Why Australian organisations are turning to advisory boards

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    More Australian organisations are appointing advisory boards to help them explore complex risks and opportunities, and to provide guidance and knowledge to their management or board. 


    The rise in advisory boards locally is in line with a global trend, driven in part by the shrinking size of statutory boards and a concurrent increase in the issues they have to confront, including ESG, digital transformation, AI, the energy transition, cybersecurity, geopolitical risk and public health, says Advisory Board Centre CEO and executive director Udo Doring.

    They are distinct from statutory company boards in that their members don’t make any decisions and don’t have any directors’ duties requirements. Doring says this is one of their strengths as governance boards are focused on risk and building consensus around decisions, and rarely have time for open-ended conversations.

    “In a best-practice advisory board setting, consensus is not the goal,” he says. “So you’re not looking for everyone to agree, you’re actually looking for the opposite. You want to look at every side of an opportunity or challenge, because that helps inform a better strategy. When you walk into that room with the knowledge that you’re not making a decision, but you’re there to road test, to challenge, to suggest — it becomes a different- natured conversation. Often, it can be an unscripted conversation, which is a pretty stark difference.”

    An advisory board’s purpose should be aligned with the strategic intent of the organisation, be it addressing one of the biggest opportunities or one of the biggest risks. The Advisory Board Centre has been working with a major European company, putting together an advisory board on its digital transformation strategy. The company already has able people working in digital transformation, but wanted to draw context and content from outside its walls — and outside its sector — people who could think differently.

    Advisory boards are often, but not always, established with a fixed life of between 18 months and three years while they deal with a specific problem or opportunity.

    UK-headquartered executive search firm Odgers Berndtson, which has helped to fill advisory board positions, says successful advisory boards are clear about their purpose. “Clearly setting and communicating the roles and expectations of individual advisers and articulating the mandate and purpose of the board is essential,” the firm states in a paper on the role of advisory boards. “The organisation and advisory board must establish how they will work together. It should be clear who from the company’s side can make contact with the advisory board, and on what issues.”

    Different organisations have different models for doing this. Some advisory boards provide their insights and advice to the CEO, while others report to the board. It is considered best practice to carry out an annual impact assessment of an advisory board to ensure it is serving its purpose.

    Joining an advisory board

    Along with considering whether they have the required skills and experience, directors invited to join an advisory board need to also decide whether they have the capacity to take on the role, says Marianne Perkovic GAICD, inaugural member of the Workday Asia-Pacific advisory board.

    Advisory board roles are more flexible and, depending on the scenario, can demand more time, she says. It is also a good arrangement to have a fixed term for a year for an advisory board role, with the expectation it will be extended if it’s a success. The first year is a chance to see if the advisory board member and the organisation can work well together and if their values align. 

    Case Study 1: Workday APAC advisory board

    Marianne Perkovic GAICD says she enjoys being able to provide executives with help quickly in her role as the inaugural member of the Workday Asia- Pacific advisory board. Perkovic — also a non- executive director at Insignia Financial and Teachers Mutual Bank, and chair of the Australian Fashion Council — took up the role in June, when the cloud-based financial and human capital management software company established the advisory board. She notes that the position will tap into her skills. Perkovic’s experience as a CBA executive who has used the Workday software gives her an understanding of the clients and their capacity to take on a new software platform.

    “What they’re looking for from an advisory board are strategic decisions, the opportunity to get quick, value-add advice, without the constraints boards bring, plus guidance and mentoring for their team,” she says.

    Perkovic can provide advice on strategic decisions without having the task of day-to-day management clouding her views. “What I like about the advisory board is you can help and assist quicker,” she says. “So I feel there is a value-add, you can really see an immediate effect around that part. You can go more broadly in different areas of expertise — outside of just the agenda, the board governance structure and the timetable.”

    Perkovic provides guidance on specific problems and is transparent about her role to the executives she both works with and mentors. They understand she isn’t responsible for their own areas of accountability. “It is strategic advice, but it’s not decision-making,” she says. “It’s mentoring and guiding.”

    Seeing the role as a two-way street, Perkovic says, “I’m giving advice and strategic mentoring, but to be connected with such a leader in cloud- based applications and AI also keeps me relevant as a director.”

    Workday’s central governance board is based in the US and Perkovic has the most contact with its APAC president, Simon Tate. Over time, they will add more members from the region, probably starting with Singapore, she says, adding that three to four members would be a good number. Perkovic will work with Tate to identify the needs of the business and any gaps in the advisory board as it takes on new member.

    Case Study 2: MCA Indigenous Advisory Group

    The Indigenous Advisory Group (IAG) at the Museum of Contemporary Art (MCA) advises on and monitors the progress of the Sydney institution’s First Nations commitments. The group’s chair, Christine Evans, describes her role as “cultural quality assurance”. The IAG’s work is informed by the MCA’s Aboriginal and Torres Strait Islander policy, introduced in 2015.

    “I was fortunate enough to come along after [the policy was initiated] and, in a sense, to start to unpack that policy, find mechanisms and means of translating it into operations in different ways,” says Evans, who joined the group in 2017 and soon after took on the chair role of the museum’s First Nations advisory.

    “That was a really exciting time and it’s an important legacy,” says Evans.

     

    One aspect of the MCA First Nations policy is cultural safety. “We had and led, really, from very early on, the training of staff at the MCA around Aboriginal and Torres Strait Islander knowledge, histories and cultures,” she says. “We’ve been exploring cultural safety and cultural workload.”

     

    Associate Professor Evans, a Wiradjuri woman with a cultural connection to the Mudgee region of NSW and Prov Vice-Chancellor, Indigenous Education at the University of New South Wales, is also a member of the MCA governance board, on which she can represent the Aboriginal and Torres Strait Islander Group. “Where there is something of relevance, or particularly significant, I’m able to raise that in the board meeting for consideration by board members,” she says.

     

    The IAG also gives a formal annual report to the board on how it is responding to its mandate. Evans says the IAG provides an extra dimension to the work of the governance board and is always alert to ensuring staff are culturally safe and that the cultural risk around operations is assessed and managed. “There’s that element around the different viewpoints, the world view of many Aboriginal and Torres Strait Islander artists and communities they represent, along with the work of the museum,” she says. 

     

    The IAG takes into account the concerns of First Nations staff and advises them on cultural issues if they ask. It might also advise on any cultural dimensions to building projects, as it did when the new cafe was being developed. This led to the cafe being named the MCA Cafe at Tallawoladah, in reference to the traditional name for The Rocks precinct in Sydney.

     

    “We have a very experienced membership, from diverse workplaces and communities,” says Evans. “And we have national representatives from various states across Australia. We’re invited to review material documents, draft material initiatives of the MCA that pertain to Aboriginal and Torres Strait Islander arts and communities, and to provide endorsement of more high-level parts of the project.”

     

    Other Aboriginal and Torres Strait Islander Group members include retired Aboriginal health worker with 30 years’ service at the Aboriginal Medical Service Redfern and Gadigal Elder Uncle Ray Davison, journalist Brooke Boney, and First Nations artist and a curator of Indigenous Cultures at the Tasmanian Museum and Art Gallery, Julie Gough. “When an issue arises, our members can apply so many different lenses — from their own experience, from experience working with community, as community members themselves, and various organisations that they represent,” says Evans.

     

    Case Study 3: Telstra advisory board

     

    Telstra is in the midst of a program to roll out artificial intelligence to every part of its business and has established an independent AI and data council to monitor and approve different use cases.

     

    Kim Krogh Andersen, product and technology group executive at Telstra, says the company is taking an inclusive approach to AI because engaging the entire company in its adoption is pivotal. Telstra says it aims to demystify AI and showcase its practical benefits across various roles in the company.

     

    “At the core of Telstra’s approach to AI is a robust governance framework overseen by an independent AI and data council,” says Andersen.

    “This body ensures AI applications align with established ethical, security and privacy standards, scrutinising each use case before its deployment.”

     

    The governance model reflects Telstra’s commitment to responsible AI usage, addressing potential concerns related to bias, data integrity and user privacy, he says. “By adhering to clear guardrails and principles, Telstra aims to foster trust and transparency in its AI initiatives, ensuring technological advancements benefit users without compromising ethical standards or personal data security.”

     

    Telstra’s AI Risk Oversight Council (AIROC) operates independently from the teams building the products, solution or AI use cases.

     

    “We focus on ensuring the data sources we use are handled appropriately, adhering to our guardrails and principles,” says Andersen. “We assess the AI being applied to ensure it follows these principles as well. Additionally, we look at security, data and privacy as critical components. The council has clear AI and data guardrails, and each use case must go through this process before it can be applied in production or scaled.”

     

    Telstra is also embedding AI in its products and assisting customers with their own digital transformations and AI implementations. The council examines these uses to ensure customer privacy is maintained, says Andersen. 

    This article first appeared under the headline 'Reliable Advisors’ in the November 2024 issue of Company Director magazine.  

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