Boardroom Conversations with Virginia Bourke

Season 2 Episode 2: Virginia Bourke: Lessons from the pandemic, challenges for the NFP sector and conflicts in the boardroom

Virginia Bourke FAICD is the Chair of Mercy Health, Pro-Chancellor of the Australian Catholic University and a director with Catholic Health Australia. She speaks to us about: lessons from the pandemic on crisis management, challenges for the NFP sector and tips for resolving conflicts in the boardroom.

Transcript

BENNETT MASON

Hello and welcome to Boardroom Conversations, a podcast from the Australian Institute of Company Directors. My name is Bennett Mason. Thanks so much for joining us. In each episode we’ll have candid conversations with some of Australia's top directors, leaders, and experts, delving into their background and discussing many of the key issues that boards are grappling with. Our guest this time is Virginia Bourke, chair of the national health and aged care provider Mercy Health. She's also the pro-chancellor of the Australian Catholic University, plus a director with Catholic Health Australia and Caritas Australia. Previously, Virginia was chair of St John Ambulance Victoria and a director with their national body. Virginia, thanks so much for joining us today.

VIRGINIA BOURKE

Thanks Bennett. It's a pleasure to be here.

BENNETT MASON

Now, we love to talk with our guests about their careers and how they first became board members. So, Virginia, tell us if you can, how did you become a non-executive director and why did you want to be on boards?

VIRGINIA BOURKE

Well, my first non-executive director board role was really entirely serendipitous. And I was at a lunch event, and I was sitting next to a rather remarkable woman who'd founded a small not-for-profit in Dandenong, which is south-east of Melbourne. And, she had galvanised a group of volunteers around her, and they had grown from being a drop-in centre for isolated women to, offering a whole range of programs. And the centre had really developed as Dandenong itself had grown and was meeting the needs of a much more culturally diverse group of people. Many refugees were settling in Dandenong at the time, so that was about 18 years ago. And by the end of lunch, I was invited onto her board. And I think I responded to that invitation not because I had any intention of joining a board at that time, but I think I knew that I could offer something to the organisation, and I was so impressed by the actual work that was being done. So, I think I could see the need. And I felt a sense of obligation, and I realised I had some skills. I was practising as a lawyer, and I thought that I could offer something to that woman and her organisation.

BENNETT MASON

You then moved on to a number of other organisations, some of which we mentioned in the intro. How did your position with Mercy Health come about?

VIRGINIA BOURKE

Oh, another serendipitous event really. I was introduced to the chair by a mutual friend. At that time, they were looking for certain skills. They were looking for a lawyer on the board. They were really working towards a gender diverse board. I was a woman, relatively young in the scheme of the demographic of the directors at that time. So, I think that was a piece of luck, really, that I was talking to my friend at the time the chair was looking for someone like me. I think also, again, I felt I could offer a particular skill set and a deep knowledge of the stakeholder group, that I think I had. Well, I certainly began to develop at that time. So, I think, again, it was not so much what I was looking for, but that I felt that I had something to offer. And I was certainly, by that stage, very interested in how boards work, how you improve the performance of organisations through high functioning board. So, that was a terrific opportunity for me. And I relished taking it up.

BENNETT MASON

You’re now quite an experienced board member. Is there anything you know about boards now, and being a board member, that you wish you'd known before becoming a director?

VIRGINIA BOURKE

I'm not sure that there is really anything, because I think what I've come to understand is that it is a skill that you learn through doing, through being a director. And so, knowing all of that, all of the things I know now, I don't know that that would have been particularly helpful. But I think it would have been helpful to know you don't have to know everything. That you can learn it. And that when you're a part of a high functioning board, you don't have to have the answers before you go into the board meeting. The answers to any particular difficult issue or the matters that are before you with the board, they can resolve or be worked upon by the group itself. And I think, what I've learnt is that there's a certain creativity in the boardroom that comes from a diverse group of people working on a particular issue. And so, solutions sometimes appear when you think that you have an intractable issue. I think it would have been helpful to have known that before I started out in boards. But it's something that I've learnt. The answer may not be apparent to you, but you don't have to have all the answers. You simply have had to do the solid work in preparation for the meeting. You have to have a view. You have to be prepared to listen. I think all of those are the things that I learnt. Perhaps I would have had less anxiety about some board meetings if I'd known that earlier.

BENNETT MASON

Some of our listeners will just be at the beginning of their board career, or they might just be in their very first director position. Do you have any advice for those people, for directors who are just joining their first board?

VIRGINIA BOURKE

I think it's important to bring a great deal of energy to your role, particularly if it's your first board appointment. Very important to have a proper induction, to have got to know the chair and at least some of the other directors, to be able to sit down with the executive team and understand the operation as best you can at that early stage. I think doing as many site visits, if it's an organisation that has a number of sites, certainly health community organisations tend to have numbers of sites, to visit as many places as you can, I think really accelerates your understanding and your sense of belonging to the organisation. It's incredible how when directors come back from site visits, things fall into place for them, and they feel like they more deeply understand the nature of the organisation that they're governing. I think it's important to turn up to all functions, to things that you're invited to, especially early on. Accept all invitations and listen really carefully to what people are telling you, both site visits, at events. In board meetings, I think to be listening carefully. You don't need to prove yourself in the first board meeting. You really do need to understand the dynamic of the board that you've just joined. And I think following up with the chair after meetings is also helpful. If you don't understand why a particular issue has been dealt with in a particular way, or you're unsure of the dynamic that's playing out. Some time, I think, reflecting with the chair or a senior director is really helpful. I also think some sort of buddy arrangements with more senior directors are really helpful. I had that experience sort of informally, when I first joined the Mercy Health Board, and I've kept that up as the practice for other directors. It's really helpful to have a senior director you can go to and ask questions outside the board meeting, outside the pressure of the agenda and really find out what’s going on there. And also testing whether the contribution you've made is helpful.

BENNETT MASON

Almost like a form of mentoring?

VIRGINIA BOURKE

Yeah, that's right. I'd say informal in the sense that you don't need to have any particular structure. But I think a regular follow up with that person, even on the breaks in board meetings, asking your mentor, your buddy for just a steer on what is playing out here, that’s been very helpful to me. And I know it's been helpful to other directors who were sort of early in their career.

BENNETT MASON

When you've been asked to join a board or maybe an organisation is almost sounding you out, are there particular bits of information you look for? Or questions you ask? Red flags you're wary of?

VIRGINIA BOURKE

Yes. There is always sort of a process of due diligence. You look at the organisation, you look for all those red flags that you can identify. But mostly I look to who is the chair, who are the other directors around the table? I always ask the chair: “What's your relationship with the CEO? Do you trust them?” Sort of a basic question, but for me, that underpins everything that is ahead. If you do join that board, the level of trust really, will be the thing that means whether you can make an impact or not in governing the organisation. So, I think I always test the relationships at board level, relationships between chair and executive, between the board and the executive team, and then looking to understand, of course, the financial situation of the organisation. There've been times when I've been invited on to a board where I would be the only woman on that board. I have rejected those positions where I don't believe at the time, and this is almost 20 years ago probably, where there wasn't a true commitment to actually moving towards a gender diverse board. But I've also accepted a position where I was the only woman on the board initially, and that board then moved to having equal numbers of men and women at board level over a period of years. So, I think, you’re really testing, I suppose, your own interest in what that organisation is doing. That's probably a given. But also, the level of commitment and drive that the chair and the other directors have.

BENNETT MASON

Has that been a real shift that you've seen over your career? The improvements to gender diversity?

VIRGINIA BOURKE

Yes, it has. I think I’ve probably lived that in some ways in the last probably 18 years that I've been on boards. And it is less unusual now to be the first woman chair or the first woman director. That's more unusual. There are many more women on the boards that I'm on. So, I've certainly seen that as a as a terrific improvement.

BENNETT MASON

What are some of the other significant changes you've seen over your career?

VIRGINIA BOURKE

I think the level of public scrutiny of directors has just increased so much, particularly in the last ten years. And even before the Royal Commissions. I think the Royal Commissions, aged care, mental health, financial services, all of them, I think, raised the visibility and the level of accountability, transparency expected of directors. And so, there's certainly that greater visibility. But even before that, I think there was a shift in some of the cases dealing with directors duties that you could no longer take a passive stance as a director. So, I think I have seen that move from a more passive approach of just attending meetings and giving the organisation the benefit of your wisdom, then retreating for another month, to a much more --. Well, the words used in the cases are “a diligent interest in the affairs of the company. And that diligence, I think, means you have to take a much more dynamic, a more dynamic view to your role and that means more site visits, much more high levels of engagement, with executive. Even more, I think, events. I would say the time commitment has increased, enormously. And the level of stakeholder engagement and awareness. I think there was always stakeholder engagement. It's a key part of board life. But I think that has been lifted in terms of awareness. And we've all seen the response of boards to certain social issues that have arisen. All of that is a very significant shift, I think.

So how do you as a director try to get an accurate view of stakeholder feelings on a certain issue? Obviously, stakeholders can be diverse, and those stakeholder groups aren't homogenous. So, is there a way to get an accurate picture of what stakeholders really want from the board?

VIRGINIA BOURKE

I think it can be quite difficult, particularly in large organisations where you can be many steps removed from, for example in health care, from the delivery of care to a patient. Or to caring for an aged care resident. The board could be 7 or 8 management levels removed. And I think that we are much more acutely aware of how do we hear the voice of that resident or patient? How do we hear the voices of their family members? And I think that comes down to consumer advisory mechanisms that are real, that you have people who are trained up who understand what their role is, and that you have a flow of information to the board that captures that voice of the patient, the resident, the client. But there are also many other stakeholders. Government, you have members in a not-for-profit organisation, local council. There are a range of stakeholders. And I think, much of the work of the chair and many of the directors is, with the executive, managing all of those relationships, being visible to those stakeholders, actually engaging with them enough that you know what is their view on something. So, there's a lot of time and energy put into meeting with stakeholders, attending their events, understanding their positions. I've seen the work of stakeholder engagement work increased exponentially really in the years that I've been a director.

BENNETT MASON

Sticking with your career, arranging a board portfolio is something that directors can put a lot of care and thought into. How have you selected which organisations’ boards to join?

VIRGINIA BOURKE

Well, I suppose I haven't. I must say, my path has not been one of careful selection of boards. It's been a different path. My board portfolio has really grown, sort of, in and around my work as a lawyer, as a consultant. And I've been offered or invited into various roles, and I've accepted them where I think I have something to offer. But usually what I have to offer is really deeply knowing that stakeholder group, having strong networks and thinking I understand this organisation, what it's trying to achieve, and I can offer something here. And for me, those opportunities have been in health and community organisations, in aged care and more recently in higher education. I suppose I've declined invitations where I couldn't add anything, or I didn't have any real interest in the organisations’ services or what they were offering. And perhaps back to the question you asked me earlier about what do I look for, if there are poor relationships between chairs, CEOs and so on, I certainly would decline invitations. I know that many directors, and aspiring directors, very carefully think about the sort of organisations they'd like to join. And they're very careful about their CVs. All of that is admirable. And it's certainly very important. They're very good at networking and positioning themselves, and I respect that. And I think it is so important. But I also think there is a case to be made for thinking about what you can offer an organisation as much as what it might offer you. That has served me very well. And I just offer it as a comment to aspiring directors that there are many organisations that are looking for certain skills. And I think you have to have a certain generosity of disposition as an aspiring director to perhaps, get that first position or second position.

BENNETT MASON

You've had many roles in the NFP space or the for-purpose space. Within that, health, and the care sector. Is there something you find personally rewarding about those sectors?

VIRGINIA BOURKE

Oh, yes. I mean, it's hard to go past health, aged care. I think what drives me is where there is need in the community. And while we have a very high standard of living here in Australia. I think sometimes we might forget that in amongst all the angst about regulatory burden and so on, but we have a very high standard of living and also great need in our community. And I think it's important that people contribute to these institutions in our community. And in terms of health, it really affects everyone. I think that’s its great appeal to me, that all of us have a stake in a strong health system. It's very difficult to deliver health services. It's very difficult to craft health systems that are coherent and that work, sort of a never-ending challenge. So, it is very stimulating from that point of view. But there's huge community need. And I think, it's hard to look past that. And particularly, I think, in aged care, which has been a particular area of growth for Mercy Health in the last decade or so. And there's still enormous need there. We're in a huge reform environment, so much work to be done, but I feel like we are making some progress there for a part of the community that certainly needs attention and the highest quality care. So that is the driver for me and for all of my fellow directors.

BENNETT MASON

There's a lot of regulatory scrutiny around the health sector, and in aged care. You mentioned the Royal Commissions earlier. There's been a number of other inquiries. This might have encouraged a number of Australians to lose faith or trust in some of the organisations that provide health care or aged care. How do you think directors and boards can help those organisations rebuild trust with a community?

VIRGINIA BOURKE

I think that all of our governance processes have to be directed towards just a high degree of accountability. That if we say we are going to deliver high quality care, we must drive our organisation towards that. That sounds simple, but it's very hard to do it well. But I think that is how you gain the trust of the community, is that you have a relentless focus on continuously improving the care that you provide to the community. And also, I think that you are prepared to go into areas where there is unmet need, where you see that the community has a need that other organisations, can't meet that need, where perhaps government is struggling to meet that need. I think that's where you can garner significant community support, that you're going out of your way for your community. Particularly in regional areas or areas where it's very difficult to service demand for say, health care or aged care. So, I think the accountability, meeting unmet need. There's been some interesting work done on transparency about, and I'm thinking really of the Human Rights Equal Opportunity Commission report from Victoria a couple of years ago, that looked at Ambulance Victoria and the idea of radical transparency. That is one way to shift culture where there's an issue of lack of trust, perhaps with an organisation. And that in doing so, people can understand what you were trying to achieve, that you share your failures as much as your successes. Now, that is very hard for organisations to do. It can be very hard for some boards to grapple with. But the idea that you both take responsibility for what you say you will deliver, and you share that with the community that you're serving. I think those are the sorts of things that build trust. I think also the efforts to really hear the voice of the people that you're serving, your patients, your residents, your clients, that's very important. If people feel they are heard, then they're much more likely to trust you. We've had interesting engagement on, for example, complaints. One of my directors many years ago said to me that a complaint is a gift to the organisation. You've got to see it is something that tells you what you don't already know, and it gives you information you don't already have.

And so, you should embrace complaints. And so, I think complaint handling and how we respond to complaints is another way that you build trust. It takes a long time to build good cultures in organisations and to sustain them is hard work. But I think all the work that you do internally to build the culture of your organisation, that's what the community responds to.

BENNETT MASON

I'll never think of complaints quite the same way again. We talked about some of the issues that NFP organisations are grappling with. But what do you see as some of the major challenges for NFPs right now?

VIRGINIA BOURKE

Well, I think across the sector broadly, that many not-for-profits are struggling with reduced government funding. There's increasing competition for grants and donations, and I think most not-for-profits would be looking at how can we diversify our income sources. I think that that would be a fairly common challenge. There's certainly an increasingly complex regulatory background for almost all not-for-profits, I would say. And that demands resources, which are thin on the ground for many not-for-profits, and a level of expertise that many simply don't have. So, I think that's hugely challenging. We've seen that most recently, I think, in the aged care sector, where there are many small providers and much is being asked on the compliance front, legislative reform environment. That's really difficult if you don't have access to expertise and you don't have the resources to actually buy in the expertise that you might need. Another very significant issue is workforce. Attracting, retaining skilled staff is an ongoing challenge for the not-for-profit sector. There’s competition with the private sector for staff as well, that's sort of a constant. And I think, volunteers are a challenging area, in that there's been a decline in volunteer numbers across the not-for-profit sector, particularly during and post pandemic. And building back up that volunteer workforce, which is just a critical part, sometimes the lifeblood of many, not-for-profits. That takes, again, resources and energy and effort at a time when many not-for-profits are still, I think, suffering from the pandemic years, that we really are still in, to a degree. So that's really challenging. We've talked a lot about governance practices and transparency. And I think that is quite challenging for many not-for-profit organisations. Meeting the expectation of your members and your stakeholders is an ongoing challenge, especially when I think there is generally a rising demand for services from the not-for-profit sector. So, at the time when you might be being squeezed for funding, where you’ve got a lot of regulatory compliance pressure, you're also being asked to do more. And finally, I think just generally the changes in demographics, and in the expectations society has of institutions and what they might be able to do. I think that is just broadly a challenge for the not-for-profit sector.

BENNETT MASON

Virginia, just to unpack a few of those topics you raised, you mentioned that in many ways, the demand for NFP services has never been greater. But at the same time, government funding might be drying up, donations might be drying up. What is the role of the board in a situation like that? Obviously, you want to shore up the balance sheet. You make sure management has the tools they need. But what does the board do in a situation like that?

VIRGINIA BOURKE

Well, I think you can have some very sobering discussions in these times, especially if you're a small to mid-sized not-for-profit where you may not have the scale to ride out difficult times. So, I think, often the boards will really look to what is our purpose here. Can we actually deliver on it? Is someone else doing it as well as we are? And I think this is a time where some boards look to mergers. Can we give ourselves some scale here? There are sometimes limited options when your main sources of funding dry up. But I think those boards that are brave enough to look at whether someone else can continue their mission or whether they can join with someone else and continue their mission, I think that's a critical discussion for some boards. And the idea of partnering with other organisations is, of course, also a hot topic for boards. What could we be doing here? Can we change the services that we're offering? The other issue is, and I should have mentioned it as a general challenge, is the challenge of digital transformation for not-for-profit organisations, where they may not necessarily have the level of resourcing to quickly respond or to change what they're doing. Sometimes a solution might be in some kind of digital transformation, but then there are barriers to that. But again, that's a good discussion to have at the boardroom. Is there something, is there a technological answer to some of the work that we're doing that will increase our productivity or reduce our costs? They're all valid discussions. But again, there are many constraints, I think, for not-for-profit organisations in really delivering those kinds of solutions. At the same time, I think there's also the issue of AI governance, a particular topic for the AICD this week, I see. I think boards need to have discussions about what is the future for our organisations if we are so constrained? Can we deliver these services in a different way? Can we deliver them with other people? Do we keep delivering these services? These are all very difficult discussions but commonplace in the sector.

BENNETT MASON

You mentioned the pandemic earlier in our conversation. I just want to draw you back to that. Mercy is a major aged care and health provider. So as an organisation, it must have been a very challenging time going through the pandemic. What did the board do during that period, and are there lessons there on managing a crisis that can perhaps be applied to directors at other organisations?

VIRGINIA BOURKE

Oh yes. Look, we learnt so much during that period. It was a long, sustained crisis for so many of us in health care, in aged care, and elsewhere. I think what I learnt was that you really have to adapt your governance practices almost immediately. And that was what we did. Because the flow of information that's required during a crisis is, you need different information, you need more frequent information. So, I think one of the main things I learned was to very quickly change the information the board was receiving. Some boards immediately went to more board meetings. That happened on some of the boards that I was on and that was appropriate to respond to the crisis. But at Mercy Health, because it was such a sustained period in which we were effectively in crisis mode, we went to an incident command system. And normally that is a very operational thing. But because of the nature of the pandemic, we ended up with daily reports from incident command that went to all the directors. I would have spoken to the CEO multiple times a day during the height of the crisis. It was a time for chairs and boards to step up, but also not to hinder the executive team from getting on with the very real work before them. So, I was grateful for high levels of trust between executive and board at that time, which meant that we could very quickly work out this is what I'm doing as chair, this is what the CEO is doing. We really adjusted the cadence of engagement with stakeholders. Many stakeholders are very anxious. The more we communicated with them, the easier it was to manage. And we found that people generally were receptive to bad news. And there was plenty of bad news during that period. People just wanted to know what was happening. So, I think, that increased stakeholder engagement, I was able to take on some of that for the CEO, who was extremely engaged with operational matters. We formed just a working relationship for that period. I think that worked well. There are so many lessons from that period, Bennett. But I think that that ability to adapt your practice to the needs of the organisation was the main one for me.

BENNETT MASON

It's unlikely -- at least, I hope we will never have a crisis quite like Covid ever again. But there will still be other shocks for boards and organisations to deal with. Do you think your organisations are better prepared now for the next crisis, whatever it is, after having gone through Covid?

VIRGINIA BOURKE

I think so. But I also think that organisations can have short memories in relation to these things. So that's something that I've thought about a bit in relation to cyber security particularly, and our cyber incident response. I think we can be complacent, that we've got through this huge crisis. There's no place for self-congratulation, I think, in relation to crisis management. You have to keep at it. And things like engaging in incident response exercises. I think they're more important than ever. Because we've seen what a completely left field crisis does. And I suppose it's made me particularly aware of maintaining readiness for a crisis in a way that I wouldn't have been before the pandemic.

BENNETT MASON

Virginia, before we let you go, I wanted to talk a bit about your experience as a chair. You've now been chair at Mercy since 2018. And previously you were a chair at St John Ambulance in Victoria. What advice do you have on how to be an effective chair?

VIRGINIA BOURKE

Well, I've had the great, good fortune to watch many fabulous chairs in action. So, I've learnt a lot from watching very effective chairs in action. And really, what I've gleaned and what I think now is that you really have to have a passion for the organisation that you are leading. And that has to be sufficient to motivate, persuade and engage other people. I think that's critical. And the role of chair is really about managing a set of relationships. And the most important one is with the CEO. And you need to have a very high level of confidence and trust, mutual candour. These are terrific working relationships when done well and I think that is the critical relationship for the organisation. The other relationships, of course, are between the board directors themselves. And I think there's a role for the chair in having really high EQ, being able to form the board into a high performing organisation where people know each other, they can communicate readily. I think that's really important. Having a professional company secretary is a luxury for large organisations. I know smaller ones can't always have a company secretary. But for me, that has been another critical relationship where you really have another set of eyes to help you with the board dynamic. Apart from all the issues of preparing the agenda and the flow of the meeting flow and so on. There's also a relationship usually with the members for not-for-profit organisations. So that's another set of relationships that needs to be managed. I think you need to have some courage as chair, a certain steeliness, good judgement. And I do think there are some practices that effective chairs do well and that is meeting preparation. You might take that as a given, but I think really good chairs spend a lot of time not just reading papers, but looking at the agenda, the shape of the agenda. Where is the board's time spent? Good chairs think about that a lot and are focussed on really generative conversations, not just compliance-driven conversations. I think I would stress the qualities of the board chair and the temperament of the board chair over all else. You can have terrific policies and practices that are very important, but I think the qualities that the chair brings are as important, are more important really, than any other practices you might have. And I think the difference between a good board and a bad board is really in the individual behaviour of the directors and in the collective behaviour of the board. So, I would say the behaviour is more important than anything. And I suppose that goes to the culture that you are forming within the board. Mostly, I think that the effective chairs can generate high levels of trust, particularly between the directors, between the CEO and the executive team. And that's really the only way, I think, that you can truly affect change or drive performance of your organisation or deliver on your mission.

BENNETT MASON

Sticking with that relationship between the directors themselves. Boards often have to talk about very complex issues and sometimes there are some difficult conversations, some rather heated arguments. How do you, as a chair, try to resolve those conflicts or disagreements around the board table?

VIRGINIA BOURKE

I think I would say disagreement is fine around the board table. You even encourage it in a sense. I think, really, it's the level of disagreement that drives, that test your thinking, that really validates the position or not. But what you probably are referring to is conflict within the boardroom. And I think if it's a point where you feel that the tension -- you look for a good creative tension, I think in board meetings. If that tension is imbalanced towards conflict, you really have to act quickly, I think, as chair. It does assist if the directors do have strong interpersonal relationships, that's excellent where people know each other. But that's that isn't always the case. I think the chair has to move quickly. Sometimes you might have to shut down a discussion, take it offline. I've found most things can be headed off with a phone call. Most good chairs can see where there might be something brewing, there might be undercurrents. Candid discussions, I think good directors welcome them. I think sometimes too there may be a situation where a decision may not properly be with the board. It may fall somewhere else, for that matter to be decided. So sometimes a disagreement might arise, there might be insufficient information. There are a number of reasons why you might have to steer something in a direction during a board meeting. But I think on balance, a healthy level of challenge is encouraged in the boardroom, really. And in fact, it's very interesting.  Reports on too much collegiality, too much consensus, is not really healthy. It's not really what you're after. So, I think a healthy tension, a robust discussion is welcome. And conflicts need to be dealt with immediately. You certainly would not leave any kind of conflict, I think, to fester.

BENNETT MASON

Thank you. Virginia. We might leave things there. But you've had lots of great advice for the listeners, and you've been very generous with your time. So, thank you for speaking with us on Boardroom Conversations.

VIRGINIA BOURKE

Oh, thank you, Bennett.