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Chief Executive Officer & Board of Directors

Australian Board of Directors Survey 2013

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In drawing on the Australian data from the annual Board of Directors Survey conducted by Heidrick & Struggles and WomenCorporateDirectors, we find a pattern of directors exhibiting frustration at the pace of board refreshment in the face of demographics and changing business conditions.

The concern is that directors in positions of power on boards may be reluctant to leave for many reasons, including strong relationships with other board members, financial considerations, and prestige. But most board members believe the competencies of some directors may no longer be as relevant to the business – or the company’s longterm strategy and global context may require a whole new mindset.

Some directors lack the needed competence in areas such as enterprise risk management necessitated by the dramatic increase in threats to the enterprise, while other directors may simply be under-performing. For example, they are failing to adequately prepare for meetings and contribute little strategic value to deliberations. Diplomatically easing such members off the board can bring new blood and new ideas to seats that are, in effect, already vacant.

The survey shows that Australia’s male-dominated boards have recognised a need for renewal, and this in turn will open up opportunities for increasing diversity of gender and nationality.

We believe boards need to look for talent in new places, and avoid the easy boilerplate solutions. Our companies need more women, and more broadly board members who reflect the needs of global markets and can think strategically about new markets in new geographies.

In our work with boards, we do not recommend they achieve diversity by simply placing the right gender or nationality on the board, but by using a different framework, out of which diversity naturally emerges.

The key to successful boards is the framework they apply whenever a vacancy occurs. We encourage boards to take a more holistic view, looking at the strategic direction of the organisation while assessing the current board mix. Rather than asking, ‘Who can replace this director?’ they should ask, ‘What are we trying to achieve in our business?’ And when they do this, a much wider pool of candidates emerges.

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