AIM Australian Governance Survey

What People Asked

Q. The AIM Australian Governance Survey finds that CEOs are the strongest champions of governance change – why is this significant?

• Since the corporate scandals of the 1990's, the spotlight has been on directors as the primary drivers of good corporate governance. As a result, the role of management has been pushed into the back seat.
• The AG Survey is a reminder that both directors and managers are key players and that governance responsibilities do not fall just on one party but squarely on both.
• Despite not being the spotlight, managers still play a critical role in governance and this is set to increase if the Corporations & Markets Advisory Committee's (CAMAC) recommendations to extend corporate duties to persons below board level are accepted by the Federal Government.
• We hope this Survey will kick-start moves to re-insert managers into the core governance discussion and spark some ideas on how managers and the board can better work together toward effective governance.

Q. Does the AG Survey say that CEOs are more important than Chairs or directors when it comes to promoting governance in organisations?

• No. The Survey serves as a reminder that both management and directors have a critical role in ensuring their organisations are properly governed.
• The role of management has been sidelined in recent years, despite the fact that both directors and ‘officers' (who are mostly senior-ranked executives) have clear duties at law and the CAMAC proposals may expand corporate duties to an even wider class of management.
• The AG Survey restores balance to the governance debate by recognising that both managers and directors have a key role and both need to find better ways to work in partnership toward achieving effective governance.

Q. The Survey shows that directors and managers generally don't agree on what makes an effective board. What are the implications for organisations and what should be done about it?

• When directors and managers don't agree on what makes an effective board, you have the makings of a dysfunctional working relationship.
• There is the potential for management to view the board as performing poorly and for the board to feel mistrustful of a sceptical management.
• This can stall open dialogue and reduce the level of collaborative information sharing that is desirable for transparent governance.
• Organisations should therefore put in place processes to encourage awareness and agreement on the part of both directors and managers of what the board's priority roles and activities are, so that both parties have a common set of expectations.

Q. How can boards of directors perform their strategy development role better?

• The AG Survey showed that both directors and managers agreed that the board's strategy role was one of the most important indicators of board effectiveness.
• But for boards to be seen by management and others in their organisation to perform well on strategy, they must adopt a collaborative working approach.
• This entails working with management on strategy issues in a ‘team-based' fashion and in a way that reduces formalities in the way information is shared between management and the board.

Q. Can you tell me who participated in the AG Survey?

• Almost 380 people were surveyed comprising non-executive directors, executive directors, CEOs and senior managers. Each group was represented in roughly equal proportions.
• Respondents were drawn from a broad mix of company types including listed companies, unlisted companies, government-owned corporations, proprietary limited companies and non-profits. Proprietary limited companies were particularly well-represented. A diverse range of industry sectors was also represented.

Q. Is a written report of the AG Survey findings available?

• The full report of the Survey is available to download in PDF format [1.2Mb].