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News update

National Conference – day two wrap up

We have just concluded our 2020 National Conference, held in a virtual format for the first time in its 37-year history.

With more than 55 speakers beaming in from Australia and around the world across two days, we hope we have helped you build your roadmap to tackle the year ahead.

Here are the key expert insights and takeaways from day two of National Conference.

Recap the highlights from day one

Fireside chat: Future of the workforce

  • Moderator: Deidre Willmott, Non-executive Director, Australia Post
  • Athalie Williams, Chief People Officer, BHP
  • Macinley Butson, Scientist & Inventor,
  • Michael Priddis, CEO, Faethm
  • Gus MacLachlan AO, Executive General Manager Business Performance & Improvement, Boral.

The flexible future is here.

There’s been a fundamental shift in the nature of work globally and that’s been accelerated by COVID-19. What are companies and individuals in Australia doing to address the changes?

Athalie Williams says BHP thinks about how technology can unlock and disrupt the company’s operations.

“Safety always comes first so when technology offers opportunity to work smarter and safer then it becomes an opportunity for us.” BHP, for example, has been able to operate a large drill fleet remotely, lowering costs 15 per cent and taking its workforce out of harms way.

“It means the nature of work is fundamentally changing, and that is an opportunity for the mining sector to find a whole new cohort of workers, who previously would never have identified with the traditional view of a miner… It’s not the future of work, it is the now of work.”

Macinley Butson calls for more training in the classroom for young people, which will help the transition into the workforce. Mentoring in the classroom is a big opportunity. “Young people have freedom of thought, which when put with experienced people, can lead to breakthroughs… Harnessing the curiosity and passion of young people and paring them with mentors and experts in a field will open up whole new ideas that hadn’t been thought of before.”

Michael Priddis says automation is here and not something to resist. Companies need to think about how to bring people along for the ride. “This is a rapid transition to new types of jobs that needs investments in skills. And there is a commercial driver: it is cheaper to retrain and redeploy, than rehire. Australia needs to get more strategic about learning and development. Rather than a tactical afterthought, it needs to be more forward view of what technologies will be over time.

“We are seeing a shift from routine work, to jobs that are more human. Care, compassion, ingenuity, dealing with risk, empowering people … these are things that are fundamentally human. We need to transition people through learnings and development into jobs in the future.” This is a real opportunity for universities in Australia.

Gus MacLachlantalks about the notion of discretionary effort and how leaders unlock individual’s discretionary effort. It takes an understanding of curiosity, creativity and passion. “It’s important we as leaders understand we need to unlock the final 20 per cent of discretionary effort and earn it… The most important tool we can provide is a vision for the future… We have to have positivity and optimism and we can’t ignore the need for an ethical foundation or purpose.

“I like the term ‘confident humility’ for leaders – confident they have the vision and a humility to open themselves to others.”

Fireside chat: The new world order

  • Pru Bennett, Chairman, National Foundation for Australia China Relations.
  • Mukund Narayanamurti, CEO, Asialink Business.

Pru Bennett says that over recent years there’s been a shift in the foreign policy approach of both China and the USA. China has become more assertive in regional issues and issues such as climate change and COVID have disrupted trade even further. But we are now entering a time when geopolitical relations will be reset, providing challenges and opportunities. She says there are three key issues:

  1. Global trade and diversification will remain top of agenda – COVID demonstrates the need for diversification
  2. Technology, information and security are more important than ever, and there will be more focus on data – how its generated, stored and used.
  3. While there is now an overall consensus about the science of climate change and there’s a common goal, the road map has not yet been agreed. That provides an opportunity for globe to come together.

To manage this, boards need diverse skills and experience. Directors need to ensure they are informed independently of management, so they can challenge board papers. And they need to be able to interpret and understand responses from management.

“It does appear there’s a lack of skills and experience in developing a business relationship with Asia, including China. It needs cultural understanding and that needs to be embedded into the board. Governance structures of companies in Asia need to be understood. They are different,” Bennett says.

“The basic question remains: is the board and senior leadership team fit for purpose for expanding into Asia and other jurisdictions? It has never been more important for board to be conversant on geopolitical challenges.

“It’s about respect and understanding of Chinese companies and that’s critical on the business and government front.”

Mukund Narayanamurti says we need to appreciate the success of some Asian countries responding to the COVID pandemic, nominating Thailand and Taiwan as global benchmarks. He notes that emerging and developing Asia is the fastest growing region in the world.

He identifies five key drivers for international business.

  1. International cooperation will be more important, not less
  2. Digital trade will become foundational, not an add-on.
  3. Diversification needs to be about more than China.
  4. Internationalisation will become about best practice, not just engagement.
  5. Regionalism is the new globalism and competition for Australian companies will increasingly come from Asia.

South Korea, Japan and south-east Asia have come to the fore this year as partners for Australia, but companies and boards have several big issues to consider, including whether offshore expansion leads to greater shareholder value.

“We found internationally diversified companies delivered better shareholder returns compared to domestic peers. It’s across many sectors… and we need a much broader set of case studies for board members and senior execs to draw information from.”

It is important that boards and senior executives have the capability to expand offshore. “Ninety per cent don’t have all the skills needed to grow in the region. That will become increasingly important as we shift from bulk trading goods to other investments in Asia.

“It is also important to navigate risk in the region. In Australia we tend to get paralysed with risk. Understanding policy and navigating it is absolutely essential.”

Leadership and governance concurrent 3A: Company secretaries’ panel

  • Moderator: Ann Bowering, CEO, Issuer Services Australia & New Zealand, Computershare
  • Fiona Last FGIA, Company Secretary, Transurban
  • Rohan Abeyewardene FGIA, Group Company Secretary, Vicinity Centres
  • Maureen Therese McGrath, General Counsel, Compliance & Secretariat, Scentre Group.

The role of a company secretary is normally dominated by regulation and legislation, but in 2020, the pandemic and the forced switch to digital operations took precedence, says Ann Bowering.

Maureen Therese McGrath says this year has shown that sound governancepractices help facilitate good responses to crisis, while adaptability, integrity, and the conduct of people are critical.

Scentre Group ran one of Australia’s first virtual annual shareholder meetings back in March as lockdowns hit and McGrath says boards across Australia have smoothly adapted to a virtual environment and the demands of increased meetings caused by the pandemic.

“Good governance transcends technology,” agrees Bowering.

Rohan Abeyewardene says that while company secretaries are always problem solving, “it just so happened that COVID presented a pretty novel set of problems that we had to solve.”

Vicinity was forced to shut shopping centres and negotiate rent assistance across its portfolio during the pandemic.

“We were all glued to every press conference on a daily basis just to understand how our business was going to be impacted next.”

But it aimed to “do the right thing by our retail partners… they are our business”.

“Fundamentally, conducting ourselves in that manner is not only the right thing to do but we believe it is in the interests of our security holders from a value creation perspective as well,” he says.

Fiona Last says 2020 forced a halt to face to face site meetings for the board and Transurban switched to virtual tours to bridge the gap.

“But in the last fortnight we’ve just started director site visits again in some of our key Australian sites,” she says.

McGrath urges company secretaries to relook at the way governance frameworks and practices work.

“You’re partnering with any number of areas within the business … it is a great opportunity to help shape the business and governance practices.”

The panel agrees that company secretaries should aim to take a wide-ranging, enterprise view rather than narrowly focusing on traditional responsibilities.

Risk concurrent 3B: Technology and information: Governance, opportunity and risk

  • Moderator: Lyn Nicholson, General Counsel, Holding Redlich
  • Rachael Falk, CEO, Cyber Security Cooperative Research Centre
  • Christoph Strizik, Chief Information Security Officer, Origin Energy
  • Chui Yong, Head of Data Science and Information, Australian Federal Police.

What are the rules around the use of data and artificial intelligence, and how should boards respond, particularly when information changes so quickly?

Rachael Falksays that with change happening so quickly, the question boards should be asking is not just whether it’s legal, but whether it’s right.

“The law will take time to catch up so don’t wait for the law. The question is whether it’s right for the business and right for customers.”

And while automation is growing, that doesn’t give boards any excuse to devolve responsibility.

“Part of a board’s obligation is good governance around data …. and that is when higher order thinking skills come in – what do we want to automate? Who is doing the checking? The board has to remain at the centre of this and be comfortable with the level of risk being taken.

“It is critical that boards not simply accept board papers but ask questions and critically consider what they are being told, particularly around data and cyber security and risk. They should talk to other board members and look at what’s going on in other boards.

“The board are the people who pull a thread and say this doesn’t sound right,” she says.

“To get the right board members for the job, it’s partly around getting people who think differently and are not afraid. A board member may not be an expert, but if they start digging around they might find things don’t make sense. A board doesn’t need passive people who accept the board papers and don’t say anything.”

Christoph Strizikthinks about it as opportunities and risk, and most critical of all is transparency.

“You want to be as transparent as you can when using data, and that avoids legal and other problems. Clearly outline to consumers what information is being collected and how it is going to be used. That transparency is critical and there are some good examples of that now.”

He says the optimal outcome in the security space is human beings in the loop coupled with machine learnings. That is the most efficient way to operate.

“It’s important because in risk management, you need to be careful where you automate. There are still things like algorithm bias. Machine learnings can reinforce existing bias and stereotypes and that can hold back progress … and you need a governance framework that’s set up well to understand that.

“As a society there’s a need to take more ownership of the data generated about us. We need industry and government to work together to jointly solve the challenge to get the right principles in place. “

Chui Yong says computer programs, data and artificial intelligence can have real consequences on everyday life. It’s important that there can be a human feedback mechanism into machine learning.

The needs to be a convergence of skills and governance around how data is managed as a risk.

“We need to build in a competent contestability and be able audit a situation.

“I’d love to have a conversation around our expectations of government. We do need increased access to data to generate insights. But what’s the balance between that and privacy?” she asks.

“In a government context, it needs to start to put in place principles around the use of artificial intelligence.”

Fireside chat: Technology – regulation, governance and innovation

  • Moderator: Greg Dickason, Managing Director, Pacific, LexisNexis
  • Dr Catherine Ball, Science Futurist
  • Ed Santow, Human Rights Commissioner, Australian Human Rights Commission
  • Professor Jon Whittle, Director, Data61/CSIRO.

Jon Whittle says recessions are great time for innovation and he thinks there will be an upsurge in innovation, both globally and in Australia. “But there is a need to innovate responsibly,” he says, adding that we are likely to see innovation in artificial intelligence techniques and its adoption that could be worth $315 billion to Australian economy by 2028.

“We do have an AI ethics framework with eight high levels principles including fairness, accountability and transparency. But they are very high level and there’s still work to convert those principles into something concrete.

“We need to be looking at what we value as society and build that into software from the beginning. But we don’t need a revolution. It’s about tweaking technology processes. Education is key, and so too are governments,” he says.

“There is a long way to go to make [the] ethic framework practical, but it has contributed to a shift in the mindset of the technology industry.”

Catherine Ball calls 2020 a survival year and says 2021 will be the year of reckoning. “March, April is the time when a lot of businesses that have been holding on will give up.”

“Diversity and innovation are two sides of the same coin. There are boards in the ASX 200 which are not diverse enough. Are boards diverse enough to cope with the tsunami of change that is coming?

“We have become lackadaisical. Every company can fail… I am hoping this will be a wake-up call to many boards.”

Ed Santow asks the question: what happens when a computer makes a decision that discriminates?

“The decision is made based on AI that has algorithmic bias. That is just as unlawful as human discrimination, but we have prevaricated on that for the past few years. The AI scenario needs to be dealt with.”

Increasingly the approach being taken is to say there are opportunities using AI but it needs to done in a mindful way. “The companies doing very well are the ones that aren’t looking at just high-level principles but are also working mindfully throughout their workforces to make sure the principles are understood and have practical applications.”

Charities and not-for-profits — enabling the critical role in community resilience and recovery

  • Moderator: David Crosbie, Chief Executive Officer, Community Council for Australia
  • Ronni Kahn AO, Chief Executive Officer & Founder, OzHarvest
  • Jody Wright, Executive Director, Drugarm.

Charities have been struggling to grow income in recent years even before the challenges of the bushfire crisis and pandemic and some 330,000 charity staff were forced onto the government’s JobKeeper program in 2020.

“There was donor fatigue. So much money was raised by the bushfires we knew that we were in for a tough year,” says Ronni Khan, adding that key fundraising events just did not take place in 2020

“We started COVID with a $5 million deficit already … and then COVID hit.”

She says as food donations tightened due to supermarket shortages, Ozharvest was forced to buy food for the first time to fulfil its mission of feeding people in need.

She says the pandemic meant more people than ever were in need partly due to travel restrictions affecting temporary via holders and students.

“It’s a whole new cohort of hungry. We see up to a 75 per cent uplift in need.”

Jody Wright says Drug ARM moved all its services online and through telehealth.

“This was a huge shift, and quite confronting for a lot of our staff. These are specialist staff who are used to face-to-face work with what is a very vulnerable group of people.”

From a governance perspective, Kahn says she lifted the frequency of board meetings from every two months to every two weeks and management meetings from once a week to every morning.

“That will continue,” she says. “It gives us touch points to the whole business.”

Crosbie adds: “That’s remarkable and really underscores the critical importance of having good governance within charities.”

Closing panel: Young leaders

  • Moderator: Megan Motto, Chief Executive Officer, Governance Institute of Australia
  • James Bartle, Chief Executive Officer, Outland Denim
  • Jessica Mellor, Chief Operating Officer, Star Gold Coast
  • Charles Prouse, Social Diversity Supply Chain Manager, Lend Lease.

What does the future look like and what should be top of mind?

Jessica Mellor was a CEO at 30 before moving on to COO at Star, Gold Coast. Her philosophy is to always be learning and taking a step forward.

James Bartle’s journey began after seeing a movie about human trafficking and learning more about it. Seeing a young girl in Asia being sold, he committed his life to stopping it.

Charles Prouse says much money for the first Australians is wasted. He says all governments, combined, spend about $27-30 billion a year on indigenous programs “and it’s pretty much a waste.” A person with a job had dignity and financial choices, so economics matter.

Mellor says there has been a gradual change in mindset around leadership – it’s not what you look like but what comes out of your mouth. (None of the panellists wore a collar!).

“COVID changed leadership,” Mellor says. “Initially team members wanted command and control. They wanted to be reassured, but that has evolved to teams coming up with ways to adapting how to operate in this environment. And that takes trust in your team.”

Bartle says as COVID was progressing, he thought all the advice around leadership was old school thinking. He believes in empowering his team. He says he doesn’t have all the skill sets so needs people around him, and his job is to support his managers. He learnt much about maintaining an environment where everybody feels loved, supported and heard, particularly when you can’t be in places physically.

Prouse says working from home involves empathy, checking in, the right equipment, and also phone calls you have with each other, even as friends. His day job took a back seat to making sure other First Nations people within Lend Lease were OK. Generally indigenous leaders stepped up during COVID, he says.

Diversity in boards is moving “at a glacial pace”, Prouse says, adding that diversity means bringing something different to the table, including innovation and different ways of sourcing things. And he adds that companies still need wisdom and people who can teach and mentor younger directors.

Mellor says diversity is important but it’s also important that there’s more discussion about the role of directors and boards among people in a younger cohort. Understanding the role of the board is important and needs to be explained to younger people.

One of Mellor’s favourite moments of the year was pivoting The Star’s restaurants to home delivery and keeping people in jobs. Prouse’s moment of the year was getting supplies to remote Western Australia in part by using his networks. Bartle is most proud of his businesses supply network system. It means he could get medical equipment to remote areas.

When asked for one piece of advice to young leaders, Mellor says when you are on a call and have a nervousness in your gut, that’s when you should talk. Mellor says people need to get out of their comfort zone, particularly as young leaders. Bartle says it’s ok to fail, and every time you do that, you are closer to success.

2020 Governance Institute news wrap up

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