1. Good Governance in Superannuation Funds
Governance Matters
Kate Costello

2. Effective Governance understand the role of the Board
get the right skills and encourage the right behaviour
introduce effective processes

3. Understand the Role of the Board
Governance is what the Board does or should do to be a “value-adder” to the organisation rather than just a “cost-centre”.
It is different from what management does or should do.

4. What is Governance?
“The Board’s role is to create the future of the organisation, not just mind the shop”.
John Carver

5. Monitoring and Supervision
The Role of the Board
Strategy Formulation
Outward Looking
Accountability
Compliance
Roles
Appoint CEO
Performance Roles
Inward Looking
Monitoring and Supervision
Policy Making
Past & Present
Future
*adapted from Tricker, RI: International Corporate Governance (1994) p149

6. Those you can’t say no to!
Accountability
Those you can’t say no to!
the law and regulation
constituent document or
empowering legislation
creditors (eg. bank; suppliers)
other contractors (eg government
funding; sponsors)

7. Those you need to listen to!
Accountability
Those you need to listen to!
owners (shareholders; members; government)
customers
staff
the community

8. Good Governance in Accountability
“listening” to stakeholders
risk management
organisational culture

9. Strategy Formulation what is “Strategy”? – Michael Porter
the gut, the head, the heart
answer the hard questions

10. Good Governance in Strategy
longer term strategic plan (with measures)
aligned operational/business/annual plan (with measures)
aligned budgets

11. Good Governance in Strategy
dedicate some board meetings to strategic matters
spend the first hour on a strategic issue
reorganise the agenda (decision; discussion; noting)

12. Policy
“I define policy as the value or perspective that underlies action. Of course that means everyone in the organisation makes policy including staff members, but boards must make the broadest and most inclusive policies in order to control the organisation. The trick is for the board to make distinctions between the types and sizes of policy, so that what is delegated is clear”.
Carver J: Reinventing Your Board, P41

13. Good Governance in Policy
Carver argues that the board only has one employee, the CEO.
“The board will:
instruct only the CEO
view all organisational performance as that of the CEO
view any organisational failure to comply with board policy as the failure of the CEO
require that the CEO keep the organisational performance within policy criteria and restore it to this state should there be policy violations
never in its official capacity, help the CEO manage”
John Carver

14. Good Governance in Policy
Matters reserved for the board
Policy separated from minutes
Board Manual

15. Monitoring and Supervision
By strategic KPIs
By annual KPIs
By compliance with board policy
By agreeing what information will
come to the board, in what format

16. CEO and Succession “hire and fire” the CEO remunerate and reward
assess performance
plan for succession

17. Get the Right Skills size of the board board skill set committees
the right ones?
clear terms of reference?
reviewed, or task forces?
amend constituent document to
make right

18. Board Member Knowledge
induction
management update sessions
expert reports
expert development sessions
Board and director
performance evaluation

19. Encourage the Right Behaviour Board Effectiveness Research
Shey Newitt
Compliant but not contributing: why Australian boards are being under-utilised

20. Working Relationships
Chair – CEO relationship critical
behaviour and teamwork
a “living” Code of Conduct

21. Introduce Effective Processes
calendar
papers before meeting
clear, concise, precise papers
duration of meetings
calibre of minutes plus action list
receipt of minutes after meeting

22. Effective Governance understand the role of the Board
get the right skills and encourage the right behaviour
introduce effective processes

23. Good Governance in Superannuation Funds

24. Structure and Skills size of board; alternates
“fit”: skill set; appointed or elected directors – written notification of duties
letters of appointment and position descriptions

25. Structure and Skills what committees? the right committees
committee skill sets

26. Accountability communication from, and to, members
relationship with APRA
Code of Conduct – Section 52 SIS; fiduciary obligations
reports on governance

27. Strategy a true differentiation? mergers enough time on strategy
longer term plan

28. Strategy
Fund-specific investment philosophy drives investment objectives and strategies
measurable objectives for each investment option
time on investment matters

29. Strategy who makes investment decisions?
assessing, rewarding and terminating investment managers

30. Policy matters reserved centralise all board-endorsed policies
outsourcing – what?; service standard agreements; auditing; reporting to board

31. Policy risk management integrated in strategic planning process
risk management program
business continuity plan

32. Monitoring and Supervision
of outsourced service providers
of objectives for investment options
of risk management program and follow-up of breaches

33. CEO and Succession performance management
annual succession planning including for nominated, critical positions

34. Leadership and Teamwork
the right chair
succession planning for the chair
performance evaluation

35. Meetings duration and timing format for submissions annual calendar
meeting without management

36. In Summary The right directors and chair A strategic view
The right processes
Your checklist

37. Understanding Good Governance in Superannuation Funds
Governance Matters
governancematters.com.au