Boardroom Conversations with Graeme Innes

Episode 4: Graeme Innes - NFP board pay, tips for a successful merger, and the risks of staying on a board for too long

Graeme Innes AM GAICD is the Chancellor of Central Queensland University and a board member with the National Disability Insurance Agency. He’s also a former Disability Discrimination Commissioner and former Human Rights Commissioner. Graeme talks about: why NFP organisations should pay their directors, the chair’s role in a successful merger, and the dangers of staying on a board for too long. Plus, how can boards be more inclusive towards Australians with disabilities?

Transcript

BENNETT MASON

Welcome to Boardroom Conversations. Our guest this episode is Graeme Innes. He's the Chancellor of Central Queensland University, a board member of the National Disability Insurance Agency and a board member of the New South Wales state insurance regulatory body. Graeme previously spent around ten years as Australia's Disability Discrimination Commissioner and also served as the Race Discrimination Commissioner and Human Rights Commissioner. Graeme thanks so much for joining us.

GRAEME INNES

It's a pleasure to be here, Bennett.

BENNETT MASON

Now, Graeme, you've been a director for decades now, but can you tell us how your board career began and what was your first board?

GRAEME INNES

Well, my first board was Royal Blind Society of New South Wales, a long time ago now. I don't like to think about how long ago, but it was it was over 40 years ago. I was, at that stage, a university student concerned about the production of Braille and audio materials to support students studying. And so, I had lobbied the organisation with other students unsuccessfully to change the way that this work was done. And so, I decided as a strategy to stand for election for the board. I was unsuccessful at that first election, but some six months afterwards a vacancy came up on the board. And I think the general view around the board table at that stage was that it was better to have me inside the tent than outside the tent. And so, I was asked to join the board at that time.

BENNETT MASON

What was it like in your very first board meeting? How did the other directors respond to you?

GRAEME INNES

As a young “almost” lawyer, I was pretty keen to be there and thought I had a lot of good ideas. In your 20s you think you have far more wisdom than you probably actually do. I probably pushed a few issues. I think that the board members were at the time welcoming, but I think there might have been a little bit of tokenism, in terms of having a person who was blind or vision impaired on the board. There were a couple of other blind people on the board, but they weren't sort of pushing issues as energetically as I had been. And so, I think there might have been a bit of tolerance as well as a degree of welcome, Bennett.

BENNETT MASON

You are a trailblazer in a lot of ways, I suppose, for that board. And I guess you've been a trailblazer in many ways throughout your career. Do you think you've been a role model for other would-be directors, whether they have a disability or even if they don’t?

GRAEME INNES

Well, certainly other directors with a disability, I think I have. And that excites me because you cannot be what you cannot see. And so, I am keen for other people with disabilities to see people with disabilities in board director roles. And if I've been a demonstration of that, then I'm very pleased. I've always been keen also to be a mentor of people coming onto boards and I've spent quite a bit of time with younger people coaching and mentoring them in their new board roles, as they build their experience and expertise. Because it's really important that we build critical mass around the board table. You know, I find it both pleasing and sad at the same time that in 150 years or maybe more of universities in Australia, I'm the first chancellor to identify as a person with a disability. It's exciting that I'm there, but I find it incredibly sad that it's taken so long. And when people with disabilities make up more than 20% of the conversation, you know, we should be more in these roles. And if we're not, then I think that's a problem.

BENNETT MASON

You mentioned university chancellors and like you said, around one in five Australians have a disability. But we know that it's an underrepresented group across Australia - in boardrooms and at the senior executive level. You mentioned in tertiary education leadership. How do you think we can address that?

GRAEME INNES

We address it by appointing more people with disabilities on boards. We address it by doing what the AICD has recently been doing, supporting people with disabilities, with the availability of government funding for this, to complete the AICD course and train as directors. The big problem that people with disabilities face, whether it's getting around the boardroom table or in broader areas of life, is the attitude barrier. The innate assumption amongst the vast majority of community members that people with disabilities will not be able to effectively carry out the roles that we're putting ourselves forward for. Most of those assumptions about people with disabilities are limiting, and most of them are also wrong. But they continue to be made. And as a person with a disability, I run into that every day of my life, from the time I walk out my front door. If we can challenge that barrier by having more and more people with disabilities delivering at the board table, then we can remove a lot of the issues. And I was speaking to a conference just last week, a conference of disability service providers, where I said: “If you're not employing at least 15% of people with disabilities in your organisations, because that's the percentage of people with disabilities of working age in the population, then you're not living your values. And you have to face up to that fact.” If you're still caring for people with disabilities, but you're not empowering people with disabilities, you're not really living the values that should be driving your organisation.

BENNETT MASON

You'd hope that all organisations, businesses, NFPs want to be more inclusive and want to be more accepting of Australians with disabilities. But some of them might be unsure exactly where to start. Do you have any advice for boards on how they can begin to be more inclusive and accepting?

GRAEME INNES

Well, I think you start by talking with people with disabilities. You start by looking at, if you're a service provision board, a not-for-profit board in the disability sector particularly, you speak to the representative organisation of people with disabilities in your area. In my case, that would be Blind Citizens Australia, but other disabilities have different representative bodies. You reach out to them seeking nominations for board members. And you work to empower senior leaders in those organisations to join boards. You look at the people who are advocates in those areas and try and draw them in. I mean, I think one of the important things that you also have to do is recognise that people with disabilities are a disempowered group. We're disadvantaged financially as well as otherwise, and so you have to have the conversation around your board table about paying your board members. Because if you continue to not pay your board members, then you will be limiting the participation on your board to people who can afford to put the time aside on a voluntary basis to be on your board. Those people will be people who have been successfully employed in the community in other roles. A lot of us with disabilities are not so successfully employed, so you're immediately going to indirectly exclude us. So those are the sorts of things that boards have to start thinking about if they are really serious about having people with disabilities join their boards.

BENNETT MASON

That issue about board pay and boards at some organisations not being compensated, that's part of a broader issue as well. It applies not just to Australians with disabilities but other parts of society who are under-represented?

GRAEME INNES

Absolutely. If you're a for-purpose board and you're not paying your board members, then you're probably excluding the cohort of your purpose. Whether it is people with disabilities, Aboriginal and Torres Strait Islander people, people who might be socio or economically disadvantaged. If you're a housing board, for instance, running some sort of housing co-operative and you're not paying your board members, then probably the cohort of people who are trying to get into housing are not going to be in the main, putting their hands up for your board. Because they're trying to make their way in the community, and they don't have time or capacity for a voluntary role. So indirectly you're reinforcing privilege. And if you're serious about broadening the cohort of your board, you have to face that fact.

BENNETT MASON

There would be some organisations in the for-purpose sector who would tell you: “Look, we would love to pay our board members, but we just can't afford it.” What would you say to them?

GRAEME INNES

I would say to them that you need to think about how you're allocating your budget. Because you can't afford not to have representatives of the cohort you're serving on your board. And that is the result you are achieving by not paying your board members.

BENNETT MASON

I want to talk a little bit about your board career. We mentioned that you've sat on a number of government boards, including the National Disability Insurance Agency, which is the organisation that's in charge of the NDIS, so to speak. And also the NSW Insurance Regulatory Authority. Do you think serving on government boards is different to NFP or company boards? And if so, then how much?

GRAEME INNES

It is different in the sense that there are different expectations and requirements on government boards, on for-purpose boards and on for-profit boards. I actually think a lot of the work on for-purpose boards or NFP boards is more complex than for-profit or government boards. And I say that because you're working with a cohort, often made up of volunteers and people in a particular sector, whatever that sector may be in the in the NFP field. And you've got to take those people with you. If you're in a for-profit board, if you put enough money on the table, the bottom line is you'll take people with you. That's not the case in the not-for-profit sector. So, I actually think not-for-profit boards are more complex in in many ways. And you really have to be able to demonstrate willingness to listen, to think carefully through values and value sets, and to really engage with the cohort that you're looking to serve. In general, the board responsibilities, governance responsibilities are similar on government and for-profit and not-for-profit boards. There are some nuanced differences which you learn about in the AICD course or in a board director course. And as you build your knowledge and awareness of boards. But I don't think there are too many differences, whether you're delivering for a for-purpose organisation, for a not-for-profit or for a government organisation.

BENNETT MASON

Something like the NDIA comes with a lot of public scrutiny sometimes. Can that be challenging for board members?

GRAEME INNES

It can, yes. And you know, it can be challenging for anyone such as myself and the others on the board who've spent a lot of time in the disability sector. We're well known. We are able to be communicated with and we're contacted pretty regularly. That can be a challenge, but it's also really useful to be grounded in that way and to have that feedback from people experiencing life in that particular sector. I've always viewed feedback and concerns expressed to me as a gift because it gives me information of experiences that I haven't necessarily had. Or that I haven't had as recently, perhaps. And it lets me get a better understanding of the sector and its thinking. But you have to be careful in those conversations because there are things that you know as a board member that you can't reveal to members of the public or members of that sector. And you are going to have to make decisions for the whole organisation, which will sometimes disadvantage particular groups or lobbyists involved with that organisation. And you have to make decisions which maintain the sustainability and the effectiveness of the organisation that will not always be popular. So, there is a level of responsibility there and a level of pressure there that you have to deal with as a board member.

BENNETT MASON

You talked about those difficult decisions that board members and directors have to grapple with. Something a lot of directors are thinking about now is stakeholders and that balancing of the interests of various stakeholders when they come into conflict with each other. Do you have any advice on that? Is there something that you've done in your own board career that's helped you when it comes to balancing out those interests of different stakeholders?

GRAEME INNES

Well, one of the things you have to do as well as the governance of a board, is the strategy of a board. And so, you need to think through potential conflicts and try to wherever you can, and you can't always do this of course, but try to wherever you can avoid those conflicts. That's the most effective way to deal with those things. Find a pathway that you can explain to stakeholders which will avoid those conflicts. Or if it doesn't avoid them, be very clear with stakeholders about the reasons that you are taking the particular decisions that you're taking, so that they appreciate the broader perspective as well as just the perspective from which they're coming. As I said previously, there will inevitably be some times and some decisions where you as a board member, and the whole board, makes a call that is not particularly popular with a specific sector of stakeholders. You have to recognise that's going to happen. Be prepared to explain why you made that call. And at the end of the day, unless the circumstances change and the reasons for making the call change, you know, hold the line on the decisions that you and the board have made.

BENNETT MASON

Graeme, we were talking about NDIA a little earlier. You were appointed to the board with the new chair, Kurt Fernley. You both, of course, have lived experience with the disability sector. Why is that so important and how does it impact your approach to the organisation and its governance?

GRAEME INNES

Well, taking a broader perspective Bennett, the research on this issue is very clear: that diverse boards make better decisions. It's why there's a huge effort across the world to include more women on boards and to include people from more diverse areas of society, culturally and linguistically diverse. Aboriginal and Torres Strait Islander people, people with disabilities. Because we need to have all of those voices on the board. You know, it's why we're having a referendum towards the end of the year to make sure that we include that voice, to provide feedback to our politicians before they make decisions about Aboriginal and Torres Strait Islander people. So, it's critical that the NDIA board, to take that one example, includes that diversity and includes the lived experience of disability. Because our decisions around disability will be better decisions because of that diversity. And that's why the Minister is making the appointments that he is. It doesn't mean that the whole board should be made up of people with disabilities. You need a breadth of experience in the board cohort. But it does mean that you need to have that diversity of representation.

BENNETT MASON

I want to go back to some of the events from your own career. Years ago, you led the merger of several state-based organisations to become Vision Australia. How challenging was it to bring those different groups together? And do you have advice for any other organisations who are going through mergers?

GRAEME INNES

Well, I talked about this a little bit earlier in the conversation. When I was talking about the difficulty of being on a for-purpose or not-for-profit board. The general thinking amongst company directors is probably that a for-profit board, an ASX board, is more complex than a not-for-profit board. I actually think the complete opposite is the case and mergers are a really good example of this. If you're merging two for-profit companies, bottom line, if you put enough money on the table, the merger will take place. If there’s value, if the merger brings a good value proposition. In the for-purpose sector, it's quite different because you're working with people who are on a journey to deliver in a particular area. You know, that is the mission or purpose of the organisation. And if you don't sell the value of merging organisations to all of those groups of people, then the merger won't happen. It's nothing to do with money. The dollars are not the key focus. And so, in any merger in the for-purpose sector, you have to test all the time, all the way through that sort of merger, the direction that the various organisations are going and whether that is a shared direction, whether there are shared values. Because if you don't have those shared values, then the merger either won't take place or if it does take place, there's going to be at least one sector of the merged organisation that's pretty unhappy. That's a much more complex task on a board of a for-purpose organisation that it is on the board of a for-profit organisation. So my advice around mergers is that you have to be constantly aware of that. You have to be constantly talking to the group of people that you're merging with. Probably not just the board directors, but the broader stakeholders, to ensure that your values fit, and your mission is either the same or similar or enough to make the merger a value proposition. And that's a continuing conversation that you have to have. And you have to work really hard to mould the cultures of the various organisations to draw out the best of those cultures and build them into a new culture. And that is ongoing work that you have to do before, during and after the merger, if you're in a leadership role in the organisation.

BENNETT MASON

How do you do that practically though, Graeme? Is it time? is it just these groups of people spending time together in a room or socially?

GRAEME INNES

It's all of those things, so it is time. These mergers are complex, and they do take a lot of time. It's conveying your messages clearly around the merger and what you're seeking to achieve with that merger. And what you want the new organisation to look like and deliver. It's finding the right leaders to take the organisation forward. Sometimes those leaders are within the existing organisations, but sometimes you have to have a fresh start. And start and begin to operate with a new leadership team. It's working out how the organisation is best served with the resources that it has. Someone told me around the time of the Vision Australia merger that the three toughest questions were: who was going to be on the board, who was going to be the CEO, and where the head office would be. And they recommended to me that we leave those to last until the merger had developed real momentum, which would carry you through those complex negotiations. But it is about time, it's about talking and it's about clear and continued focus.

BENNETT MASON

I guess part of the challenge in NFP mergers is that sometimes it's a smaller organisation merging with a larger one and then the smaller one ceases to exist anymore. It must be very hard for people in a for-purpose world to give up your own organisation. But how can a board come to a decision on whether that's the best road ahead?

GRAEME INNES

Well, what you have to always have your mind on is, is what the best outcomes are for your client group. You know, organisations have a mission to deliver whatever it is for their clients: housing, transport, education, empowerment, accommodation, etc. So, you have to always go back to your mission and the vision of your organisation. And this is the problem with a lot of mergers, you're absolutely right Bennett. Not be put off by the fact of whether or not your organisation will continue to exist. It is whether your clients, your client group, the group that you are serving, will continue to benefit. That's the important count. And the new organisation that's formed has to be very clear that it is no longer the bigger old organisation. It is a new organisation comprised of the smaller and bigger merger partners. So, you're changing the culture in both the organisations and that's why those conversations and that messaging is so important.

BENNETT MASON

Do you find that it's often the chair who really has to lead to get these mergers done?

GRAEME INNES

Yes, a lot of the time it is. And a really important role of the chair is to continue focus that I talked about and continue to test whether or not the new organisation is going to deliver more effectively for the client group. Because if they're not, then the merger isn't worth doing. The arguments for mergers are that you can save on things like back-office functions, and you can share costs, and you can do things like that. But that's all because you want to focus on your delivery and what you're trying to deliver and get more of the percentage of the resources in that area of focus. So, the chair has a key role. The chairs of all the organisations involved in the merger have a key role because they're guiding that process. As do the CEOs and as do the board members, sometimes resulting in personal disadvantage. With the Vision Australia merger, three CEOs of the three organisations that merged all finished with the organisation. We appointed a new CEO because that was felt to be the best way to bring the cultures together. So, three CEOs lost their jobs. Members of boards were no longer on those boards to which they were clearly deeply committed. So, you've got to take people with you to give up those personal benefits in order to get a better result for the client group that you're trying to serve.

BENNETT MASON

We talked about the role of the chair in a merger. But of course, that's just one part of the chair's job. You've been a chair now at a number of organisations. This is something we've been asking a lot of our guests, but do you have any advice on being an effective chair? And importantly, what are some of the mistakes that should be avoided?

GRAEME INNES

Well, the first mistake is thinking that you know all about what's got to happen because you never do. Thinking that you know more than other board members or other chairs, or senior leaders, CEOs, and direct reports to the CEOs, because you never know at all. So, you've always got to be prepared to listen and learn. You've got to be prepared to adjust your position when circumstances change and when your knowledge changes. At the same time, and this sounds like a contrary thing, but it's actually not. You've got to be really clear about the vision and mission of the organisation and keep focussed on those things and keep working with people to take them on those journeys.

Because that's what the organisation is about. It's often described these days as servant leadership. So you’re leading the organisation, but you're by no means the most important person there. You're by no means the one who has all the knowledge. So you're serving the organisation by, if you like, having that guiding hand on the tiller or the steering wheel. But working cooperatively and collegiately with board members and senior leaders in the organisation, and the stakeholders of the organisation so that it continues to deliver its mission.

BENNETT MASON

Many directors have had the misfortune of sitting on a board that was perhaps malfunctioning. Has that ever happened to you, and what was the problem? And importantly, how was it addressed?

GRAEME INNES

If you've been a director long enough, inevitably that is going to happen. Because all the things that I've been talking about: people let their personal position overrun that of the organisation. I've served on a number of boards which have been malfunctioning because there hasn't been good succession planning and good refreshing of a board. We all get to a point in our lives as directors where we should step away from boards on which we serve. Even though we might think that the board may not continue to be successful if we're not there any longer. We all have a use by date, Bennett, and it's really important for us to remember that. And I think it's around nine to 12 years. After that period of time, you're probably not contributing new ideas, new energy to the organisation and you need to step aside and let someone else take that role over. It's why I left the Attitude Foundation. The Attitude Foundation has a provision in its constitution that says you can only be on the board for three terms, so nine years.  And I was one of the people who put that into the Constitution because I think it's important to follow through on that. And I've been and am still on a couple of malfunctioning boards where people have been in roles for way too long and can't let go. And they think they know how to run the organisation. They were probably right when they started being involved 20 or so years ago. But they no longer are because things move on and none of us are good at stepping back and seeing how that change takes place. So, succession and planning succession is really important because you need to, at the same time as you're moving people through the organisation, you need to maintain the corporate memory. And so, there's got to be a balance. You can't have a situation where the whole board changes or a big chunk of the board changes because then you lose that corporate memory. So, it's really important to put things in place, in your Constitution or your governing documents, to ensure that retention and succession occur in a sustainable and balanced sort of way.

BENNETT MASON

Do you have a view on the ideal make-up, in terms of board tenure? How many people on the board should be relatively new and then how many should have been more longer-term directors?

GRAEME INNES

So, if you are talking about a board of around nine people and you have a constitutional limitation of around nine years, then ideally one person is changing each year. Or you might change three every two or three years. And there'll always be other exigencies which come into play and mean that people have to resign early, or people are not performing on a board and need to be moved on a bit earlier. But you want that balance of new fresh thinking by two or three members of the board, as well as two or three who've been there for a medium period of time. And perhaps two or three leaders or people who've been on the board for a longer time. But it's a flow. It's like a river flowing. You don't want it to be jerky or clunky. You want it to occur smoothly. So, if you've got a third, a third and a third of balance, new, medium, and old, then that's ideal.

BENNETT MASON

We mentioned earlier that you've recently taken on a new role. You're now the Chancellor of Central Queensland University. Chancellors can often function in a similar way to the chair of the board. How have you interpreted that role as the chancellor?

GRAEME INNES

Similarly to a board chair. I think they are quite similar roles. The key difference being that you are the person who hands out the university degrees. And that is a significant difference that the Chancellor and Deputy Chancellor have on the Council of a University, to that of the chair of a board. But apart from that you really are, as Chancellor, responsible for governance and strategy. It's usually a part time role. You've got the Vice Chancellor, who is effectively the CEO, running the organisation day to day. But you've got the governance and strategic responsibilities with the Chancellor, as they are with the chair of a board. So, I see the roles as quite similar.

BENNETT MASON

Do you think universities present any unique governance challenges?

GRAEME INNES

Will they’re unique organisations, in the sense that they're delivering learning through education and they're delivering research outcomes. So in that sense, they're unique. They're places of learning. I suppose every sector has its particular challenges. The university sector is quite regulated by various bodies setting degree and VET qualifications. So, it's different. They are different in that way. But really overall, you've still got to have a balance sheet that means that the organisation is sustainable, so it can continue to deliver on its mission. And you've got the day to day running of an organisation that has to occur. And that's true whether it's a university or an organisation delivering housing outcomes or transport outcomes or regulating insurance. The governance principles are largely the same. There's always going to be specific things for each sector. But in the main, they're corporate entities that need to be governed appropriately and run effectively.

BENNETT MASON

What's your general outlook on the universities sector right now? What are a few of the key challenges it's facing?

GRAEME INNES

Well, the pandemic was a significant challenge for most sectors, including the university sector. Closing our borders and not having international students here in Australia was significantly problematic for that sector. So, it's now facing the challenge of recovery from COVID for some universities. They had to take on significant debt during COVID. That's certainly the case in in the University of which I'm chancellor. And so, as I like to describe it to staff and stakeholders, we're running a marathon with four or five COVID bricks in our backpack and we have to clear that debt. But at the same time, we have to make sure that we look for and continue to take opportunities for growth or expansion. Because if a university or any organisation is not growing, then it's not sustainable. So there's that. I think the way that funding is divided in universities needs to be addressed. And the Government is doing work at the moment around the universities accord, where those things can be addressed. I think that regulation always needs to be monitored. I'm not suggesting that universities are overregulated, but it's always important to keep regulation refreshed and up to the mark. As the chancellor of a regional university, I would say that regional universities are disadvantaged in the funding that we receive, as opposed to the metropolitan universities. That needs to be addressed. And I think what universities do needs to be thought through. Some universities are very clear that their branding is that they won't take people with an ATAR of less than a certain amount. And that's fine if that's your purpose. The university of which I'm chancellor, is very much an inclusive university. So, we believe in learning, and we don't believe that people from disadvantaged populations are any less able to learn than anyone else. So, we want to include those people from regional groups, from Aboriginal and Torres Strait Islander groups, from people with disabilities, from people who might be socially or economically disadvantaged. We want to provide them with learning opportunities. That's our mission. And so that's what we're trying to deliver on.

BENNETT MASON

Graeme, you've had some really great advice for both aspiring directors and also experienced board members. So, thanks so much for joining us today. It's been great speaking with you.

GRAEME INNES

It's good to talk with you, Bennett. I'm always happy to pass on some of the things that I've learned. Certainly, I haven't learned everything. Learning is a continuous journey. But if I can share some of that knowledge and help people to continue to be effective in this area, then I'm very pleased to do it.

BENNETT MASON

Thank you for joining us Graeme. Listeners, thanks for joining us on Boardroom conversations. I'm Bennett Mason from the AICD. We hope you enjoyed the show, and you can find more episodes in your podcast feed. Please join us again soon.