations in that industry. As with peer board members, they needed to be personally confident and appropriately assertive around the boardroom table, and, be willing to engage in robust debate.

Across the board, the range of attributes needed include:

• Business management experience gained from working in an executive role in complex commercial organisations.
• Financial management expertise with relevant financial qualifications and experience gained from working in an executive role in complex organisations.
• Legal experience with relevant legal qualifications and experience working in, or advising, complex organisations at the executive level.
• Consumer / Industry focused technology and digital experience
• Strategic Risk Management gained from working in strategic marketing, communications, reputational risk and public relations.
• Public policy management and experience gained from working in an executive role in complex public sector organisations.

The last-named area, public policy management and experience tends to be under-represented on government boards but is strongly supported by many of those with whom we are engaged. Executives or former executives from the public sector were seen as having strong relevance because they understand the ambiguity of how government works, including political environments, and the differences between political and logical decision making. They can provide an articulate counter-balance to some of those with business backgrounds who could be less patient or less understanding of processes to do with probity. They know what makes – and how to develop – successful business cases for government funding.

d. Attend to diversity including personal and demographic attributes

Practice 8: Consider if the mix of board members reflects community expectations and engagement.

There was recognition that government boards, to at least some extent, should reflect the society of which they are a part, and that very few did that.

Boards tended to lack a good range of perspectives from different life experiences. Board members did not necessarily have the range of informed perspectives or experiences of those with whom they were trying to partner, with their actual and potential customers, and audiences, with those whom they wanted to influence and those with whom they wanted to engage. They did not reflect the diversity of the community the organisation was seeking to serve.

There is strong acknowledgement that the experience and age profile of many of boards is likely to mean that amongst the board members there might not be a sufficiently strong grasp of the interest and aspirations of those from other demographics. This includes those who are Indigenous, those who are younger, those from non-metropolitan areas, In the words of one CEO, it is important to have people who ‘just think differently’, are willing to ask the ‘obvious questions’, or who are prepared to address ‘the elephant in the room’.

e. Ensure whole of board thinking re succession, chair roles, induction

Practice 9: Consider board succession planning and chair requirements in board member appointments

Amongst the board members there needs to those with the experience, qualities, facilitation skills and sense of presence to be effective chairs for both the board and its sub-committees.

Succession planning to ensure a level of continuity for a smooth transition from one chair to the next is critical. There needs to ongoing scrutiny of board members and board recruitment in relation to potential for next board chair. There is also of course to the need to ensure amongst members that there are those with chair and facilitation capabilities to chair board sub-committees.

Practice 10: Consider board member credibility and connectedness to stakeholders

Government boards have particular needs in relation to how they relate to their government stakeholders – Ministry and the bureaucracy – as well as the community more generally.

Some of those we have worked with emphasise that each board should have at least three people who were seen as credible to provide advice to the Minister. The rationale is that there were sometimes situations that require the ability to explain, present a business case, or provide appropriate and perhaps delicate advice. Those who convey that advice need to be people whom the Minister would or could respect.

Each board needs to be able to maintain a ‘connectedness to government’. Some boards had sometimes seen themselves as ‘outside’ government and, amongst their members, there were not enough board members who really valued or understood the value of being appropriately connected on an ongoing basis. The links between the Minister, the organisation and the board itself, has to be a ‘well calibrated dance’ as one board chair noted.

Practice 11: Effective Boards with Foundations integrate governance and foundation boards

Government boards with fundraising or foundation bodies, such as large cultural institutions have particular governance requirements. Our experience is that effective structure for well-functioning boards generally separate out their main Governance (or Business) Board with their Foundation Board; but they also integrate them effectively. The Foundation Board is usually a sub-committee of the Governance Board and the Foundation Board chair is a member of the Governance Board.

One of the perennial concerns of Government boards, or those supported by government funds, in the cultural and creative, sporting and education sectors is fundraising. Government might provide some base funding, but this has not kept pace with the nature of expectations and demands. The survival of their programs, and particularly their level of innovation and digital presence, is creating increasingly significant demands.

In our work the institutions that were most comfortable about their arrangements tended to be those who separated out – but linked – what we would call their Governance Board from their Foundation Board.

Practice 12: Effective boards take board member induction seriously

Board member preparation and induction is essential to ensure board members make the contribution they seek and that the board gain the full value of their expertise.

A regular theme from both board chairs and CEOs is that not enough time and attention was spent on inducting new board members. The consequences of this was that too often board members did not have a good enough understanding of their role and commitments, and the difference between board and executive management accountabilities. In addition, a ‘buddy’ system for, say, the first 6 months for a new board member is good practice.

There is a clear role for agencies with a portfolio of associated boards, councils and authorities, to develop a targeted induction process for new board members – in the same way they might do for groups of new chief executives, particularly those coming from diverse industries and sectors.

How do we achieve a coherent set of appointments to a Board?

In making new and renewing appointments to boards we see increasing use of an evidence-based board matrix. The board has developed a clear sense of the capabilities needed across the board and specific depth of expertise now and into the future. We have worked with many boards on developing a clear and simple matrix that depicts the T shaped requirements for board membership.  We then work with each board member to identify their individual attributes and synthesise this to clearly identify the gaps.

This matrix process provides the foundation for well-focused board searches, and a strong base against which to assess board candidates. It means the recommendations from a board’s nominating committee can be well calibrated and the subsequent decision making in relation to selecting new board members is a much more considered and objective process.

Government Board appointments matter

Government Boards are now a major mechanism for managing many critical current and future development, large assets and potential accomplishments. It is critical that we ensure that they are well-equipped to do that through the appointment of experienced, relevant, diligent chairs and board members.

Note: This article includes material from a policy paper Marianne and Mark were commissioned to complete by Mike Mrdak as Secretary of the then Department of Communication and the Arts. We would like to thank Mike and his team, including Deputy Secretary Richard Eccles, and Dr Stephen Arnott for their support and discussions. We also thank the many Board Chairs and CEOs who shared their insights and considerable experience with us.