TMTYB S01E01 Governance in a Crisis TRANSCRIPT

TMTYB S01E01 (Governance in a Crisis) This is Take Me To Your Board, a production from the Tasmanian Council of Social Service. This show is not only for current and aspiring board members, it's for anyone who wants to hear from some of the country's best about how a good board really works. Each episode is based on one of the 10 principles of good governance for not-for-profits, as laid out by the Australian Institute of Company Directors.

Responding to current social distancing needs, this episode has been recorded remotely. Hosted by Bridget Delaney and Cameron Allen. This is episode one, Governance in a Crisis.

Bridget Delaney: Hi. I am Bridget. I'm the Community Sector Development Officer for TasCOSS, and this is my co-host Cameron.

Cameron Allen: Hello Bridget. Good to be with you.

Bridget Delaney: And today we're going to be talking about governance in a crisis. With things changing so very quickly, we thought it would be poignant to do a very relevant podcast for you today.

Cameron Allen: And it's very obvious this pandemic we're seeing now is not like anything many boards have had to deal with or plan for. This means that knowing what to do and how to respond appropriately feels further out of reach. You are most likely feeling overwhelmed with all the various scenarios and speculations being thrown about on how this particular crisis may unfold in the next hour, week, month or year.

Bridget Delaney: Absolutely. And the good thing about it is that while the situation is unknown, you can fall back on your governance basics to help you, your board and your organisation. These are all things that you know.

So let's look at one of the very fundamentals of being on the board. And that is the relationship between the board and the CEO. These roles are still the same. So the CEO provides information that allows the board to make a clear, accurate, and well-informed decision. The board then guides the CEO on which direction to take that decision.

Cameron Allen: There's another aspect that's always vitally important, and that is oversight. So board provides oversight of an organisation. This is in business and risk strategies, finances, and regulatory requirements. While everything is moving quickly, this is still relevant. Within the frame of the crisis, boards need to decide how much risk they're comfortable with, which informs what future strategy they would like to employ, while meeting all their regulatory requirements.

Bridget Delaney: And while all of that is really important. One of the big things to put on top of that is transparency. The decisions that are being made are made with consideration and, where appropriate, input from staff,

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members and stakeholders. And then, to close the loop, communicated back. As things change and move frequently, there is a lot of trust that the decisions that are being made are well-informed and considered. The community within and surrounding the organisations should be informed and invited to discuss, where possible.

Cameron Allen: Maintaining lines of communication during a crisis is vital. Ensuring the messages are clear, honest, timely, and consistent between CEO and the board, between the organisation and its stakeholders, between the board and staff. Often where people are uncertain they will start to fill in the gaps and this can become problematic. It's helpful to control your organisation's narrative, where possible threat crosses.

Cameron Allen: What does good governance look like through a crisis? What can you do in your role as a board member to ensure the organisation is best placed to deal with the situation? If not managed effectively, there are dire implications.

I would like to introduce you to Georgie Ibbott, the Chair of Volunteering Tasmania, to unpack this a little further. Georgie Ibbott is a highly qualified executive, operating a niche consulting business in Tasmania called Marketing Solutions. Prior to this, Georgie successfully lead a not-for-profit organisation in the health sector and has experience on a number of boards. She's held various high level executive and board roles in her time. Georgie is a graduate member of the Australian Institute of Company Directors and Associate Fellow of the Australian Marketing Institute. Her qualifications include Master of Business Administration, Bachelor of Commerce, and the AICD Company Directors Course.

Georgie, welcome.

Georgie Ibbott: Thanks Cam. It's good to be with you.

Cameron Allen: Let's start with the non-negotiables. What is important, practically, as a board member to deal with a crisis?

Georgie Ibbott: That's a really good question, Cam, and we need to refer back to our basics around governance training, which is that the boundaries between the operational responsibilities of a CEO and the strategic and governance responsibilities of a board, remain unchanged. So we need to be really mindful that those boundaries stay in place when we're dealing with a crisis. And it becomes even more important, particularly given the workload of our CEO's and the operations team within an organisation are really stretched at times of crisis. So we need to make sure that, as Directors, we're really clear on what those responsibilities are and we maintain those traditional boundaries between operational and strategic and governance matters.

Georgie Ibbott: So keeping in mind that, as Directors, our responsibility is to guide the strategy and governance of the operation. And it's our CEO who is charged with the day-to-day and operational responsibility for

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managing the business. And we need to be really respectful of those boundaries during a crisis. So, that's the first point.

Cameron Allen: So understanding roles.

Georgie Ibbott: Absolutely, and that's unchanged. So that's one of our fundamental responsibilities as Directors is to understand those boundaries and to make sure we're aware of them. So, that's just really crucial to maintain that during periods of crisis.

Cameron Allen: Excellent. And a little bit about, if you don't mind, about the risk implications.

Georgie Ibbott: Well, certainly the risk implications during a crisis, one that Directors need to really carefully consider.

So there are a number of particular risks that organisations would be addressing at the moment. So, in particular, some organisations might be facing some financial or solvency risk and as Directors, we need to be well and truly across what those risks are, how they may potentially be mitigated and aware of what our obligations are as Directors.

As you would know, Cam it's one of our fundamental responsibilities as Directors is to always ensure that our organisations of which we are Directors, weren’t trading solvent. So we need to make sure that we're monitoring that solvency risk, particularly during times of crisis.

Georgie Ibbott: There's also potentially funder risk that many organisations, particularly those in the community sector are facing at the moment. So many community sector organisations receive funding from various sources. How they actually deliver on those funding agreements with those funders may be at risk. The services that they typically deliver as required by those funding agreements might need to be delivered differently, or it might be very difficult for them to deliver at all.

Cameron Allen: Yeah. I'm seeing that quite prevalently in this crisis with a lot of organisations, especially in the community sector, having to adapt their model of service delivery to fit with the times, I guess.

Georgie Ibbott: That's right. And so what I know that is happening in the majority of those community sector organisations is they're talking constantly to their funder, particularly where they're a government funder, to make sure that they're engaging with that fundamental stakeholder to understand how they're managing those service delivery risks, what adjustments they need to make, and importantly, what outcomes and deliverables they can continue to provide given they might be different to what the funder originally thought they'd be delivering, Cameron Allen:

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That probably works as a good segway there, Georgie, to take a little bit of a look at governance. What, in your opinion, are the important things to implement early, to support an organisation through a crisis?

Georgie Ibbott: Well, the most fundamental thing to start with is around communicating with the CEO. So that is a vital communication channel, which should already be well-established between any board and the CEO. Usually it's the Chair that is the designated contact person to liaise with the CEO. And that should continue. Certainly during a crisis, CEOs and chairs should be meeting regularly and making sure that they've got some dedicated time, perhaps even each week, where they can provide each other with updates on what's happening. So, that constant flow of communication can occur between those two individuals.

The other really important thing that we need to consider as Directors is potentially adjusting our board reporting requirements or board and committee meeting schedule as is necessary to support the CEO and the work that the operational team are doing during the time of crisis. You know, that might be as simple as rescheduling some committee meetings, or there might be some work, for example, that the finance committee would ordinarily do with the support of the CEO, but may choose to do some of that work offline without the CEO's input during the time of crisis, knowing that the CEO is fully deployed on operational issues.

So certainly, as Directors, we need to be flexible with our CEO's and the operational team to make sure that we can enable them and allow them to do what they need to do from an operational perspective, but also making sure that we can still meet our governance and compliance obligations as Directors. So we still need to do the typical board and governance responsibilities. We need to hold our meetings. We still need to manage our compliance obligations, but we need to be constantly talking to our CEO to make sure we're not overburdening them at a time of crisis with potentially unnecessary reporting or perhaps asking for things that aren't strategically important at this point in time. It's just being mindful of that.

Cameron Allen: It's about using all the resources at your disposal in an organisation and less when the board chimes in as well, as you say, not to overburden the CEO and to get ahead of the eight ball a bit.

Georgie Ibbott: Absolutely. And you would know that ASIC and the ACNC have recently come out with some directions whereby those organisations that would ordinarily need to have their AGM or report their annual financial statements and submit them, there is a reprieve and they can potentially delay those reporting requirements. So as an example, one of the boards that I'm on will be delaying their annual general meeting, which was to be scheduled for early May. And we now have up until the end of July to have that AGM. So they're the simple and practical things that we can do as Directors that are going to relieve some of the pressure from the operational team and from the CEO in particular.

Cameron Allen: Let's take a little bit of time to talk about best practice. Now, obviously sometimes things are happening on the run, it's hard to execute best practice, but if you get the foundations set early it becomes a hell of

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a lot easier. What do you think the key principles, or the fundamental basics if you will, that underpin good governance in a crisis?

Georgie Ibbott: That's a really good question, Cam. And you would know, and your listeners would know, about the AICD good governance principles, which is a really neat list of 10 governance principles for not-forprofits working in the community sector. And of those 10, there are three that I think are particularly important at a time of crisis. So the first one is purpose and strategy. The next one is risk management and the final one is culture of an organisation.

So if I just take a minute or two to discuss each of those, the first one being purpose and strategy. So at a time of crisis, as Directors and the CEO must always maintain that focus on the purpose and strategy of an organisation. Just because we're in a crisis and the world's been turned upside down, doesn't change the reason that our organisation exists and the strategies that we've put in place. So that continues to be our guiding light in terms of informing how we make our decisions, how we understand our risk and how we move forward. So purpose and strategy continues to guide the organisation, and it's the fundamental starting point for all the decisions we make. And that will be the same for all of our interactions with our stakeholders, our funders, our staff, our volunteers. It continues to be in the context of purpose and strategy, so that doesn't change.

The next one, and equally important, is around risk management. The majority of organisations will have a risk management framework or policy that's already in place. And that guides our decision-making. So at time of crisis, as Directors, we should be revisiting our risk management policy or framework and looking at those strategic and governance risks. So revisit the strategic risk register and identify the mitigations that you've got in place already and think about, are there additional mitigations that we need to put in place, particularly given a pandemic is, in my experience, a very unusual risk to be mitigating. It's not something that a traditional risk register or a disaster recovery plan or business continuity plan really addresses.

So we need to be revisiting those risk registers and also working with the CEO to make sure that they're working through their operational with register and being really pragmatic about how they're addressing the risks from an operational perspective that are coming up every single day for them and making sure that they feel supported and that they've got the right tools and framework to be assessing risks and putting in place the mitigations to manage those risks. So, that continues. It's a fundamental part of a board responsibility is to make sure that that risk framework and that risk policy is applied, particularly during a crisis.

Cameron Allen: And that's ongoing, crisis or no crisis, as you were saying. You can have these things in place from the out.

Georgie Ibbott: Yep, absolutely. And this is where the value of an appropriately documented risk management policy really comes into play because it's a genuinely useful tool to guide decision-making and to help the CEO and the board identify what's important and what's not during a time of crisis. So it's fundamentally important.

Cameron Allen: Excellent. And you had a third fundamental one that you wanted to talk about?

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Georgie Ibbott: Yes. So the final one is around culture. And again, this is something that is an underlying principle of notfor-profit boards. Making sure that, as Directors, we are developing and instilling a culture that supports our organisation's purpose and strategy. So, as Directors, we're accountable for building a culture that supports the organisation, and we need to role model that desired organisational culture. And at times of crisis, this is where that is really important. So the practical ways that we would be doing that is in how we're communicating as Directors with the CEO, with our stakeholders, with our staff, with our volunteers. How are we communicating?

Making sure that we are being clear and we're being honest and timely. And that speaks volumes of the culture of an organisation and the values of the organisation and making sure that all of the decisions that we make as Directors are made in accordance with the values of the organisation. And that we're very mindful of our role in leading that organisational culture. Because that is at the heart of our organisations, particularly in the community sector. And as Directors, we've got a very clear responsibility to role model that, particularly in times of crisis. When anxiety levels are high, our staff, our funders, our volunteers are under enormous pressure. So we have a very clear responsibility to role model the culture and the values of the organisation.

Cameron Allen: Yeah. So as a board member, how hands-on do you like to be with board, especially in times like these?

Georgie Ibbott: That's a tricky question, because we still have to be very mindful of those responsibilities of the CEO in terms of the operational and day-to-day management of an organisation and the board's responsibilities around governance and strategy. So it really does depend on the organisation, the role the board already has within an organisation. So, as an example, at Volunteering Tasmania, the board works with Volunteering Tasmania through the CEO. So I'm in constant contact with our CEO and she will guide me as to how much or how little I should be involved with our staff, our stakeholders, our volunteers, and the entire VT team. So it really does depend. I don't think now is the time for the board to change how they interact, how hands-on they are within an organisation. I think they need to be respectful of the boundaries and constantly asking the CEO how they can support the work that the team are doing and being flexible in how they provide their support.

Cameron Allen: Georgie, how important is keeping lines of communication with CEOs during a crisis. You spoke a little bit about this before. It's about supporting them, but is there anything else that you'd like to share?

Georgie Ibbott: Well, communication is fundamental in terms of working with the CEO during a crisis. And as everyone out there listening would know, it's become complicated by the fact that now we're doing it via teleconference and video conference. And it's very difficult to cap on the nuances when we're all working remotely, particularly during a time of crisis. So we all need to refine how we're communicating via teleconference and video conference and improve on that and continue to actively engage and communicate with our CEO's. And that's really fundamental, particularly given the pressure that they're under and the fact that the changes that we're experiencing in our working lives at the moment are going to be in place for quite some time. We need to adjust to this new way of working quite quickly and adapt and ensure that we are providing adequate support.

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When we're communicating with the CEO, we need to be linking back to the values of the organisation, which I mentioned earlier. So making sure that our communications are clear, they're honest, they're timely. And that they align with the culture that the organisation has, and that we're providing the CEO with plenty of opportunity to work with the board, usually through the chair, during the crisis. And particularly during a time of crisis, the CEO is under enormous stress, and we need to make sure, as a board, that we are checking in on the CEO and ensuring that they feel adequately supported and that they have access to the appropriate supports during what is a really stressful time for everyone, but particularly for the CEOs. So we need to check in regularly and make sure that the CEO is okay from a practical perspective. That might mean simply asking them, "are you okay?" Checking in that, are they having some time away from their emails and teleconferencing, and that they're actually taking some time out. That's another challenge that we all face now that we're working remotely. We're always on. Your email is always there. Your phone's always by your side. And so it can make it really difficult for all of us to switch off from the chaos that we're dealing with in our working lives. And we need to make sure that our CEO's are taking some time out from that and making sure they're looking after their own health and wellbeing. Because they're certainly focused on the health and wellbeing of their teams that they're working with. And we, as Directors, need to make sure that they are taking really good care of themselves as well.

Cameron Allen: So there needs to be that outlet in place that the relationship between, as you were saying, a CEO and quite often the chair, that you're just willing to pick up a phone and just have a chat even about day-today activities. Just checking in and checking the pulse, so to speak.

Georgie Ibbott: Yeah. Absolutely. And the CEO and the Chair can often, and should often, be talking about risks as they're emerging and having a fairly informal discussion about how they're managing those risks and troubleshooting some issues. Because certainly for the small community sector organisations, the CEO doesn't always have a large executive team or access to particular specialist skills. So they can, and they should, be working with their Chair and their boards to troubleshoot the issues that are coming up and making sure that they're making the most of the skills that they have access to through their boards.

So for example, Cam, most of the not-for-profits have a skills-based board and many Directors on the boards have really useful skills that the business can call upon in times of crisis in particular. So those discussions with the CEO and the Chair can identify where a particular Director might be able to assist on a specific issue that has arisen as a result of the crisis. And it's those conversations between the CEO and the chair, and ensuring that the lines of communication are open, that mean those opportunities can be leveraged. Those risks can be managed and mitigated with the support of the board, to the benefit of the organisation.

Cameron Allen: Yeah. So harnessing that skill set, be it strategic communications or policy direction, and using the knowledge and capabilities of the board effectively is really important.

Georgie Ibbott: Absolutely. And I'm hearing some great examples of how Directors are using their skills to support a CEO at an organisation during this crisis. I mean, skills with industrial relations, for example, stakeholder TMTYB S01E01 Governance in a Crisis Transcript by Rev.com

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engagement, as you've mentioned, dealing with funders, particularly given the pressures that government stakeholders are under. Having access to Directors with some of those skills and insights is really helpful for our CEO's and for our organisations during a time of crisis.

Cameron Allen: I'd like to finish on perhaps a little bit of a different note. When we're looking in terms of the role of a board, long-term thinking versus short-term goals. How do you go about evaluating those, at times, conflicting priorities and how do you decide on your priorities as a board?

Georgie Ibbott: Well, in terms of long-term thinking, that should be enshrined, effectively in the vision and purpose of an organisation. It should be well-documented in your strategic plan and you should have a risk management framework or plan already in place. So they don't change, as we've mentioned before.

Certainly your risk management plan might be adjusted slightly to include some new mitigations for some of the risks that you've identified. But in theory, your strategic plan and your vision, that doesn't change. That's still what guides you.

What I think is challenging during a crisis is your short-term goals. And for many community sector organisations in particular, what this might translate into is delivery around KPI's that might be in funding agreements with some of your funders. And that's a tricky one that you need to deal with on a case by case basis. So for example, if you have a funding agreement with a government department to deliver a particular service, and you can no longer deliver that service, or service delivery looks really different, you should already be having those discussions with your government funder to say, "okay, it's unlikely I'm going to be able to deliver on these KPI's that are in the funding agreement." Let's have that discussion on, "okay, well, what can I deliver? What service can I provide?"

And importantly, a lot of funding agreements now have deliverables around outcomes. And providing you can show that you can still deliver value to the end user, then I'm pretty confident that your funders are going to be happy with that. Knowing that the crisis that every organisation is dealing with.

So in terms of those short term goals and what you're able to deliver, I think it's really important that organisations are talking constantly to their funders around what they can deliver, so that expectations are set early on around what's reasonable and what's not. And based on what I'm hearing from various organisations that are talking to their funders, that's been a very useful process and discussion to be having with your funder and a very collaborative process that's building trust and understanding of the value of what we're delivering within the community sector. And certainly during a crisis, the value of the programs and services that community sector organisations are providing, if it wasn't obvious before, it's really obvious now what the community are delivering and the programs and services that they're delivering to Tasmanians.

So as a board, we need to make sure that our CEO's are having those discussions, but not losing sight of our vision, our strategic objectives and goals, because they shouldn't change.

Cameron Allen: Excellent. That's a great note to finish on. Thanks so much for joining us on the podcast, Georgie. It was really great the insight that you were able give around the role of boards and your personal experience as a Chair. Thank you.

Georgie Ibbott:

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Thanks Cam. Thanks for having me.

Bridget Delaney: Thanks Cam, and what an amazing and clear way to think about crisis in governance from Georgie. I think what I got most from that was that we already know what we're doing and that we have all those practices in place. And it's just about remembering what our roles, what our responsibilities are, and why we're doing the job. While things feel quite overwhelming at the moment, there are very practical things we can fall back on right now, and we're not doing anything different. We're just doing some things more. So that was super helpful in terms of moving forward and finding our way through these uncharted places, I guess.

We'll wrap it up there for one of our shorter podcasts during this time. I thank Cameron for running that interview for us. The next podcast we'll be looking at is one of the principles of good governance from the Australian Institute of Company Directors. And we'll be having a look at how that works or how that didn't work on a global scale, have a looking at what it actually means, and then talking to someone locally based to make sure that we understand what that looks like in Tasmania.

We look forward to coming to your boardroom next time.

Take Me To Your Board is produced by Ikin Media for the Tasmanian Council of Social Service. It's presented by Bridget Delaney and Cameron Allen. Music is from Tide Electric. With special thanks to Georgie Ibbott. Please follow and subscribe wherever you get your podcasts to make sure you don't miss the next episode of Take Me To Your Board.

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