A Directors ViewpointNZISM Continuous Professional DevelopmentF McCutcheon – July 2018

Presenter: Alison Murphy

IMPAC

A Directors Viewpoint

Theme for today

Board Environment

Due Diligence Duty

Help and Advice

Case Study

▪ Trust

▪ Family Business

▪ Agriculture Sector

What's next?

Discussion

Content

Strategic leadership

Raising capital

Technology

Financial matters

International markets

Health and safety leadership

Compliance and risk

Cultural issues

Change management

Board Experience

Acting in good faith and in the best interests of the

company

Exercising your power as a director for a proper purpose

Not allowing, agreeing or causing the business to be

carried out in a way likely to create a substantial risk of

serious loss to the company's creditors

Taking the care, diligence and skill that a reasonable

director would exercise in the same circumstances

Ensuring the company can pay all its debts and has

more assets than liabilities

Complying with the Companies Act.

Minimum Standards

Governance Framework

Goodman Group 2016

Accelerate what you are

good at!

Three Noticeable Shifts

System failure at all levels

Management not risk aware

Governance turned a blind eye

Violations had become normalised

Culture of safety absent

Production pressures dominant

Regulator emasculated and ineffective

Potential for disaster not foreseen.

Remembering Pike River

Health and Safety governance is the relationship between board members and senior executives in the health and safety leadership of an organisation.

Governance provides the structure through which the vision and commitment to health and safety is set, the means of attaining objectives are agreed, the framework for monitoring performance is established; and compliance with legislation is ensured.

It is a fundamental part of an organisation’s overall risk management function.

Corporate Safety Governance

“Due diligence” requires technical, situational and strategic knowledge of work health and safety matters where the officer actively analyses information, engages in dialogue with workers and takes a hands-on approach.

“The behaviour and decisions of officers strongly influences the culture of businesses and undertakings”.

Due diligence is a personal and a positive duty – it applies to an individual and whether or not there has been a health and safety event.

Due Diligence

Safe Work Australia

Have:

Up to date knowledge

Understanding of the operations and

risk

Ensure the PCBU:Has appropriate resources

and processes to eliminate or minimise risk

Has appropriate processes to respond to information about

incidents and risks

Implements processes to comply with any duty

Verify

Establishing systems and processes which are

monitored, audited and reported on

Individual knowledge

Cannot be outsourced

Must be their own

Resources and processes are being utilised

The Duty…

Technical, situational and strategic knowledge

Both positive and personal

Active analysis

Active engagement

Inquisitive

Review and audit

Due Diligence

Available Help and Advice

WorkSafe may be shifting gear when it comes to officers’

due diligence. WorkSafe is increasingly asking questions

about who the officers of a PCBU are, and what those

officers are doing to properly engage in health and safety

matters, as part of the investigation of workplace

accidents.

Has Something Changed?

Grant Nicholson: Partner at Kensington Swan

Three very different organisations

Sixteen Directors

Twenty Officers

Elected, appointed and “professional”

Highly experienced, very capable

Emotional investment

Significant organisational risk

Australasian operations

An environment of rapid and constant change

Have been severely tested

A Directors Viewpoint

Some observations

Total commitment to the health and safety of all engaged

Leadership and culture connect well understood

Moved beyond compliance

Rapid learning curve▪ Integrating health and safety into existing governance framework

▪ Building individual competency – BLHSF, IoD, local initiatives

▪ Operationalising the due diligence duty

Executives and Directors with the same duty accelerates change

Some confusion between Officer and PCBU duties

Level of disquiet based on new insights

Reliance on the information provided – assumption and feel

Low tolerance for uncontrolled risk

Performance based on injuries not effectiveness of risk controls

Complex reporting

Confusion between data and performance measures

Work paused because of health and safety concerns

A Directors Viewpoint

Officer Duties versus PCBU Duties

Officers do not have to directly ensure

health and safety.

They must exercise due diligence that

the PCBU is meeting its primary

duties.

PCBU holds primary duty for

health and safety.

Officer’s due diligence

complements this duty – it

doesn’t replace it.

A Directors ViewpointWhat they say

Vision, strategy and governance framework can be fuzzy

Feel quite embryonic in terms of the journey

One step forward, two steps back

Individual and collective responsibility is heart felt - we take this very

seriously

Whole of Board – no shrinking violets

Constantly asking – “is there more I could do?”

Pausing to review can be very difficult

Constantly balancing trust with inquiry

Haven't always got it right

Board skills and experience is variable

Occasionally we drift into the management space

A Directors ViewpointWhat they say

Assurance questions are not well answered

Quite challenging to stay current

At times we feel completely overloaded

Do not want to see the “human error” one liner

No surprises – expect to see all issues bought to the table

We will make the call re funding availability – show us everything

Very easy to get bogged down, easy to mirror last previous meeting

It’s easy to get blindsided

Better integrated planning is a key so we can target resources and track

performance

Can’t solve every problem day one

Good safety, good everything

Transactional Compliant Focused Proactive Integrated

Safety Governance Maturity

Least effective

Minimal emphasis

Safety is a management

responsibility

Activity following

incidents

Awareness from a legal

sense

Basic reporting in place

Brief reference in annual

report

Legal compliance

Focus is beyond

compliance

Charter in place

Vision and targets agreed

Increased disclosure

Leadership role clear

Performance pressure

exerted

Board sub-committee

Personal statement from

Chair

Most effective

Safety completely

integrated

Safe production concept

High levels of disclosure

What's Next?Reset what good looks like - clarity

Planning – strategic and tactical

Integration – accelerate strengths

Discipline to execute the plan

Focus – stay the course▪ Leadership

▪ Governance

▪ Engagement

Reconsider what is an acceptable level of controlled risk

Continue to build capability – learn and grow

Site visits – done differently

Align the performance measures

Celebrate success

Wrap-up Thank you for your time.Questions?