How do we Create and Sustain Effective Government Boards?
How do we Create and Sustain Effective Government Boards
Authors: Dr Marianne Broadbent and Mark Lelliott
Originally published on The Mandarin in February 2025
As we progress towards the announcement of an election it will be worth keeping a lookout for any flurry of appointments to effective government boards. This has occurred in the weeks, and even days prior to the announcement of the federal elections in both 2019 and 2022. A senior government minister in the previous government referred to it as just ‘good housekeeping’. But this raised a critical question: why weren’t those appointments made at the appropriate time during that cycle of government? Perhaps the answer at that time was that there would likely be some negative press, but it would quickly pass as the focus shifted immediately to bigger issues in politics.
Governments at all levels are increasingly using Boards and Statutory Authorities to carry out different types of work for public purpose and benefit. Today, some government boards oversee multi-billion-dollar trading enterprises, major sovereign investment vehicles, large and complex cultural institutions or a range of service delivery, administrative or regulatory functions.
In conversation with the chair of a major government board a week or so ago we were discussing the nature of appointments to government boards and the responsibility of their directors. These boards and their directors are responsible for financial stewardship and ongoing solvency of organisations that often have budgets and investments in the billions of dollars. As with private companies, their role is to ensure and add to shareholder value and in doing so maintain their social license to operate. Many also have accountability for areas such as regulatory oversight and the welfare, safety and security of citizens.
Processes for Government Board appointments can vary
There is a well-developed process in many federal and state government departments and agencies for appointments to Government Business Enterprises and corporate government entities. Sometimes it progresses well and sometimes not so much. Their shareholder minister has the ultimate say, and usually on recommendation of the Chair and senior officers in the Department.
Over the past five years or so there has been increasing use of search firms to assist in this process. This means getting clarity around the needs of the board at this time, building longlists and iterating these with the agency and the board chair and perhaps the relevant board committee, then approaching potential candidates.
It is a regrettable to see at times appointments made in a rush as either the work did not commence when it should have, or did not progress in a timely way or perhaps other issues of timing.
How are government boards different from private sector boards?
A key challenge for government boards is the context in which they work. Board members need to have or quickly develop a strong appreciation of the ambiguity inherent in how government works. There tends to be a larger number of significant stakeholders, in a more political-charged environment. This often requires more nuanced approaches to tackling the board’s role, and its influencing and decision making.
Government boards are often framed by different legislation and specific requirements regarding a portion of the board’s membership.
It also worth keeping in mind that the chair and sometimes board members need to be prepared to appear before investigatory groups such as Senate Estimate Committees. We know that this can involve a considerable amount of political theatre of a type that is much less prevalent in private sector boards. Regardless of that, the board members need to be respectful of those processes no matter how challenging they can be. Issues of integrity and probity are also very high on the agenda.
What makes for well performing GBE Boards?
The foundation stones for effective boards are clarity around context and accountabilities, a talented and facilitative chair and board members with the right blend of commitment, expertise, experience and behavioural attributes.
Board members require both general and specific capabilities. The notion of the ‘T shaped’ board member is one way to think about this: every board member requires both generalist and specific capabilities and expertise.
The horizontal part of the T are the functional and behavioural attributes required of all board members. The vertical part of the T are the areas of specific expertise and experience that individuals need to bring to their board membership. These specific capabilities or expertise depend on what each board needs a particular point in time.
What mix of attributes do Government Boards really need?
We were commissioned to prepare a policy paper for government agency about ‘best practice’ for board appointments. We referred to this as exemplary practice for boards rather than best practice. While there are many common needs across all boards, what is ‘best’ for one board, is not necessarily the ‘best’ for all boards.
We have identified 12 practices in five categories that are strong indicators of exemplary practices for government boards:
- Context and chair attributes
- Generic behavioural and functional attributes
- Specific expertise attributes
- Personal and demographic attributes
- Whole of Board attributes
We list those exemplary practices in summary form below with commentary from leading board chairs, directors and CEOs who have been part of our work. These Practices have worked as guiderails for many appointments to Government Boards.
a. Context and chair attributes really matter
Practice 1: Clarify the nature and context of the board and accountabilities
Each board needs to ensure that there is a well-documented set of statements that clarify the role of the board and its board members viz-a-viz the role of the CEO and executive team.
The role and remit of each board shapes the accountabilities of board members. This in turn shapes how the board approaches strategy development and oversight and then the capabilities the board requires. Governance determines what the board requires and thus the nature of, and guidelines for, board membership’
As expressed by one experienced board chair: ‘Ensuring there is a coherent strategy is at the top of what a board needs to do, so everybody then understands what is, and is not, important: what is it we want to achieve? What is the game plan’.
Each board member would be expected to have the experience and capabilities to both contribute to and to challenge the strategy of the organisation, and how the organisation is led and managed to achieve its objectives, but not to interfere with the everyday operations of the organisation.
The nature of the relationship between the board and management needs to be specified if not already clear. This is often stated as the board having an oversight, strategic planning and monitoring role, while the senior executive team was responsible for performance and corporate management. In the words on one board chair, this brought about the board’s need to have ‘good knowledge of the enterprise, and to know what the levers are that will make the organisation succeed’.
Practice 2: Pay particular attention to the qualities required for the board chair
The board chair shapes the nature of discourse and direction. It is the board chair who sets the tone, clarifies scope and the expectations of board members, and plays the key role in the relationship between the board and the CEO.
A good board chair also attracts good board members.
They require strong facilitation and good people skills, as well as a sound grasp of organisational cultures. They need to be willing to really get to know the organisation and how it works. They need to create space for robust debate and keep their ego in check. They need to be able to chair in a ‘forensic and robust way’, in the words of one experienced chair. They need to be completely focused on the outcomes the organisation needs.
b. Enable relevant generic behavioural and functional attributes
Practice 3: Ensure T shaped attribute 1 – Commitment to the organisation’s domain.
Evidence of commitment to and interest in the organisation’s domain, was seen as essential, along with the willingness and ability to devote time and energy to the role.
Effective board members are seen as those with a demonstrable interest in the domain area. Without that interest it was likely that they would not have, or develop, the passion, or put in the time and energy, required to be an effective board member.
Practice 4: T shaped attribute 2 – Ability to address strategic context and challenges and opportunities.
Board members need to have a good strategic lens through which to understand and contribute to the longer-term strategic context of the organisation. This is about the ‘bigger picture’, and possible future growth paths and potential role.
Board members need to be able to take one step back, and to look at the ‘big picture’. In the words of one chair: ‘board members are not there as caretakers or maintainers. They are there to grow and sustain things’.
Practice 5: T shaped attribute 3 – Evidence of being collaborative, team players.
There is strong evidence that a range of behavioural attributes provide the foundation for teamwork. These attributes in board directors greatly increase their chances of being a positive contributor to an effective board.
The board chairs we have worked with are articulate about the necessity for board members to be good team players, who were able to collaborate effectively in the interests of the organisation. Each board should have, and be able to enjoy, diversity of thinking and of opinions while demonstrating mutual respect. They should not be ‘single issue’ people and have a good level of emotional maturity.
Practice 6: T shaped attribute 4 – A base set of functional financial and governance literacy.
Each board member needs a base set of functional competencies to discharge their duties as a member of a board, inclusive of financial and governance literacy and appropriate legislative understanding of the role and remit of the board.
The ‘first order of business’ in the words of one board chair relates to financial health: ‘Sound financials mean that you can then focus on what is important . . . and where the board can add real value’. All board members require financial and governance literacy at least to the level of a reputable Company Director program. They need to be able to understand the business dynamics of the organisation, and the ‘key drivers’ that will bring about economic performance and financial success.
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.
Originally published on The Mandarin, Thursday, February 20, 2025
