There were many thoughtful and informative interviews which could not be included in the latest edition of The Book of the Board (published by The Federation Press). But interviewees have been happy to approve their separate publication. Paul Wright reflects on his experience as a board member and Chair of health, hospitality, banking and consulting organisations.
Interview with Paul Wright AM by David Fishel
Paul Wright AM
Paul Wright's career has included 28 years as a company director serving on some fifteen different company Boards. He has held senior management and leadership roles in the banking, health, hospitality and consulting industries. In 2006, Paul was appointed a Member of the Order of Australia for his service to medical administration and to business and commerce. Paul has been Chairman of The Australian Institute of Management, The Royal Flying Doctor Service, The Queensland Institute of Medical Research Trust and PQ Lifestyles Limited. He is currently the Chair of Sugar Research Australia Limited and Phoenix Eagle Company Pty Ltd as well as a director of the Australian Sugar Industry Alliance Limited and Idec Solutions Pty Ltd.
On the changing operating environment
We have become over-regulated and created a real burden for ourselves with onerous workplace health and safety requirements and high employment costs. We’ve perhaps over corrected - and it makes it tough to govern.
Regarding regulation in the non-profit sector, I think you need to have some regulation but it needs to be balanced. I remember going to a law lecture a long time ago. The lecturer’s proposition was that regulation doesn’t fix things, you have to put some policy settings in place to change the culture. My view is that self-regulation works but the culture has to be right. You can have as many laws as you like but it’s not going to fix things, you really need to get people’s behaviors and attitudes fixed. When something goes wrong, we make a law to fix it, then something else goes wrong, we get another law to fix that and that doesn’t really prevent future problems. All you’ve got is more laws which make it harder for the honest broker.
The quality of Directors in the non-profit sector is just as good, if not better, than the quality of Directors in the for-profit sector and there are “would be’s” in both. I don’t think you can separate it on the basis of profit or non-profit. The quality of some of the people on the big public company boards has often been disappointing to me.
On the leadership role of the chair
It has taken me a long time to sort out my philosophy on this, but I believe strongly that there are two issues that a Chair should be trying to build - independence of mind and collegiality. If you can get those two things out of a board then you’re well on your way to a good robust board. You have to discourage groupthink but you still need collegiality. If you have hostile conflict then you’re never going to progress.
I very rarely put my views on the table about an issue first. I’m more likely to say, “There’s the issue, you’ve read your board papers, are there any questions or comments about this issue?” Then we have questions and comments and I see my job very strongly as a facilitator. I will make sure that everyone is contributing. If someone is not contributing I’ll draw them out. We always work on a consensus basis, so I always go around the table anyway. Then I’ll recap, “What I’m hearing is that there are three or four of you who are saying this… and there are two of you who think that… I want to flesh out what your issues are and why you’re feeling that way,” and I facilitate rather than dictate the decision.
I have tried a number of different board review systems. What I do now is include a questionnaire at the end of the board papers and one of the questions is: Did the Chair facilitate the meeting appropriately?
How do you see the relationship between Chair and CEO?
The most powerful relationship in the organisation or the most potent is that relationship between Chair and CEO. That is the linkage between the board and the management and operation of the organisation. That relationship needs to be collegiate but not over-friendly. You don’t become close personal friends but you need a strong working relationship. The reason is that you have to hold the CEO accountable and there will always be times when you have to provide some mentoring and some correction. But there may also come a time where you have to get rid of them, so I think it is very important to maintain the relationship as collegial but professional.
In commercial companies I expect to be talking with the CEO a couple of times per week. I work on the basis of no surprises. The CEO’s understanding with me is that I don’t want them to have to get permission from me to do anything but I don’t want to get any surprises. So anything you think I should know about, keep me informed. That is a matter of practice until you get it right and you get used to each other. The new CEO of Sugar Research Australia, for example, will ring me and say, “Just giving you a heads up on this…” and I know what is going on and I know that if anything nasty happens I’m the first to know about it and that’s the way it ought to be.
The other thing I’m quite firm about in terms of the relationship is that I will never get involved in management. I work on the grandfather principal. For example, if the CEO is appointing someone who is reporting to him it is his decision, but before he actually communicates that decision he will just run it past me, “These are the sorts of people who applied…this is who I have chosen,” and that then gives me the opportunity to say, “Did you ask about such and such…how did they react to this… were they better or worse than the others in terms of this?” I will never interfere with their decision.
It is very important that the relationship is kept at a professional level and that communication flows strongly. Then it’s my job for anything the rest of the board need to know about to keep that flowing through to them. I do my bit and he does his bit but we help and remind each other about the communication either way.
Regarding appraisal of the CEO I’ve tried a number of different systems. There are five things that I judge a CEO on:
1. Have they delivered on strategy?
2. Have they delivered on the financials?
3. What is the nature of their internal relationships, have they got a good management style?
4. What is the nature of their external relationships including all stakeholders?
5. Governance in the broader term of “what is the culture around here?” Are the right things being done right?
The first step in the appraisal process is that I ask the CEO to give me an assessment of their performance against those KPI’s and to put in writing how they feel they went this year against those things. Then I take that to the board and put that assessment in front of them and get their input. Once I’ve got their input I sit down with the CEO and go through, “That’s what you think… this is what we think… there is a gap here etc.”
For many years I was very ambivalent about whether the CEO should also be a Director of the company and I’ve come to the conclusion that they shouldn’t. If it is a Managing Director and then you want to do their review or there is some other contentious management issue, then you have to exclude one of your Directors from the process. I think it’s better to have CEO and board separate.
What is the board’s role in fundraising?
I was chairman of the Queensland Institute of Medical Research Trust for seven years and we went from $15 million to $68 million under management in that time, so I’m speaking from that perspective. I attended a number of functions - fundraising events - and I was there to host a table of some of the potential donors. Did I ever say, “Well what about a donation?” Never. It was a representational role. I attended regular lunches with corporate players and I would explain the work being done and what happens to the money, but never once did I say, “We’d like your donation”. I might say “We look forward to your support or thanks for your support”. It was the same when I was Chair of the Royal Flying Doctor Service in Queensland.
What do you look for in potential board members?
It is firstly to get the right skills mix and then I’m looking for compatibility with the other members of the board so you can achieve collegiality. Now you might get somebody who has got precisely the skills you’re looking for but you know that he or she is going to be abrasive and upset everybody, so what’s the point? If they’re not working together for the common good then you won’t achieve what you’re setting out to do. So I would be looking for those people whose personal traits are going to fit. Their commitment also has got to be complete. I am not interested in freeloaders. You’re either interested in the company or you’re not. You’re either a Director or you’re not. Commitment is total. In terms of time, that varies. It depends upon the maturity of the organisation, where it is in the lifecycle and the issues it is facing.
One of the things that fascinates me is the number of people who come to me and say “How do you get on boards?” What is their motivation? Why do they want to be on a board? Do they understand what the issues are and what the responsibilities are? There seems to be a trend that everyone wants to be on a board including young people. You really need to be sure you can bring some skills and value to a board and you need to make sure that you understand the responsibilities that you take on when you join a board. There needs to be some management of expectations.
On board remuneration
My view is that you ought to be paid. You might not be paid public company rates but I think if there is some sort of pay that recognises your time and your expertise then, for some people, the commitment is strengthened. For me, if I make a commitment, I make a commitment, doesn’t matter if I’m paid or not, but there are some people who if the pay is there then the commitment comes up to match it. You’re certainly carrying the same responsibility at law as any other company. If you say well this is a charity and you want to donate some or all of your fees back then that’s fine - that is up to you. But I think it is proper and professional for Non-Executive Directors to be paid whether it is a charity, a non-profit or whatever.
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About the Author
David Fishel is a Director of Positive Solutions, a consulting firm specialising in the cultural and non-profit sectors. He has been a board or Council member of several cultural and educational organisations, including Circa, Creative Enterprise Australia, QUT, and the Brisbane Writers Festival. He has been involved in the development of national training programs for board members in the UK and Australia. He is the founding Director of BoardConnect, a non-profit organisation established to provide advice and support for the board members and CEOs of non-profit organisations throughout Australia. David has facilitated strategic planning and organisational development for cultural, health, Aboriginal, sports, educational and other organisations.