Governance Bites #74: governance in Crown Entities, with Glenys Talivai

In this episode, Mark Banicevich asks Glenys Talivai about governance in autonomous Crown Entities in New Zealand. He asks how they differ from government departments, and how governance differs from private sector and for-purpose organisations. Mark asks how board members are appointed, and how they remain independent and autonomous. Glenys outlines the role the board plays in setting strategic direction and monitoring performance. She also shares the best governance advice she’s received. 
Glenys Talivai is CEO of Public Trust, a role she’s held since 2019. Earlier in her career, Glenys was General Manager of Customer Acquisition, Retention and Claims at Tower Insurance, General Manager of Sales and Marketing at Medical Assurance Society, and spent almost 12 years at ANZ. 
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Transcript

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Kia ora koutou. My name is Glenys Talivai. I'm the CEO at Public Trust, and we're here today to talk about governance in a Crown entity. Hi, welcome to Governance Bites. My name is Mark Banicevich, and as you just heard, today I get to spend time with Glenys Talivai of Public Trust. Glenys, thank you very much for your time. Thank you. We are talking about the topic of governance in a Crown Entity, which is not a private entity and not a for-purpose, not-for-profit, incorporated society. It's a very different beast. So, an interesting topic. What is an Autonomous Crown Entity, and how does it differ from, in particular, a government department? Because a lot of people don't see the difference. Sure. An Autonomous Crown Entity is a type of state sector organisation that operates at arm's length from the government and is governed by an independent board. So, I report to a board of directors, and it differs from a government department mainly because it has some autonomy in its decision-making. Right, and a government department tends to report to a Minister, right. Whereas, when I worked at the Financial Markets Authority, it, too, is an Autonomous Crown Entity, and my boss would say that your boss's boss is the Governor-General rather than a Minister, which is a nice way to look at it. That would be true, that would be true. So, yes, I guess it's that your boss's boss would be the Governor-General. Have you thought about it that way before? Look, I mean, we do think about it; it has multiple layers. I mean, ultimately, you know, day in, day out, I report to a board. Yes. At the moment, we've got eight members of our board, but we do have oversight and monitoring with Treasury. Yes. And we report to a Responsible Minister. Minister, as well, yes. In Public Trust's case, that can be a dual reporting, between Finance and Justice, so that makes things interesting again. Yes. Yeah, so, you know, I mean, it is an interesting — I suppose, I don't know what the right word is — but it's kind of an interesting layering of governance for the organisation. Yes. That actually brings me on to my next question, and you've touched on it there. You've had experience in executive roles at different organisations. You started out with 10 years at ANZ, you've been in the insurance business, as well, and now as CEO of Public Trust. How does governance differ from the private sector businesses you've worked in, from the Autonomous Crown Entity? Yeah, look, I mean, governance in an Autonomous Crown Entity, in all honesty, it doesn't actually feel that much different to in a private sector company that I've worked in before. In fact, a lot of it is very much the same. I report to a board day-in, day-out, you know, decisions and the like are being made with the board. I think the overlay is that there is this monitoring component with Treasury, so there's also an element of reporting in there, as well as reporting and engaging with our Responsible Minister. And I think one of the key mechanisms that happens is every year our Responsible Minister will send us a letter of expectations. That's right. That guides the board and the organisation in terms of key things that we'll be thinking about and focused on for the year. Right, so it's almost like the board is being given some direction rather than setting the direction themselves. And then the impact on you is you're communicating with the board. Yeah, and I mean, look, there are still a lot of things that the board will set direction on within that. I think, though, the letter of expectations makes it really clear about the different types of outcomes that the organisation, in the context of the government’s priorities, is expected to deliver or think about. Right, right. How are board members appointed to Crown Entities, and what criteria are used to ensure that there's diversity of skills, diversity of experience, and different perspectives? Yeah, so board members are essentially appointed by our Responsible Minister, following a process that's coordinated through the Treasury. And, you know, look, there'll be multiple series of engagements around what skills and experiences are needed on the board. And the board chair might feed into that process with the Treasury. But it's the Treasury that coordinates actually going out to market to look for people interested in joining the board and going through that recruitment process. But it's the Responsible Minister who appoints them. Right. And the board are each individually on rolling terms, aren't they. So, they don't all expire at the same time. So, if there's a change in government, it's not like the new Minister comes in and gets rid of the whole board and replaces the whole board. They just roll off as their terms potentially expire or get renewed. Yes, that's right. So, we do have a rolling cycle of board members in terms of their terms, or their initial terms, which I understand is three years, usually. Yeah. And they're rolling at different times. Yeah. So you don't have this, you're not particularly led and controlled by the Minister. The board is quite independent, and really the influence that the Minister has is, as you say, with the annual letter of expectations, and then as board members roll off, they may have an influence in helping to select or selecting, of course, because they finally approve the new board members going onto the board. Yes, yes, that's correct. Right. Apart from that, what mechanisms are in place to ensure independence and autonomy in decision-making, while you're fulfilling both the statutory obligations — because you have got those — as well as the government's priorities and the letter of expectations? Well, I think like any entity, Public Trust has got a really strong governance framework and risk framework, and I think transparent reporting in terms of decision-making is quite key elements, just of any board and governance regime. I think equally, too, what’s quite unique about Public Trust is we are governed by our own legislation, and that in some ways guarantees independence from the Crown. You know, we are dealing with day-in, day-out client and customer monies and funds, and so it's really important that we're acting in the best interests of our customers in our fiduciary capacity. Yes. And it is quite clear in our Act that the Crown isn't able to interfere and overlap into that, which I think is also key in terms of what we do about guaranteeing independence. But, you know, outside of that, I think there are really strong governance frameworks and the like that also bolsters that further. Well, you've had over 100 years to get that right, haven't you? 150. 150 years! 150 years. It's got to be one of the oldest organisations in the country, doesn't it. I'd say so. Yeah. What role does the board play in setting the strategic direction and objectives of the Crown Entity, as well as what role does it play in monitoring the performance against the goals once they're established? So, our board, I think like any board of an organisation, and particularly, like I said, it feels very similar to private sector boards that I've worked on, is critical in setting the strategic direction of Public Trust and regularly monitors performance. I talked a bit earlier, of course, there's that additional overlay of monitoring that goes beyond in terms of our ownership and the ecosystem that Public Trust works within, but that's certainly a key role that the board plays. So, setting the direction, of course they take into consideration the expectations that we get from our Responsible Minister. But equally too, look at our organisation, the trends, the opportunities for our business, as you would everywhere else in terms of setting the strategic direction. Yes. Yeah, so I guess in terms of governance, every entity has its own swimming lanes in terms of the legal parameters by which it operates. Public Trust just has slightly narrower swimming lanes because you've got objectives that are set in the legislation and then the Minister setting some direction as well. That's correct, that's correct. And, you know, the objectives of the company to be efficient, effective, to prudently manage assets and liabilities, to be a good employer, and the like, is set out in our legislation. Right. So there is pretty rigid guidance for the board to follow in that regard. Yeah, excellent. What initiatives are undertaken to support board development. Their training, their succession planning, to ensure you've got a capable and diverse governance team? Yeah, so I think we have a range of things that I've seen in place at Public Trust that includes board induction, both in the organisation — I think Treasury also run a broader induction for Crown Entities at least once a year, which I think is also helpful for members. Board members attend conferences; I think any training in and out of the organisation that they need. They do a lot of, in my experience here, they do a lot of attendance together in terms of seminars or the like that might be relevant in terms of our particular industry. And, of course, they do regular board evaluations, which I think is continuous development. You get quite specific individual and team feedback in terms of how well the board is operating. Right, okay. Thank you. I've got one final question for you, which is a little bit off-topic. It's a general question I ask most interviewees: what's the best governance advice you've received? Look, I think the best governance advice that I've received is that, particularly as a chief executive, when you're engaging with a board, I think you when you've got critical things that you want to move forward on, or big issues in the organisation, I think making sure that you're really clear around, so, what it is that you are asking for from the board? What do you want them to know? What do you want them to discuss? And actually, what do you want them to make decisions about? Because, I suppose where I sit, you get very familiar with how the business is operating, exactly what's going on. For a board, at a governance level, it really needs to be, actually, so, how do you get to the heart of the matter really quickly and help the board to really understand, what is the issue? Or what is the decision? Or what is the direction that's needed? Why is it important? And what are we asking for them to do? So that they can do their governance job really well. I think that was a really good piece of advice. It's really thinking about the, so what do you want the board to be thinking about, or to do in this particular context? Excellent. That's great. Thank you, Glenys. I really appreciate that. Thank you very much for your time. That's okay. I'll look forward to catching up again. Thank you. And see you next episode. Thanks very much.