Governance Bites #127: What makes a high performing board? with Ian Fitzgerald

In this episode, Mark Banicevich interviews governance expert Ian Fitzgerald, as he shares lessons from over 35 years in boardrooms in New Zealand and overseas. Ian breaks down what truly defines a high-performing board.
Discover the fundamental elements: trust-based teamwork, clarity of purpose, and diversity of thought. Ian reveals how boards balance short-term pressures with long-term value creation, the role of constructive culture and candour, and the power of regular board evaluations. Learn the critical importance of the Chair's role in fostering a safe, high-value discussion. Whether you're on a small company board or a large organisation's, Ian's advice on advancing the conversation and building collective value is a must-listen.
Ian Fitzgerald is an experienced company director and advisor based in Blenheim, New Zealand. A Chartered Fellow of the New Zealand Institute of Directors, his career in governance spans the public, private, and not-for-profit sectors.
Ian began his career at the NZ Treasury, working on public policy and international economics, before moving into executive roles at Westpac in both New Zealand and Australia. In 1998, he founded the professional services firm Burleigh Evatt, where he advised senior executives on complex strategic issues. Since 2012, Ian's main focus has been on directorships and advisory assignments.
His extensive governance portfolio highlights his diverse expertise. He is currently the Chair of the Niue Development Bank. His former leadership roles include serving as Chair of Public Trust, a Crown Entity; Deputy Chair of the Institute of Directors in New Zealand; Chair of Timaru District Holdings Limited; and Chairman of the Ngati Apā ki te Rā Tō Investment Company. He has also been a director for organisations such as World of Wearable Art and Kiwibank.
#CorporateGovernance, #HighPerformingBoards, #BoardofDirectors, #Leadership, #BusinessStrategy, #BoardCulture, #Teamwork, #Director, #GovernanceBites, #ValueCreation

Transcript

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Hi, I'm Ian Fitzgerald. I've been actively involved in governance roles for over 35 years, both in small companies, NGOs [Non-Governmental Organisations], large commercial operations, and in government, both here and overseas. I've had a particular interest in high-performing boards as I reflected over that time, what's worked well, what hasn't. I've advised a large number of companies as well in terms of my consulting practice, and again, it was really interesting understanding what are the common themes about high-performance boards. And so I'm interested to have a chat with you today, Mark. Hi, welcome to Governance Bites. My name is Mark Banicevich, and as you just heard today, I have the absolute pleasure of spending time with Ian Fitzgerald. Ian, thank you very much for your time. Pleasure, Mark. At 35 years in governance, you started your career in treasury. You're a chartered fellow of the Institute of Directors. You've got board roles at the moment coming from Nuie, haven't you? I have, Mark. So really interesting governance background and governance portfolio. The topic of what makes a high-performing board is going to be a really interesting one and one that you've got a lot of experience in. So I'm going to start with the question, what does a high-performing board look like in practice? Mark, for me, I think it boils down to a couple of fundamental things. It's a board, first and foremost, as a team that's built on trust, has clarity of purpose, and has the ability to manage short-term demands with long-term value creation. And what I've learned is that the high-performing boards, the way they do that, they have really focused conversations, they have diversity of thought and discussion around the board table, and they're really clear about the distinctive roles between governance and management. That actually felt like a really good summary of what I'm going to ask you about this interview, because many of the things you touched on there, I've got questions about. But the next question I have for you then is, how do you define performance in a governance context? And in particular, what should boards actually be measured on? Well, to me, it looks like boards, when they are working cohesively together, they're engaged in a focused conversation, as I mentioned, and they're consistently anchoring their decisions around purpose, and balancing those immediate issues with the future. I think that's the tension point as directors, is we've got short-term pressures all the time, but actually from a governance role, we have responsibility for that long-term value creation. So that's for me, it's about working cohesively as an engaged team. And are there any kind of measures that you'd expect people to be looking at to say, this number says X and therefore this board's performing well? Are there any kind of metrics that people would follow? They're probably more qualitative than quantitative measures. I think to me, it's around forming a view around the quality of the conversation. And that's why I think board reviews and self-evaluation is really important. So, you know, what's the quality of the conversations we're having? Do we have clarity on strategy? Is there respect for governance management boundaries? Again, often when those tensions arise, he's actually saying, well, actually, it isn't the argument at the table. There's something else about where quite, you know, in terms of the board performing well. And it's the board's ability to create that long-term value. I think that's the bit I would measure is not quarterly performance or annual performance, but actually, generally, board members are there for three years, maybe two terms, you know. Is the organisation more valuable at the end of three years or the end of six terms - six years? Would be just two terms. Right, okay, thank you. You mentioned earlier the concept of diversity of skills and backgrounds and perspectives. How important is that to board performance, and why? Yeah, look, it's it often gets confused as gender diversity, which is really important, but actually the diversity of background and thought's really important. That diversity, it really is, if you've got a lot of board members with similar backgrounds, that's where the blind spots come out. Okay, that thought. It's also clear to me, you need younger board members around the board table. They bring quite a different perspective. And I think, I'd encourage boards to think about someone might be coming up, maybe less governance experience, but they bring a huge amount of value because they bring quite a different perspective. And particularly as we're going through this rapid change in AI [Artificial Intelligence], there's a huge amount of change. I think actually having that diversity of thought, background, gender, and age would be really important. So it's about that diversity of views, people bringing different viewpoints, more likely to uncover gaps. And it brings me back to an earlier conversation I think I had with Heather Roy, and some advice that she'd either received or gives, the old maxim that if you've got two people on the board that think the same way and say the same things, then one of them doesn't need to be there. Right, yeah. And I think, but also, if you've, again, if it's sparking well, you say something sparks a thought on me, and then the third person around the table says, listening to those creates an insight. That is the beauty of, the idea often a good board meeting, you actually create value and insight in the meeting. It's not about ticking the boxes. That's a high performing board is actually sitting there saying, actually, we created some new knowledge through that discussion or a new insight, which is useful either board or management. Right, excellent. What role does board culture play and how can boards constructively build or consciously build a constructive culture? Ultimately, that board culture is the key driver. You're acting as a team. Governance is a team sport. The power of a board only comes by the collective action. A manager or manager cannot make a decision for a company or a board. So you have to go, how do we do that? And then it comes about having respect for each other, candour. I think what I've learned is it's really important that board members, it's great to have a robust discussion, but equally, you've got to avoid the trap whereby I go to that discussion based on I'm right, you're wrong. That's a really destructive way. The question is, Mark's coming from a completely different angle. The question, I'm curious enough to say, "Why does Mark see that?"What's he seeing that I'm not seeing?" And vice versa. So I think that's where trust and candour is really important. And again, comes back to you've got to have clarity of purpose. That's the other thing. Why are we doing this? So I think that's a really important part of, that, I think the other thing I've learned, I've seen many boards fail with the thing about when the undiscussed becomes unmentionable. And we just play in the safe areas, which we can agree, which, that's a really dangerous space. A board that's not actually having a bit of active debate may actually be going, there's a blind spot, group think, or just avoiding an argument or a challenge, where in fact you might have needed to take some decisive action. Right, so you need a culture in the boardroom where everyone's able to speak openly, no topic is too taboo. You're getting into all these topics. Have you got any tips for how the board or how this team can create that culture of trust and open conversation? What are the sorts of things that you would want to do, for example, as a chair to create that culture? I think, look, the tone for that comes from the chair by enabling trust. Thinking about, I've got a group of individuals here. How am I building a team? How am I encouraging the diversity of thought? You know, if you've got a quiet board member who's got a lot, often you get board members who don't say a lot, but when they do, they really add value. So how are we thinking about it? So, you know, it doesn't always have to be for the chair that calls someone out. Other board members should be aware of actually that's, you know, that the introvert in the room actually has often been thinking about stuff where the extroverts have just been talking. So I think that's a really important part. You're focusing the discussion on purpose. I think that's really important about, actually we are focused. This discussion is not a personal attack or a debate. It's actually, "What's the focus we're trying to do?" And so I think you need to also respect boundaries. So you need to call unacceptable behaviour out. So that's a role for the chair. And I think that's a really good question. You know, the whole thing about the behaviour you walk past is the behaviour you accept. And so that's a really, to me, that's also a collective responsibility. So again, other board members can support the chair. The chair shouldn't need to lead that. And again, if the chair's the problem, then again, it's a role for the deputy to kind of deal with that. Right. Actually, you've alluded to my next question then. I don't know whether you've got any more to add on this point. The role of the chair in creating or sustaining a high-performing board. You're saying the chair's got to create this environment of trust and openness. Is there any more about the role of the chair in creating this environment, making it work? Well, again, I think it is, I mean, a key role for the board, of chair is about how do I create a high-value creating discussion. Have I got everyone, have we got an agreed worldview about what purpose is about, what we're here for? Do we have trust and candour? What are we trying, being very deliberate about what are we, why are we here to discuss in this? And I think that's a really important part of actually thinking a key role for the board chair is not to lead the discussion, it's to coordinate and facilitate it. And that's a really important, and by doing that, the board chair is actively looking for ensuring there is a strong board culture. It is a safe space. And more importantly for me, a high-performing board creates a safe space for a chief executive to excel. Right. Yeah, great. Thank you. And one of the other things you alluded to right at the start was the balance of long-term strategic focus and short-term pressures. How does a high-performing board get that balance right? I think, again it comes back to staying grounded in the purpose. Okay, what is the purpose of what we're doing? You're having the disciplined conversations that weighs up the immediate pressure versus the long term. You know, it's easier said than done, but I mean, the question is, if we are, you know, is it really critical that we actually deliver an increase in profit this quarter, versus investing in the future? And I've been open to having, what is the purpose of that short term meeting that short term need. Equally, I've been involved in entities where we manage cash flow week by week. It was, the short term was the most important thing to deal with. So you need to be clear, what's the most important thing to achieve your purpose? There's actually that you're in a crisis mode, so very much we've got to deal with the short term versus others where actually you've dealt with that. And again, you're thinking about, what creates value? Actually, and they quite often are qualitative, building a high-performing management team, leading that under, building staff capability. They're very qualitative. And again, you've got to have the courage to understand, is this really adding value? Right. So it's not a simple matter of saying in each meeting, we want to spend X percent of our time on long term and Y percent of our time on short term, because there may be particular times when you need to be in crisis mode dealing with the short term. So how does the board or whose role is it then to reflect over time to say in the last 12 months, we've got that balance right or in the last 12 months, we're been a little bit too much on the short term or long term? I think, again, the first bit on that would be the role of the chair. And actually, you've got to have a work programme over the next, over the 12, 18 months. We've got a series of topics we want to be dealing with. So long-term issues are not a yes, no. They often take quite a bit of flow. The thought would be, what are the preliminary conversations the board's having over time to kind of get its head around a longer-term issue? So again, it's not a reactive, it's a proactive. So again, thinking about, well, before we make a big decision on a big investment, we might need to have a bit more understanding of the market and the risk. So there's kind of conversations you're building up over time. Okay. Yeah. So I think the other question is, continually coming back to, is the organisation bigger, better, stronger, however we want to measure it, over the last 12 months or not? Yeah, right. That's a good way to look at whether or not you've had that balance right. One of the other things that you alluded to at the start of the conversation was around board evaluations. What role do board evaluations or peer reviews play in continuous improvement in this high performance, high performing board? Look, I'm a great advocate of regular board evaluations. I'm a great believer in doing 12 monthly. They don't have to be the full board. In recent times, I've been using a couple of main entities that, where I've been chairing, where we've done a full board evaluation one year, and an individual board member evaluation the other year. They're really quite powerful because in fact, what it would be, particularly get some external review around that. And again, it doesn't have to be expensive. I think the question, you just find someone who can interview board members, surface the issues and come back and hold the mirror up saying, "It appears there is this issue or that issue is emerging,"you're doing this one really well." I think that identifies quite often in the day-to-day whether, in fact, all board members are fully engaged. Do they feel engaged? Do they feel they've got permission to be engaged? All those things. And again, there is, I know as a chair, I'm always conscious of the fact that I may have a blind spot because quite often you're managing that, but you're missing that. That's really, really powerful. The individual board evaluations, that's been can be quite powerful and quite difficult. What I've generally done with those where you have the individual where every board member ranks the other board member. And so you get collective, you go back to the board member says, "Your colleagues rate you five out of ten,""Nine out of ten," and as chair, that's quite a powerful conversation to have. And again, it's all about learning. And a bit with, then I've often then go, if there is a performance issue in a particular area or that the board members, colleagues feel they're not quite there, as a chair, you can then go, "Okay, so how do we build on that?"What is it that we want to work on? How do we help? What can I do?" Which might be, often it will be, "Okay, I'll undertake to make sure,"deliberately make sure I call you out, twice in the meeting, to call you"to ask you a question, until you get confident to be able to meet." Some of the challenges of the chair is - I expect everyone to be incredibly open, the number of times where, what's come out of the board evaluations has really added enormous value. I'm a great advocate of it. Right, okay. And I guess the challenge for the chair then is on using that information constructively to build the individual board members rather than tearing people down and saying,"The evaluation says you're doing a bad job." And it comes back to the core bit, this is a high-performing board as a team, it's built on trust. Yes, absolutely. And those things, the board evaluation is part of the suite of things you're trying to do. Are there any lessons that boards in smaller organisations can learn from high-performing boards in larger organisations or listed companies? I think the things that easily translate, regardless of the size of the organisation is, be really clear on purpose. Trust-based teamwork. Diversity of a voice around the table and in having a disciplined, focused conversation. We're all here today. We spend time and effort. We've read the papers, got ready. Let's have a focused conversation. And you know, all too often what I've seen where boards have failed is, it becomes more like a pub conversation, where we're just all flying for different ideas around, and say, "Why are we having this conversation?"What is the problem or issue we're trying to deal with?"What would add value?" And often that's around, the thing is for board members to think about when they're engaging in a discussion, ask themselves, "Is my intervention here going to advance the conversation? Is it pushing the conversation "forward?" Yeah, right. Okay, thank you. I've got one last question for you that's a bit more generic. What's the best governance advice you've received over the last 35 years? I think the best advice I've got is the board is a collective decision-making entity and you achieve that through, you build trust, you build respect, and bring your fellow directors with you. You know, the reality is, you have to get, generally we run a board on consensus, but at the end of the day, you've got to get 51% of the votes. So the question is, you can be an outlier, but really you try to understand, if you've got a point, bring your fellow directors with you. Right. Ian, thank you very much for your time. That's been a really cool conversation. I've got some great tips out of that. I'll look forward to catching up again soon. And to seeing you next episode. Thank you for watching this episode of Governance Bites. We have more episodes on YouTube and your favourite podcast channel, where I interview directors and experts on various topics relating to boards of directors and governance. We'd love to see you back, and please like, subscribe and share the videos and podcasts.