The Director’s Dilemma – March 2021 Edition

March 01, 2021 Share this article:

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

Contribution by Peter Tulau, Managing Director AltoPartners Australia

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 - March 2021

This month we investigate possible ways forward for a government-owned organisation with an enthusiastic Minister, a huge workload in the statement of expectations, and a limited budget.

Enya chairs the audit committee of a government owned board. She is always inspired by the mission and loves to see the impact that her company has in the community.

As is common for Australian government-owned companies, her board is established by enabling legislation that restricts the company to work aligned to its core purpose and to delivering the policies of the government of the day. The relevant portfolio Minister issues an annual statement of expectations which provides ‘very firm guidance’ for what the company should achieve in the following period of operation.

Following a government reshuffle the new Minister has taken a great interest in the company, which does a lot within her electorate. She has visited projects, spoken with staff, and generally supported the company.

The Minister has just sent the new statement of expectations to the chair, who has forwarded it to Enya. Enya was impressed when she read how much the Minister expected the company to achieve. Then she remembered that the annual audit includes a review of performance against the statement of expectations.

Apart from a few small grants that are applied for each year, the company is funded by income from its commercial operations. The surplus is never going to cover the costs of all these projects, even though they are exactly what inspired Enya to join the board in the first place she is daunted at the high risk of failing to meet expectations.

The chair has asked her to reply with comments on the letter of expectations. What should she say?

Peter’s Answer

There is a lot going on beyond a simple question of how Enya should respond to the Chair; Enya needs to clarify a few things.

Starting at the top, Enya needs to ascertain the context surrounding the enhanced statement of expectations. Is it purely political or otherwise? Is it driven from above the Minister or is it a Ministerial idiosyncrasy? Is the Minister under pressure? Why does the Minister have great interest in the company? Can a little research be undertaken to ascertain the context?

Enya also needs to push back on the Chair in two ways. She should encourage the Chair to chat with the Minister and directly seek to clarify the context. At face value there seems to be irrationality in the statement of expectations as you cannot squeeze the lemon beyond a certain point.

Enya should also have a conversation with the Chair. Maybe the Chair has abdicated responsibility and taken the easy way out by simply forwarding the new statement of expectations to Enya and is seeking a “reply with comments”. (aka: let me hand you shovel so you can dig the hole) or maybe the Chair seeks Enya’s input to be worked into a final (formal) response to the Minister. Either way they need to meet to uncover things like intent, nuance, strategy and horizon thinking.

Radical candour

Enya should not be “daunted at the high risk of failing to meet (impossible) expectations” but she should be attuned to the motivations of others and the need to manage her personal risk. Enya needs to understand that she is not a magician and cannot make the impossible possible.

In terms of response style the radical candour quadrant is instructive. It contains ruinous empathy, manipulative insincerity, obnoxious aggression and radical candour. Enya needs to steer clear of the middle two and focus on a hybrid of empathy (not ruinous) and candour (not too radical) which will deliver a sense of personally caring yet challenging (the underlying irrationality in the statement of expectations) directly.

Julie’s Answer

Enya should be very honest that she feels the letter of expectations contains a workload that is not capable of implementation in the next year without additional funding.

Enya can help the chair by providing a clear statement of what she believes is achievable and what additional progress might be achieved if additional funds were available.

The Minister should be asked to provide a written directive for areas where the Minister wishes the company to step outside its usual, prudent, operations, and undertake additional work that might cause resourcing difficulties.

Enya should also carefully parse the letter of expectations and work out what is open to interpretation and what is a firm directive. Governments often work on policy outcomes timeframes and these will naturally exceed the annual activity cycle of an operating company. Hopefully the Minister is aware of the areas where the expectations will prove hard to achieve and has worded the letter carefully so that progress towards the outcome is unarguably necessary and achievement of the outcome can follow in later years.

Acceptable progress might be development of a strategy to address the desired actions, or the award of a consulting project to outline how outcomes could be achieved. Community consultation will also be a necessary first step if the actions are outside the usual scope of the business.

Finally, Enya must alert the chair if it appears that a disproportionate amount of the work is falling within the Minister’s electorate compared with other areas where the company operates. Being implicated in ‘pork barrelling’ would be a risk that could harm the reputation of the company and its board members.