Chairing a diverse board in an age of complexity
In this dynamic world where competition, management of risk and technology are in a constant state of change and flux, boardroom leadership is also evolving rapidly to keep pace.
First becoming a director at just 32 years of age, today Abby Foote is one of a new breed of directors rising to the challenge and leading a new governance style that recognises the changing demands of the role of directors in an increasingly volatile, uncertain, complex and ambiguous world.
The current Chair of Z Energy, Abby also serves on the boards of TVNZ, Sanford, Freightways and the Museum of New Zealand Te Papa Tongarewa. Her previous governance roles include Transpower New Zealand, Livestock Improvement Corporation (LIC) and the New Zealand Local Government Funding Agency (LGFA).
As companies face into the disruptive challenges of the 21st century, boards are becoming increasingly focused on environmental, social and governance (ESG) performance as well as financial performance. To do this well, boards are looking for a diverse range of directors’ views, experience and perspectives. This puts the onus on a more collaborative model of leadership, says Abby.
“More and more, the task requires bringing out a genuine diversity of views in the room, and doing that in a way that makes people feel safe and doesn’t create personal conflict. Insight and facilitation of group dynamics is key; employed effectively, they can lead to more well-rounded and robust decision-making, and ultimately outcomes that are best for the organisation. There is now a great deal of evidence around the link between thought diversity and business performance.
“As a director, I’ve always had a willingness to challenge. I’ve always considered it important for directors to ask questions without worrying too much about whether it’s something that other people might not want to hear. As the Chair, my role becomes more of a facilitator, working to create an environment where everyone feels free to offer up diverse views.”
“I don’t think it makes a difference whether it is a female or male driving it. It is more about ensuring that directors keep investing time in upskilling and understanding factors beyond factual industry knowledge, to apply broader strategies and techniques to problems. You can’t rely solely on previous executive experience to do the job; you need to be on a continuous learning journey, particularly in a world where the rate of change is faster than ever before.”
“Where a strong culture is not happening, it’s about ensuring people are willing to call out those not living the values.”
GETTING THE CULTURE RIGHT
Now more than ever, there is significant responsibility on directors when it comes to the management of risk and safety within an organisation. Abby has significant experience in governing risk. She was a director at Transpower, which runs the national grid and manages risks to both business continuity and also people’s lives. More recently in her role at Z Energy, she chaired the Health and Safety Committee of the Board prior to chairing the Board itself. Health and safety are paramount at Z given the organisation’s diverse mix of heavy industrial and retail operations. Abby says the emerging trend in recent years is recognising that safe outcomes require more than rigid engineering, with a stronger focus now on creating an active safety-conscious culture. The same she says applies to the management of risk.
“There’s been a tendency in the past to relate to enterprise risk as a compliance task. As we recognise the value of thinking about enterprise risks, particularly strategic risk, and as we face into some of the uncertainties of the future, it is increasingly apparent that diverse thinking and people are an important part of the mitigation. A strong culture becomes critical: it’s about ensuring people within an organisation believe in – and live – the company’s values. Where it’s not happening, it’s about ensuring people are willing to call this out.
“Organisational culture is one of the biggest challenges for directors, as it’s hard to monitor culture and be assured about what it looks like. You can get snapshots of it and an ability to influence it trickling down from the executive, but it’s not fast – not overnight.”
To respond, Abby encourages directors to get out into the frontline and back offices of the organisation to get a feel for the broader operations environment and understand how business is conducted. At Z, Abby has spent time at the biodiesel plant, visiting high hazard terminals around the country, and engaging in “safety walk and talks” with frontline Z people. Most recently she did a shift with a Z mini-tanker driver, providing direct refuelling into heavy machinery on customer sites, with a 5am start.
If directors aren’t already looking deeply into the risks of the businesses they govern, the Australian Royal Commission report into misconduct in the financial service industries released in February this year certainly provided impetus. However, Abby isn’t sold on whether it has made New Zealand directors more risk-averse as a result.
“The challenge is to properly understand the risk that you’re taking.”
“What I suspect is that overall the report has made directors more aware of the mantle of personal responsibility they carry. Does that make them generally more risk averse? I don’t know. I’d like to think not, as my approach to risk is that you have to be prepared to take risks to get rewards.
“The challenge is to properly understand the risk that you’re taking. If anything, the findings from the report should be directing us more towards that conversation: do we understand the risk being assessed? Is that risk the risk you think you’re taking?”
“The business community wants to do more to help New Zealand transition to a lower carbon future so we need to work together with the government to plot out a meaningful pathway.”
AN EYE ON THE BIGGER PICTURE
Abby is proud to be a strong role model for a wide range of people looking to succeed in business, including those from non-traditional business backgrounds. From her perspective, this is about a greater appreciation of people’s lives outside of work and bringing this insight into the boardroom to make better decisions and better reflect the makeup of the world our customers live in.
“Actively promoting and offering true flexibility in the workplace is key to bringing greater diversity into the boardroom and into business more generally.
“Although I have pursued my career while also raising three children, this is not, and should not be, something that is exclusively the domain of women at work.
“Regardless of gender, let’s all talk about our families more and be upfront about the fact we have a life outside of work. By embracing all of our people’s lives, we can build deeper connections with them and positively impact on the intrinsic amount of time and commitment they’re willing to offer.”
As a final point, Abby encourages businesses to collaborate on the bigger picture when it comes to the environmental challenges facing the economy.
“We’ve now got a zero-carbon vision out there, but we don’t yet have a clear sense of the path we follow to achieve that vision.
I sense the business community wants to do more to help New Zealand transition to a lower carbon future so we need to work together with the Government to plot out a meaningful pathway that recognises the challenges in achieving the vision while providing greater certainty.
“It’s about identifying where to make choices, what the consequences of those choices are, and how we help people inevitably impacted by those choices. There are no easy answers. Admittedly, the company I’m Chair of sits in the middle of the debate as a provider of fossil fuels but Z Energy is committed to moving from being part of the problem to being part of the solution. Now is the time to work together and drive the topic forward.”
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