The Australia-Israel Chamber of Commerce held its annual Chairmen’s Review event at The Star in Sydney on 29 November 2017. Elizabeth Bryan AM, Chairman of Insurance Australia Group and Virgin Australia Holdings, and Lindsay Maxsted, Chairman of Westpac Banking Corporation, gave their insights on key issues in a wide-ranging conversation with Sky News Business Anchor Ticky Fullerton to an appreciative business audience.

A New Environment for Boards

Ticky Fullerton opened by asking whether there had ever been a more challenging time to chair an ASX100 company. As a custodian of capital, Elizabeth Bryan responded, our job used to be about producing a good profit. The expectation now is that companies are going to help solve wider social problems, she said, and so directors were having to reframe their role. This and the digital revolution were giving customers a greater ability to make their needs felt, creating new opportunities to engage, but also risks if companies failed to execute well

Elizabeth Bryan further outlined the need to be constantly on the front foot when it comes to reputational issues. “If you lose control of this, then you start to become a political football, and it’s very hard to pull back once that’s happened,” she said. Lindsay Maxsted agreed that companies now have to take into account their ‘license to operate’ and obligations to multiple stakeholders. Boards understand the need to get their customer, employer, and wider stakeholder propositions correct, and that this will assist shareholder returns, he said.

In response to a question from the floor about the extent to which companies should become involved in wider societal questions, Elizabeth Bryan argued that some social issues come fairly and squarely into some companies’ remit, but that “if you spend your time trying to deal with every social issue, you can get yourself a little bit lost.” Lindsay Maxsted stated that climate change is a business issue, not just a social one, and on those grounds it would be negligent for a board not to have a view and to act on that view, as Westpac does.

Ticky Fullerton also asked Elizabeth Bryan about Australian companies’ often underperforming Asian strategies. Bryan argued that we should stop calling these an “Asian strategy”, as India, Thailand, and other countries in the region are all very different marketplaces. We should instead monitor and understand different countries’ unique characteristics, she said, and make investment decisions on a case-by-case basis.

The Digital Age

Elizabeth Bryan also raised the issue of the lack of agreement between business and government about preparing for the 21st century. It was critically important for business to invest for the long term through converting the service sector to being digitally ready, she said, articulating the need for companies to consider the impact on their workforces: “how do we futureproof them, how do we guide them into something else?”

The two chairmen were also asked about the state of Australian companies’ cyber-security readiness. Elizabeth Bryan acknowledged the importance of the issue – “you have to have board policies to recognise the impact of failure” – and of being able to draw on expertise, but didn’t necessarily consider it appropriate for a dedicated board position. According to Lindsay Maxsted, “we have to have enough expertise around the table to make sure we bring out the right questions so we can go home at night and feel good we’ve got the defences in place.”

Governance and Remuneration

The two chairmen also discussed governance and remuneration issues. Elizabeth Bryan stated that existing complex remuneration schemes had come about in another era, when the jobs of executives and boards were primarily about driving profit, and that boards were investing a great deal of time and effort into creating new models. Lindsay Maxsted commented that people who complain about executive remuneration often don’t mind footballers being paid large amounts, whereas running a big bank was a considerably more complex and challenging task.

In response to a question from the floor about whether they expected the emergence of a centrist political force in Australia as in France, Elizabeth Bryan said that it was natural for human beings to look for a “yellow brick road”, but in her view, companies needed to be clear about setting their own path. “The risk is that you have some very important things you have to do in dealing with digital changes and adjusting to society’s expectations. If you have to move people to focus on issues which come out of politics, you may be neglecting your focus on the really important issues,” she stated.

• ABC-TV The Business, 29 November 2017