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The Director's Dilemma

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25.01.2022 If power is given it will be used. When did your board last review their delegations and consider if they are still a good fit? Correspondence between Palace and Australian Government officials when the Governor General dismissed the Prime Minister of Australia in 1975 reveals that the people concerned acted upon the delegated powers even though their actions were unprecedented and highly contentious.... It is clear that the actions were not taken lightly and that both parties took legal and other advice before acting. However, they did act without first informing the Queen. Sir Martin Charteris wrote these powers do exist and then the fact that they do, even if they are not used, affects the situation and the way people think and act. Wise words. He went on This is the value of them, but to use them is a heavy responsibility. The message for boards is clear. If you have delegated power; it will be used. That use may be contentious 25 years later. It may or may not be appropriate. You must know what is delegated, to whom, and for what purpose. Review your delegations every time you have a new CEO, strategy, or environment. It could be your best use of scarce board time. #business #strategy #directorsdilemma #power #boards If your board needs advice and training that is up to date please contact me.

25.01.2022 I have worked on and with boards for over 21 years. I have observed that every year there are one or two ‘breakthrough’ directors. These directors get noticed because they positively impact the company. This week I am posting each day about a mistake that could be preventing you from becoming a 'breakthrough' director. Mistake number 5 is to apply one governance solution to all situations. There is only one Corporations Act, but every company will be governed slightly differ...ently from its peers. Those differences arise from the different competitive, ownership, and structural situations of each company. Applying your business and governance skills to developing the optimal governance framework for your company at this precise moment in time, given these exact circumstances, will maximise the ROI from your board. Governance is different in a start-up to in a turnaround, in a family business to in a government-owned or listed business, understanding the role of governance that best meets the needs is a hallmark of good directors. I will post two more to explain mistakes 6 and 7 and how you can avoid them. Follow me or subscribe to ensure you get access to them.

24.01.2022 How to discharge director's duties when recruiting via video Surely no board would recruit a CEO or director solely via video? Surely that would breach your duty of diligence? Unless you happen to be a board that needs a CEO or director right now. ... Then you might have to. There are a few things that you can do to discharge your duty, stay out of court, and make a great appointment. 1 Delegate to a nominations committee or specially appointed taskforce a small number of committed people is better than a larger number with diffuse responsibility. 2 Develop a comprehensive profile of your desired successful candidate what experience will they need, what learning style should they exhibit, how should they interact with staff and the board now and under normal circumstances, what would make the difference between a good candidate and an outstanding candidate? 3 Design your process carefully include time for discussions about candidates, with candidates, with referees, about referees, and use a skilled experienced recruiter. Make sure that you will be able to filter personal bias and subjective reactions from the factual content. Remember 'chemistry' and 'cultural fit' are as important as ‘track record’ and ‘formal qualifications’. Building that into your process takes thought and skill but adds value. 4 Drive the process decisively it is easy to lose momentum, and hence good candidates, so make sure you make progress. Schedule meetings in advance and block out diary time so that the committee can discuss each step without endless rounds of calendar synchronising or one person missing a meeting. 5 Determine how you will handle the contract consider probation periods and support mechanisms for executive appointments. Unless you need the appointment to maintain a quorum, consider a two phased process for board appointments. Remember that even if the board can appoint directors to a casual vacancy only shareholders can remove a director. 6 Don’t omit the review and reflection phase learn from every appointment your boards make so that you gain skills and insights that will make you a more valuable director in future. The Corporations Act allows directors to act with the degree of diligence that a reasonable person would expect under the circumstances. Pandemic times are not normal circumstances. You may not be able to do what you usually would. You can still do well and be diligent. If this post was useful, please like and share it. ______________________________________ Julie Garland McLellan is a boardroom trends forecaster, advisor to boards and directors, experienced company director, and professional conference speaker. She features frequently as a commentator on TV and radio and is the bestselling author of 6 books. For more information on Julie's keynote speaking topics, visit www.directorsdilemma.com.

23.01.2022 Easy way to stop bad board behaviour Bad behaviour can undermine the best governance framework. Most chairs dread having to take a director to task over their behaviour. But it must be done for the board to have an impact and add value. Here are five ideas for making it easier: 1 Set the standard before behaviour starts. Go beyond the ‘consent to act’ form and get a signed acknowledgement of a letter of appointment that sets out policies, standards of behaviour, expected tim...e commitment, duty to manage conflicts of interest, etc. 2 Have a board code of conduct or behaviour policy. Get it out and review it at regular intervals to keep it current. Encourage staff to review and contribute also. 3 Act on the first transgression. Take the director aside and give immediate feedback. People will usually forgive one small transgression and the transgressor will usually recognise and correct the behaviour. Once behaviour has been accepted it is much harder to change. 4 Recognise and reward good behaviours. Small acknowledgements, given at the time of the behaviour will naturally encourage a repeat. 5 If someone doesn’t meet your standards remove them from the board. It may be difficult or embarrassing. It will be worth it! _____________________________________________ Julie Garland McLellan is a consultant who works with boards and directors to give them the practical skills they need to build better businesses. She is famous for her practical and pragmatic approach to the real problems that face boards and directors and for her ability to bring sanity and solutions to even the most vexed boardroom. She has first hand experience on 18 boards across three continents including listed, private, government, and not-for-profit boards and has helped boards to lead successful organisations for over 22 years. Julie has written and facilitated director education for leading governance institutions, including the Australian Institute of Company Directors, The Governance Institute of Australia, The National Association of Corporate Directors (USA), The Taiwan Corporate Governance Association, etc. Julie is the author of six books for directors and is publisher of The Director’s Dilemma newsletter.

20.01.2022 A better way to think about ‘skin in the game’? The governance institutions recommend director independence. Shareholder associations recommend directors have ‘skin in the game’. They define skin as ‘enough equity invested that directors feel pain if the company value drops’. But does equity invested change the diligence or skill of the directors?... The experience of start-up founders with boards composed entirely of investors would suggest that these boards rarely add value. The exception being when the investor has direct experience of a similar company at a similar growth stage or solving a similar problem. Close oversight and loss aversion do not build good strategy for growing a business. Having money to lose does not indicate good judgement. The experience of other CEOs with boards composed of eminent businesspeople. Having achieved success as an executive does not automatically translate to being able to contribute as a non-executive. Director skill is hard to define. There is no official standard. Even diligence is measured with a reasonable person test. So how do you determine board composition? Perhaps a better solution is a diverse board where some directors have equity and others have professional skills to contribute and professional reputations at stake. _________________________________________________ Julie Garland McLellan is a consultant who works with boards and directors to give them the practical skills they need to build better businesses. She is famous for her practical and pragmatic approach to the real problems that face boards and directors and for her ability to bring sanity and solutions to even the most vexed boardroom. She has first hand experience on 18 boards across three continents including listed, private, government, and not-for-profit boards and has helped boards to lead successful organisations for over 22 years. Julie has written and facilitated director education for leading governance institutions, including the Australian Institute of Company Directors, The Governance Institute of Australia, The National Association of Corporate Directors (USA), The Taiwan Corporate Governance Association, etc. Julie is the author of six books for directors and is publisher of The Director’s Dilemma newsletter.

19.01.2022 Representative boards are on the increase. Proportional community representation is becoming a key driver of board composition. 20 years ago, a female company director was considered a strange and rare occurrence - unless their husband or father had died and they inherited the shareholding it was almost unheard of for large companies to have women on their boards. ...Continue reading

19.01.2022 Fascinating frequently asked questions about boards with answers If you are a business owner and will eventually be required to have a board, how should you prepare? How should I get on a board?... How does strategy differ from governance? What does governance mean and is it different to management? And many more .... An interesting podcast with Lauren Kress, The Business Scientist https://www.spreaker.com//the-directors-dilemma-with-board Let me know what questions you have that you would like answered. #business #strategy #diretorsdilemma #careers

18.01.2022 Powerful Advice to Keep Young Directors Safe Last night I had a really great conversation with a board of young directors. They had researched their role, decided they didn’t know enough about it, and started reaching out to experts for help and advice. They cam prepared to the meeting with a range of questions about board resilience, innovation for NFP boards, and how to manage board succession given the short terms stipulated in their constitution. Although we covered all ...of those topics the discussion was summed up as: To be safe and successful in your board roles you need to - Keep learning and stay curious - Be diligent and honest, and - Stay solvent (or get help if you think you are not going to stay solvent). Julie Garland McLellan is a consultant who works with boards and directors to give them the practical skills they need to build better businesses. She is famous for her practical and pragmatic approach to the real problems that face boards and directors and for her ability to bring sanity and solutions to even the most vexed boardroom. She has first hand experience on 18 boards across three continents including listed, private, government, and not-for-profit boards and has helped boards to lead successful organisations for over 22 years. Julie has written and facilitated director education for leading governance institutions, including the Australian Institute of Company Directors, The Governance Institute of Australia, The National Association of Corporate Directors (USA), The Taiwan Corporate Governance Association, etc. Julie is the author of six books for directors and is publisher of The Director’s Dilemma newsletter. #business #strategy #boards #governance #safety

16.01.2022 Number 4 of the top 7 mistakes breakthrough professional directors avoid: Think non-executive means non-leader Boardroom success is about influence. Bringing an open mind and being ready to be influenced is not the same as bringing an empty mind and being unable to exert influence. Every director needs to be able to confidently lead the board from time to time; even, or perhaps especially, when they are newly appointed. ... Joint and several liability does not mean directors don’t take personal accountability for their actions. They must lead the board to a decision before the board can lead the executive team anywhere. I will post a short video every day for the next week to explain more about these mistakes and how you can avoid them. Follow me or subscribe to ensure you get access to them. #business #strategy #directorsdilemma

14.01.2022 I have worked on and with boards for over 21 years. During that time, I have observed that every year there are one or two ‘breakthrough’ directors. These directors magnify their impact because they avoid making one of seven fundamental mistakes: The top seven mistakes breakthrough professional directors avoid Mistake number 1 is to rely only on governance skills Don’t get me wrong; nobody should attempt a career in the boardroom if they don’t understand the basic principles... and processes of corporate governance. That is like your high school education. It got you a job. Once. Then you had to do more and build upon that foundation. Take the Company Directors Course or become a Chartered Director and consider that to be the threshold level of knowledge to get you through the door. But don’t rely on that alone. If you do you will become a dotter of i's and a crosser of t's in sentences other directors write. Then make sure that you also have specific value to add to each board you accept a seat on. Governance processes are not enough to make you a breakthrough director. You must also solve a problem the business is facing. That is the value add that makes the difference. I will post a short video every day for the next week to explain more about these mistakes and how you can avoid them. Follow me or subscribe to ensure you get access to them.

13.01.2022 Are board fees the best measure of bang for buck? Today’s Financial Review contained an article comparing ASX 100board fees to market capitalisation: a ratio of 0.01%.... Directors’ fees are a fraction of total board cost. Senior executives spend >30% of their time on board matters: preparing meeting information, writing agendas, papers and minutes, gathering information, managing housekeeping, and interacting with directors in committee, board, or one-on-one meetings. Few boards manage their total cost. 2013 research suggested it was 3.75 times director remuneration. Roughly equivalent to two full time C-suite executives. The Apollo Communications report, while not capturing full cost, may raise awareness of the need for board ROI. Boards and directors may then understand the value of investing in improving their skill to reduce that cost and increase the return it generates. In 2013 I researched into the cost of time spent reporting to, supporting, and administering their company's board. Your help bringing that research up to date is greatly appreciated. Your best estimate - if you don't track board time cost - is sufficient. Comments and questions are welcome. Take the survey here: https://lnkd.in/fUbhkYE #business #strategy #directorsdilemma #value #remuneration Julie Garland McLellan is a boardroom trends forecaster, experienced company director and professional conference speaker. She features frequently as a commentator on TV and radio and is the bestselling author of 6 books. Her most recent book Not For Profit Board Dilemmas is a practical guide to thriving in boardrooms as the non-profit sector faces immense disruption. To see Julie speaking live, click here. For more information on Julie's keynote speaking topics, visit www.directorsdilemma.com.

13.01.2022 So delighted to receive this great testimonial: Stone & Chalk engaged Julie to deliver a session for our community on How To Position Yourself, Your Board and Your Advisors for Success’. Julie was a delight to deal with, prompt, polite and professional. Her deep knowledge and practical examples blew the audience away. She was approachable and handled a range of questions without notice providing great value to the audience. The feedback was fantastic, and our members are keen... for more. Kristina Singh Head of Events | Digital Marketing | B2B Customer Experience | Sales | Emerging Technology Stone and Chalk See more

11.01.2022 Avoid the risks and claim the rewards: Over the past few days I have posted videos on the top seven mistakes that aspiring directors make and which prevent their board careers from developing as they want them to. Here are the links to those posts: Overview https://lnkd.in/gnTK4pv 1 Relying only on governance skills https://lnkd.in/gv2UUhf 2 Relying only on business skills https://lnkd.in/gpd6NKJ ... 3 Depending only on their network https://lnkd.in/gdwRz3a 4 Thinking that non-executive means non-leader or non-accountable https://lnkd.in/gvfKrGU 5 Applying one governance model to every situation they encounter https://lnkd.in/g8ZWkSA 6 Failing to implement a progression plan https://lnkd.in/ggT4N-J 7 Not managing their board portfolio https://lnkd.in/gW8jyg9 What you don’t do can be as important as what you do do. Breakthrough directors avoid making any of seven fatal mistakes that undermine a director’s ability to have an impact. I work with directors to help them build satisfying board careers and companies that deliver their visions. If you would like to explore how I can help you, please get in touch. #business

08.01.2022 Some ideas for responding to a crisis.

06.01.2022 Mentoring a company chair yesterday I heard about directors talking past each other. It is a common issue. Independent, skilled, confident and powerful people are inclined to have value to share and in the moment of wanting to contribute can flip the switch from two-way conversation to one-way broadcast. So: what do you do when it happens in YOUR boardroom? 1 ask for a break. These are good people. Listening to unfamiliar ideas is hard work and tiring. A three minute ...‘comfort break’ can work wonders in re-establishing the concentration required to receive as well as transmit ideas. 2 stop the discussion after each director has contributed and ask the others to comment on that contribution, rather than the topic under discussion. In my experience you only need to do this a few times for the board to pick up on the value that they are missing by just waiting to contribute rather than sharing each other’s knowledge. 3 thank each director for their contribution and repeat an idea from it. Directors who see this will often copy it. Implementing is easier if you are the chair. However, any director can and should lead the board when appropriate. See more

02.01.2022 Your board minutes are confidential, but they are not subject to legal privilege. Like the official records of the events in 1975 they can be accessed by interested parties including the press and parties involved in legal disputes. The release of palace correspondence has added nuance, personality, and drama to the ‘official record’ of events in 1975. These were originally withheld as they were considered ‘private’ correspondence. Your emails and letters could also be acces...sed. Your ‘private’ correspondence could become an exhibit for the prosecution or simply float like confetti in the court of public opinion. The carefully worded letters in 1975 show the writers were conscious (if not desiring) of the potential release of their words. Cyber breaches make it likely that any email you write, and any document you attach, could wind up in the public domain. Would they would show you and your board in a good light? What if they were read 29 years after the event? Would they still look good? Or can you see the beginning of a trend that would rule your words culturally unacceptable in the fullness of time?

02.01.2022 2nd mistake breakthrough professional directors avoid During my 21 years working on and with boards, I have observed that every year there are a few ‘breakthrough’ directors. Sometimes these directors want a board career, at other times they simply want toleverage board roles into impact. Mistake number 2 is to rely only on business skills.... Again; nobody should be on a board if they don’t understand the basics of business. But you are not there to run the company. Your previous business success may get you an interview. Your relevance and ability to solve the problems the company currently faces are what will get you an offer and keep you on the board into the future. Remember that you are not on the board to use your business skills. You are there to leverage them through the staff and your board colleagues to make a lasting positive difference. That is different to being a manager, CEO or consultant. You will need to learn to generate and use leverage. Good directors never stop learning and are always curious to find a better way to do things. I will post a short video every day for the next week to explain more about these mistakes and how you can avoid them. Follow me or subscribe to ensure you get access to them. #directorsdilemma #business #boards #strategy