Produced by Julie Garland-McLellan, Consultant at AltoPartners Australia and non-executive director and board consultant based in Sydney, Australia.

Contribution by Mpho Nkeli, Director at Search Partners International / AltoPartners South Africa. Mpho is a non-executive director of Impala Platinum and Life Healthcare

This edition of the newsletter was first published on The Director’s Dilemma website and the full newsletter is available for viewing here. To subscribe to future editions of the newsletter, click here

The Director’s Dilemma - April 2019

Justin chairs a government-owned board. He was appointed for a five-year term just before a change of government and, hence, Minister. The new Minister respects the professionalism of the board, the business has met its targets, and relations have been cordial.

The chair of the board audit and risk committee reached the end of his tenure in December and the Minister appointed a replacement without consulting Justin. The new director is a qualified accountant. However, he has been appointed to three other government boards in the past six months and already had a portfolio of six directorships including three large listed companies. Justin was initially pleased to have such an experienced director join the board and looked to him as a potential successor.

In just four months the new director has upset his board colleagues and staff. He has asked questions when the answers were clear in the papers, failed to attend the induction training, and is often distracted during board meetings. Justin had a quiet conversation with the director asking him to be more attentive; the director was polite but made it clear that he had higher priorities and “the Minister is aware of the other demands on my time”.

At the last meeting the director seated beside the new appointee was able to see his laptop and, after the meeting, she sent an email to the board saying that he had been responding to correspondence about one of his other boards.

Justin feels he must make another attempt to restore good practice or risk losing the cohesion of his board.

How should he start?

Mpho’s Answer

Justin should have a meeting with the new board member and have a stronger conversation about his behaviour. He should ‘call out’ this behaviour during the board meeting when it happens again - because his perceived silence will compromise his credibility with the rest of the board.

The new Minister respects the professionalism of the board and the relationship is cordial - against this background, Justin should use this ‘currency’ well to request a meeting with the Minister to discuss the challenge:

1. Discuss the challenges faced with the new board member and Justin’s actions to-date and discuss joint remedies. The Minister should reinforce the role and authority of the Chairman to the new board member

2. Discuss and agree on the Chairman’s mandate on such issues in the future

3. Discuss and agree on ‘ways of working’ between him and the new Minister on several issues, including (but not limited to) future appointments, regular effectiveness measurement of the board, exiting of ineffective board members etc. and some of these decisions may flow into the Board Charter for proper governance. Despite the appointment being the Minister’s mandate, prior discussions with Justin, referencing of candidates, etc are important for both the Minister and Justin and the board that the best candidates are appointed

4. Propose / discuss / agree on the maximum boards a NED can serve to avoid future appointments of board members with limited capacity

Julie’s Answer

In a recent survey more than 56% of directors said their boards had one or more ineffective directors but had not taken steps to remedy the issue and improve performance or remove them from the board. Justin has made one attempt and must make others until he succeeds.

He should start by talking with the director who sent the email. Board performance is Justin’s territory and she should have brought the matter to his attention alone. She now needs to trust Justin and allow him to address the issue without further interference.

Although government boards lack the prestige or remuneration of a listed board, they are highly prized appointments that allow directors to work in areas they are passionate about. Justin’s new director accepted the role for a reason. Justin should find out what that reason was. He must rekindle whatever passion brought this director to his board. Ideally, he will talk with the new director; if he can’t get a second audience he should talk with the Minister and/or appointing panel.

A formal board performance review, with individual director assessments and results published in the annual report, can also help. Carefully crafted questions make clear who is adding value, and who is not. Knowing that the review is coming will be an incentive to prioritise this board.

Finally, Justin needs to look in the mirror. Performance has been good. The directors are engaged. Is it possible meetings are too frequent, long, or operational? A strategic agenda energises and enthuses directors to give their best. Improving the board’s operations may catalyse better performance.