Unit 11, 61 Flynn St, Wembley, WA, 6014
08 9242 2085 ots@otsmanagement.com.au
Advice from Outside the Square

Make Your Indigenous Corporation Board “Smarter”

Make Your Indigenous Corporation Board “Smarter”

If all the Directors on your Board and all the other leaders in your Indigenous corporation are of a similar profile, it’s time to expand your ideas about diversity.

Diversity is not just about balancing the genders and the ages because if all your Directors share the same background – hard not to in an Indigenous context – you need more diversity for better all-round decision-making processes.

Indigenous corporations have evolved from “associations” incorporated under the old Aboriginal Councils and Associations Act 1976. They now have their own Corporations Act (the Corporations (Aboriginal and Torres Strait Islander) Act 2006) which was intentionally drafted to mirror the mainstream Corporations Act 2001 along with the duties, responsibilities and penalties attached to mainstream corporate governance.

Indigenous corporations have had to deal with more complex and non-local issues, particularly as many hold important assets as Native Title PBC’s or as commercial arms of Native Title determinations and other royalty agreements. As a result, the perspectives that Directors need in decision-making have also evolved. While the need to remain connected to cultural imperatives and understand the stakeholders is still a key factor in all Boards’ decisions, increasingly, Indigenous Boards need to understand the Law, Agreement-making, commercial opportunity, financial control and budgeting, the non-traditional industry increasingly coming into their area, and national and international economic and other trends.

In the past, Indigenous Boards have appointed “Independent” Directors, meaning people not of the community, to help them see different perspectives. Sometimes, these Independent Directors have worked in context, because they understood the overlay of cultural imperatives, and they were not merely guns for hire. However in other examples, “independent” did not necessarily mean dispassionate or unconflicted, and they have taken over decisions through force of personality or downright corruption.

The future, however, shows good signs that younger Indigenous men and women, who have been through university, and who take up the professions or managerial positions, are willing and able to take positions on Boards, including Boards of corporations representing their own people. In my opinion, this will still take some time before a cohort of Indigenous people with enough widespread “other” experience are able to make a difference on Boards (with some remarkable exceptions in different regions).

Today, the conversations in the Board Room need to ensure that a difference of perspective is achieved. Until that diversity of perspective is represented on your Board, you can only do this by asking a lot of questions of a lot of people before you make up your mind. Unless you explore all available diversity of perspective, through involving external advisors, consultants and “independents” as well as appropriate experts from tertiary institutions, businesses, lawyers and accountants, you run an increased risk of making mistakes in complex decisions that are outside of your Board’s perspectives.

A good way to start this search for a diverse perspective is to ask management which three issues they think are not being dealt with by the Board. This involves senior management in their views on issues they have to deal with operationally that have not come across the Board’s radar. Often, these issues are the weakness in Board decisions because they have no experience or knowledge of them. Once identified, a strategy needs to be implemented where expertise in these issues are learned or bought in.

Another structural idea is to appoint portfolios to the Directors and providing them with the resources to learn about their portfolios by hiring portfolio-specific advisor-mentors for them. This is also where an appropriate Independent Director or experienced Board Advisor can help, one person who has extensive experience across “business” and governance and who can, at least temporarily, provide cross-functional thinking to help the Board see things from another perspective.

Thirdly. regular round-table forums can help Directors receive information about perspectives outside of their own. One corporation I work with asks me to facilitate regular two-day forums attended by all the Boards of their related companies, management, some senior people not on the Boards, various local and non-local business people, and representatives of Government and the tertiary sector. While the discussion is based around strategy for the corporation, subjects include how climate change may affect operations, new legislation, government initiatives and their effects on the local population, global economic trends, new industries, and so on.

Once, through the successful outcomes of these early steps, your Board has accepted the principle that they should have a diversity of perspective while protecting cultural imperatives, you can instigate more (corporate) cultural initiatives designed to improve the diversity of perspectives.

A long-term initiative must surely be a strategy to increase the talent pool of Indigenous candidates for a Board seat. This long-term strategy may involve scholarships and secondments to provide young people with a diversity of experience. It may also involve negotiations with tertiary institutions and businesses to provide practical training in different disciplines in-house with a very long-term view in mind rather than “short-courses.” In particular, young candidates, through training and employment, can be encouraged to think differently about making decisions, by applying a process of examining the desired outcome, exploring options, considering implementation processes, who it will affect, risks associated with it, and evidence to support all of the above.

The ongoing use of experts and Independent Directors needs to be reviewed with specific outcomes in mind. Controversially, I don’t believe one of these outcomes need necessarily be that Non-Indigenous Independent Directors or consultants be gradually replaced as more experienced Indigenous people become available. In fact, I do believe that the different perspective of culture and background provides as much value as that of business experience and expertise.

What is required is the right Non-Indigenous Independent Director or consultant. In most cases, this will mean people who do not derive any better remuneration or opportunity than the Indigenous people on the Board. If this is strictly adhered to, this cuts out anyone who thinks they can earn a good income from their role alone, or who provide assistance because they believe they can win a larger contract while doing so. Who is left are people who are genuinely willing to provide a different perspective to help diversify thinking.

However, these people still need to be experienced in their field or be a “unicorn” – someone who has a wide experience and skill in many balanced areas – someone with finance, legal, commercial, governance, process-thinking and Indigenous knowledge.

The Board should also at this stage, finalise a matrix of needs. Analysis of the gaps in thinking and experience, and the work carried out by the corporation should show a series of skill, expertise and experience required. Further analysis of the Board, management and consultants should be able to identify which “squares” in the matrix are blank. Don’t forget to include factors in the matrix such as industry knowledge, leadership, strategic thinking, behavioural competencies, geographic experience, and subject matter expertise.

Following this, a strategy has to be put in place to fill in the blanks over time.

In summary, all Indigenous corporations need to realise that the evolution of the Indigenous corporation, both in legislation as well as in the reality of a post-determination Australia, means that a Board made up like an old association “committee” is a risk and at best, no longer relevant to the complex decisions that have to be made today.

Hence a diverse Board is not only “diverse” because of the mix of gender and age, but it also needs to be diverse in terms of perspectives and relevant experience.

In order to achieve this, a strategy needs to be put into place now, and time devoted to monitoring how this strategy unfolds.

OTS Management provides advice to Boards and facilitates planning and strategy workshops to help Indigenous corporations improve all their processes. Our website provides free White Papers on various issues of concern to Boards as well as our capabilities. If you want to make an enquiry, please email teik@otsmanagement.com.au

 

 

 

 

No Comments Yet.

Leave a comment