Directors need to guide, not govern - Rob Campbell

Professional director Rob Campbell says governance should be "banished from directors' vocabularies" and that boards need to become more hands-on by working more closely with company management.

The former trade unionist, who chairs NZX-listed Summerset Group [NZX: SUM], Tourism Holdings [NZX: THL] and Precinct Holdings [NZX: PCT], as well as P2P lender Harmoney, and who sits on the numerous boards of NZX-listed, private and non-profit entities, spoke at a Future Auckland Leaders alumni dialogue session on leadership in governance.

"Be a director, not a governor," Mr Campbell told attendees. "We hear a great deal about governance these days. Everyone seems to have an opinion about good and bad governance. I see that NZX has made a further contribution on the topic. 

"My view is that seeing the function of a board as governance is seldom useful even in a very big business. The cynic in me wonders whether 'good governance' is simply what we observe before something significant goes wrong, and 'bad governance' is what we comment on afterwards.

"In my view once a board sees itself as governing it has distanced itself from the value creation process," Mr Campbell says. "Have you ever heard of a high performing, value adding team that responded to or was driven by governance? Try words and concepts like leadership, guidance, diligence and partnership and you might get a whole lot closer to adding value."

Mr Campbell questioned whether a board and board members could meet their legal obligations to a company if they took a governance approach.

"Any director who has considered the depth and hands-on nature of their obligations in respect of health and safety or issuance of new securities will find it very hard to maintain the distinction between governance and management so beloved of governance experts. You and management are in this together.

"Most business needs activist, effective, participant directors," Mr Campbell says.

His comments come a month after Shareholders' Association director Des Hunt said momentum for change in board diversity is gaining speed after being initially slow to build.

The association set up the Future Directors scheme, along with The Warehouse founder Stephen Tindall and Vector chairman Michael Stiassny, as it had concerns about the size of the pool of qualified people able to take on senior governance positions.

The Future Directors scheme lets candidates observe and participate on a company board for a year (without voting rights) while exposing the company to prospective directors they may not have considered before.

MightyRiverPower chairwoman and former Fairfax Media New Zealand chief executive Joan Withers said, when the scheme began, that young people are under-represented in the boardroom, and has since reiterated that point when talking about increasing gender diversity on boards.

"The whole point is to drive the executive team and board to avoid the pitfalls of group think," Ms Withers said.

"One of the challenges as we get older is to make sure the average age on boards reduces from where it was 15 to 20 years ago when a certain number of people saw it as a reward for their executive career and stayed on the board forever."

(BusinessDesk)