Given the potential for disruption coming from all different industry types, company directors will need to beef up their appreciation of worldwide marketplace happenings, according to a new report.
A report released last week, The Future of the Governance Professional, from the Governance Institute of Australia, aimed to demonstrate how the fallout from the banking royal commission is set to define the role of governance professionals for the foreseeable future.
It outlined that directors will also have to understand global trends and geopolitics “because their companies are likely to be more involved in international trade and commerce”.
“Also, they will need to better understand how to influence government policy and more about who their different stakeholders are and how to manage them,” the report said.
“With complexity growing, directors aren’t waiting for company secretaries to send them information any longer. They are going out and doing their own due diligence and research using tools fueled by AI.”
Because directors will have so much access to data, governance professionals are expected to become the filters or “curators” of information rather than being the “givers” of information, the report continued.
“Instead of controlling the information flow, they may also become the ones asking the right questions at the right times to stimulate wider thinking.”
According to Governance Institute CEO Megan Motto, many governance professionals are feeling overwhelmed by the fact that there is “too much data”.
“There is analysis paralysis around making a decision,” she said.
“They are asking themselves: ‘What if there is another data set out there that I should bring to the board?’ or ‘Do I know enough to make a decision?’”
ANZ Bank company secretary Simon Pordage was quoted in the report as saying: “They will need to have an innate curiosity as to what is happening in the broader world. They’ll also need to be well read, well connected and have a global experience because a lot of the changes happening in other parts of the world are going to be happening in Australia.”
“Directors are not necessarily looking for more information. They want better quality information. And that’s challenging and part of the valuable role that company secretary plays,” added Australian Institute of Company Directors senior policy adviser Sally Linwood.
A common feeling, Governance Institute mused, was that boards are pushing back on how much information they receive and can absorb.
“In turn, the company secretary will need to push back harder on management to provide shorter, more relevant information to the board,” the report said.
“More regulation will mean that boards will be more careful and cautious. They will ask more questions and they won’t just take things at face value as much as they used to.”
“Given the need to gain wider perspectives of the organisation and a feel for its culture, more directors will be walking its floors and talking to staff and customers (and even competitors) — sidestepping some of the company secretary’s curation of information. “
The report also showed that, in 2025, governance professionals will “still be working to manage additional regulatory scrutiny, more extensive compliance requirements within a more complex working environment, on top of the technological issues around disruption, data management and rate of change”.