Lessons for corporate Australia that can’t be ignored
The past week serves as a stark reminder of the inextricable importance of good governance, writes Megan Motto.
It has been an intense past week for governance in Australia, with the news pages riddled with question marks over decisions made and questionable standards seemingly entrenched at some of Australia’s most high-profile organisations.
Commonwealth Bank, Crown Casino and NSW Parliament were among those firmly in the public gaze last week. Questions over CBA’s decisions on executive pay made for a difficult AGM during the week – and rightly so.
In a climate when many organisations are laying staff off and reducing pay rates, extra caution is required by boards when making decisions on executive remuneration.
Boards should be asking: will this reflect well on the organisation from a brand and reputation risk perspective, and importantly – is it the right thing to do from a company-wide perspective?
The Crown inquiry playing out on media live streams and blogs has created a melting pot of governance questions mostly concentrated around the composition and integrity of boards, communication flows within an organisation, director induction, and staff training.
There are some high-level lessons for corporate Australia emerging from this inquiry: ensure your board and management team is trained up on best practice governance, that brand and reputation risk issues are a key focus, information flows are effective, and that all shareholders have access to the same level of information.
And after being commended for steering a steady ship all year, the Premier of NSW Gladys Berejiklian now also finds herself in turmoil following an arduous week of ICAC hearings examining allegations around former MP Daryl Maguire. Question marks over her personal relationship with Mr Maguire have prompted broader governance questions for corporate Australia concerning disclosure, particularly around relationships.
Much of corporate Australia already knows the value of good governance, but failures in governance are typically due to a lack of focus on risk management, a breakdown in culture, not having the right set of checks and balances, and a failure to regularly scenario test plans and policies.
Perhaps boards should also take a temperature check on those issues that may have slid off the radar during this tumultuous year – where does your organisation currently stand on climate change risk and workplace diversity and equality?
The events of the past week – and the front-page crises that can transpire when governance fails – are a reminder for more members of corporate Australia to gear up on governance.
Megan Motto is the chief executive of Governance Institute of Australia.