BOARDROOMDIVERSITY
The diversity
debate
Law firm Minter Ellison Rudd Watts is the sponsor of this year’s Excellence in Governance Award at the Deloitte/Management magazine Top 200 Awards announced late November. Patricia Moore spoke with the firm’s chair, Cathy Quinn, about the relationship between board diversity and governance excellence.
G
ood governance relies on a number of things; diversity is one of them says Cathy Quinn, chair at Minter Ellison Rudd Watts. But, she suggests, that doesn’t necessarily mean more women on the boards of New Zealand’s major companies. Rather than focus on gender or ethnicity, the key is diversity of thought, says Quinn. “One of the things boards need to avoid is, ‘group think’; they’re all from the same background, went to the same school, do the same things. “Diversity of thought is important and when you have people from different backgrounds, then that assists in providing that diversity. You want people who can stand back and think about things individually. But those people need to be able to demonstrate they can add value to a board in a range of ways.” Appointing board members today is about a lot more than ticking the boxes, she says. “The responsibility of directors is significant; the standards expected of them continue to increase and you just can’t afford to have a token anyone.” However, given that the first point of reference is frequently the people they know, the choice becomes limited – although as
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THE DIRECTOR | JULY 2013
Quinn points out, many boards are now setting criteria and using head-hunters to manage the selection process. “T hey need to fi nd people wit h appropriate qualities that also bring in diversity of thought and experience. That doesn’t mean it has to be a woman or someone of a different ethnicity, although without a doubt, people from other cultures bring a different and valuable perspective.” Quinn would like to see less focus on a requirement for previous director experience as a pre-requisite for appointment. “The mere fact that someone hasn’t been on a board before doesn’t mean they won’t be a good director.” She says partners in major professional firms, particularly accountants, are frequently prevented from taking on directorships but retire with an enormous amount of experience that can make a huge contribution. Experience definitely counts, and Quinn is concerned by the number of younger women she hears stating they want a place at the board table. “It’s not a trophy. It’s a huge responsibility; the liabilities are significant, particularly for listed company boards. You shouldn’t be stepping into these positions until you’ve got enough experience to make
the sort of judgements and contributions required in the role.” They need to look at women like Joan Withers and Sue Sheldon, she says, “great role models who take the job very seriously, read their board papers; they’re intelligent people – but they’re not 30. They’re people who’ve had a lot of experience.” Excellence in governance is essential, s ay s Q u i n n. “ Yo u’r e lo ok i n g a f ter shareholders’ money. Investors are relying on good governance to ensure their hard earned capital is protected. You need good governance to support good management and make a company successful. In order for an organisation to be truly successful you can’t have one without the other.” The quality of governance has come under close scrutiny over the past few years – something Quinn regards as a really positive thing. “It’s actually made it really clear what the responsibilities are; you can’t be asleep behind the wheel, you need to do the hard work, and if you don’t understand the business or the financials you shouldn’t be there.” The case law is “almost liberating” for both professional advisers and directors, she says. “They actually understand their role is