31 July 2019

A Skills-Based Board

An Imperative for Good Governance

When the CAA Restructure proposal was put to members, one of the initiatives was to move to a skills-based board. Increasingly, the ACA has been adopting the Australian Institute of Company Directors (AICD) Governance Principles for Not-For-Profit entities. These principles include diversity and performance as key attributes of being a director of a Company Limited by Guarantee. Importantly, it is about bringing something meaningful to the board table to progress the strategic directions of the ACA.

So, when considering whether you would like to put yourself forward for election to sit on the board there are some things that require an understanding in terms of the environment you wish to enter. It is important to understand that directors are required to act in the best interests of the company and this will ensure that the company can fulfil its role of delivering membership services for all members.

Society and the legal framework demands that directors ensure organisations act in an appropriate manner. The directors of a board must act ethically even beyond obeying the law and will be held accountable for the organisations behaviour. The penalties for a failure in this area can be draconian and can even extend to jail terms.

Corporate governance requires that a board put in place systems to direct and control the operation of the company ensuring that it complies with the related regulatory body/s requirements. In our case, these regulatory bodies are ASIC and the ATO and the company must abide by Common and Statute Law. While the company will employ or contract people to undertake these tasks it is the board that is ultimately responsible for the outcome of the activities and must sign off on the work done as meeting these regulatory requirements. Directors must keep abreast of an often complex and rapidly changing business environment and ensure that the business is being run in accordance with any changes that might occur.

Despite a perception that a particular board member from a particular region may ensure their region of origin will be represented at the board level, nothing could be further from the truth. A company is a separate entity by law and any director who serves on the board of that company must do so for the benefit and prosperity of the company. Failure to do so would mean they would be in breach of Corporations Law. A director of a company is primarily concerned with the running of that company, not representing other interested parties despite any personal or philosophical allegiances they might have.

Effectively run companies ensure that the objects of that company as set out in their respective constitutions are delivered to the stakeholders of the company. Generally, this means that companies who are well run are more likely to produce surplus profits or increased budgets to allow the board to undertake “good works” beyond what may have been budgeted for. In other words, the organisation is much more likely to achieve more when its core business in managed effectively by a skills-based board, and a management team under the direction of a professional CEO.

Ultimately it is members that will decide who they wish to sit on their board, however, the election of directors should be viewed in terms of what skills they might bring to the board, bearing in mind their past experience and knowledge in business, with little emphasis placed on regional or philosophical representation. Skills-based boards are in line with the current trends in modern board composition.

ACA Board of Directors Nomination and Election 2019

In accordance with the ACA Constitution, three member Director positions are open for nomination and election. The three current Directors, Drs John de Voy, Alison Bennett and Bruce Whittingham, are eligible for re-election if they choose to re-nominate.

In accordance with the Constitution and in keeping with moving to a skills-based board as proposed in the restructure, the ACA Board can provide guidance on the desirable attributes being sought to progress the ACA on behalf of its membership. At the Board meeting on 2 June 2019, it was determined that weighting would be given to a member Director with research and/or academic qualification and/or experience. This would be supported by demonstrable governance experience and/or qualification such as membership of the AICD or the Governance Institute. Importantly, the desire of the Board is in increasing the representation of women and youth on the Board to improve the cognitive and identity diversity plus look to the future with leadership development.

The timelines are as follows:

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