Welcome To Talking Shop

Southlands Premier Health Service & Consultancy Company

Based in Invercargill, Talking Shop provides & is developing health services, & is available to provide health consultancy services nationwide on request.

FishHead ™ Governance

Below is recent published paper on the corporate governance situation in NZ

__________________________________________________________

Are Governance Failures the Flag on the Tip of our Economic Iceberg?

Air New Zealand, TVNZ, and now our local Southland entities Holdco and Murihiku Whanau Service Trust. The media attention devoted to New Zealand’s high profile business failures are increasingly indicating that these failures result from poor governance. Are these companies failure to perform just the most visible indicator of a national trend of poor governance? Could we draw the conclusion that as a result of poor governance, many of our companies, if not failing, are underperforming - or just plain mediocre?

Business New Zealand, The New Zealand Institute of Directors and The Institute of Chartered Accountants of New Zealand are among those organisations making some significant effort towards improving the quality of our nation’s Governance. Indeed, internationally the quality of corporate board performance is drawing attention, particularly following the ethically corrupt disasters such as WorldCom and Enron.

What is Governance?

The general principle of ‘nose in, hands out’ guides this very brief discussion on the Board’s duties. The Companies Act (1993) outlines the legal duties and responsibilities of a director, clearly placing the responsibility for the performance of the entity at the feet of the Board.

Not-for-profit boards are generally required to adhere to the less prescriptive – and somewhat older – Incorporated Societies Act (1908), but could also be required to adhere to the Companies Act. Most of these directors are unpaid, yet are required to make significant ethical and business choices which affect our people, whilst bearing the responsibility for those choices.

The key activities associated with corporate governance include advising on and then monitoring strategy; appointing and managing the CEO whilst developing other executive human capital. There is also a duty to monitor the ethical and legal behaviour of the organisation, avoid and manage risk and crises, whilst also utilising their networks to obtain additional resources as appropriate.

Do we value our corporate boards and their members? Are they deserving of our respect, or do we consider them to be a self serving ‘old-boy network’? Does your organisation have the skills at governance level to ensure sustainable competitive advantage – or even just add value? The New Zealand Institute of Directors, for example, is encouraging a process of accreditation for company directors, an approach not necessarily supported by all the advocates of change.

New Zealand has proportionally very few large corporations, with the vast majority of our businesses being small to medium sized enterprises (SME’s). There are also huge amounts of public money provided to charitable trusts providing essential services in areas such as health.

The government places much emphasis for the nation’s economic growth on the development of SME’s into larger companies. If larger companies are already vulnerable to distress at governance level, it places significant pressure on emerging entities to get it right.

Of course, Governance issues must be kept in perspective. It is easy to jump on the current Governance bashing bandwagon without keeping in mind the performance of the corporate entity as a whole.

The potential of the nation’s economy is currently under scrutiny, and our ability as a nation to be competitive over the longer term is of concern.

If poor governance is hampering the performance of our companies, and good governance provides significant value, perhaps developing exemplary governance practice could be explored as a significant national competence at all levels of business?

1^st June 2006.

Health Services

Consulting

Strategy

Innovation

Governance

Research

Analysis

More...

Links

HeHa
Health Information Videos