Welcome to the March 2014 edition of The Director’s Dilemma. To read this email in your browser, go to www.mclellan.com.au/newsletter.html and click on ‘read the latest issue’.
Later this month I shall be visiting Perth, Melbourne and Brisbane. Details are below and I look forward to meeting as many readers as possible during my brief stay in each city.
This month our dilemma concerns the tricky process of board appointments. As always, it is a true story. Feel free to email me with dilemmas of your own and articles of interest about boards and governance. By sharing our problems, ideas and experience we can all advance. Consider: What would you advise a friend to do under these circumstances?
Effie is a qualified but inexperienced director and, having done the relevant courses in her home country, is keen to embark on her NED career. She is a member of a superannuation fund and would like to stand for election to that board. Her recent experience as an investment analyst at a private venture capital fund follows several years assessing grant applications for government industry assistance programs. She is sure that her skills would add value to the board.
In her due diligence Effie sought out one of the current directors to ask him about the culture and operating practices of the board. The director was horrified and assured her that only candidates who had been put forward by the nominations committee could access such information. She then sought out the nominations committee chairman and was told that to access the information she needed to stand for election; only if she gained election would she be authorised to talk to any of the directors or to access any information other than the usual reports that are issued to all members.
Effie is unsure how to proceed. She has no desire to be on the board if they are not operating effectively or embracing increased standards of governance. She also has no desire to stand for election and then decline the position if she finds the cultural fit to be wrong for her. This situation is nothing like the ‘two way street’ due diligence process that was discussed in the governance course. There it was asserted that both the director and the company would undertake careful assessment of the alignment of interests before any appointment would be made.
How can Effie move forward and is this board a good place to start her NED career?