The Crisis-Ready Company Secretary

[00:00:00] In this episode, host Richard Conway talks to Catherine Livingstone, Chancellor of the University of Technology Sydney, Chair of Pacific National, and former Chair of the Commonwealth Bank, Telstra, and the CSIRO about what makes an excellent Company Secretary during times of crisis.

[00:00:19] Richard Conway: Hello and welcome to Minutes by boardcycle. I'm your host, Richard Conway, and today I am joined by Catherine Livingstone. Catherine, welcome to the podcast.

[00:00:28] Catherine Livingstone: Thanks, Richard.

[00:00:30] Richard Conway: Catherine's one of the leading thinkers in Australian governance. She's the Chancellor of the UTS, the Chair of Pacific National and Director, at the Australian Ballet, and previously led organisations including Telstra, the CSIRO, the Commonwealth Bank, and Cochlear.

[00:00:45] Richard Conway: Today, Catherine's kindly agreed to talk to me about how Company Secretaries can excel during periods of intense governance pressure and I wanted to talk to Catherine about that because she's uniquely qualified on this topic, having led organisations through some of Australia's most challenging governance transformations, including at CBA, during the Banking Royal Commission.

[00:01:08] Richard Conway: So Catherine, from your experience, I wanted to ask what separates an exceptional Company Secretary from a competent one during times of intense pressure.

[00:01:19] Catherine Livingstone: Well, I think they're first order and second order characteristics. So, in the first order, you really want someone who is calm, and methodical, anticipates, and is prepared to take the initiative. So, they would be the first order attributes.

[00:01:38] Catherine Livingstone: But behind that are the second order attributes, which is the real understanding of the business, and being a business partner not just a legal partner, if you like.

[00:01:49] Catherine Livingstone: So, being a business partner means that they have a better understanding or more alertness to the decisions which might be facing the Board. And again, the judgements that are facing the Board.

[00:02:01] Catherine Livingstone: So, they will be better able to partner with the Chair and the CEO in supporting the Board making those judgment calls.

[00:02:10] Richard Conway: Catherine, picking a couple of qualities that you talked about there. I wanted to ask, how common do you think some of those are? Because I feel some of those things, particularly initiative, for example, in a Company Secretary. There's an aspect of the role, and the training for the role, which tells you perhaps that, "I'm not a decision maker, I'm supporting the decision makers." And so perhaps initiative isn't a strong attribute in Company Secretaries.

[00:02:39] Richard Conway: Do you agree with that or not?

[00:02:41] Catherine Livingstone: In a business sense, a Company Secretary may not be a decision maker on a standalone basis. But actually, as part of a team, they are part of making decisions.

[00:02:51] Catherine Livingstone: And I've always sought the advice of the Company Secretary as a cross check, as just a different perspective. Because when things are moving very quickly, you can't necessarily convene the Board at a moment's notice. And if a decision has to be made, then you've got a smaller group, and I would always include the Company Secretary in that.

[00:03:12] Catherine Livingstone: Their background knowledge of the law and the legal process is really important in a damage control sense, to make sure you don't overstep something.

[00:03:19] Catherine Livingstone: But they're sitting around the Board table. They're aware. They know the people. So, they're just really important advisors, and you want them feeling that they're part of the decision-making process.

[00:03:31] Catherine Livingstone: Not an "all care and no responsibility." That's not what you're looking for.

[00:03:34] Richard Conway: Absolutely. And the other bit I wanted to pick up on was you talking about them understanding the business, because I think another tension that can happen in the Company Secretarial role is this question about: am I serving the Board? Is there a degree of independence required from the business because of serving the Board? Or am I part of the management team?

[00:03:54] Richard Conway: And so, I think what you're clearly saying there is they need to find a way to bridge those two things and be a part of both. Would that be fair?

[00:04:03] Catherine Livingstone: That's absolutely fair, and it's a very difficult role from that perspective. Because, yes, serving the Board, but you can't serve the Board unless you are part of the management team and understand what's happening. And that you have trust both ways.

[00:04:19] Catherine Livingstone: So, the confidentiality around the Board is really important. So there are aspects that, as a Company Secretary, you then can't share with the management team more broadly in some instances.

[00:04:30] Catherine Livingstone: But to come to a Board without being steeped in what's going on in the business and what's happening in the management team, you're missing a whole, a whole range of intelligence that the Board might need.

[00:04:43] Catherine Livingstone: And you also can't guide the Chair, and in the agenda setting process because, to me, the Chair, the CEO, and the Company Secretary, work on the agenda setting process and you, as a Chair, relying on the CEO, you as the chair, your knowledge of the business as to what needs to come to the Board. 'Cause you can't bring everything to the Board. So, you have to filter what are the priorities?

[00:05:08] Catherine Livingstone: Often, the Company Secretary will actually highlight something that either the CEO didn't think of, or perhaps is a higher priority. So, you need that cross check.

[00:05:17] Richard Conway: Yep, absolutely. And Catherine, in these kinds of crisis times, and I actually don't want to just focus on a crisis time - there can be transformational sort of opportunities which lead to this same thing: Board processes become really dynamic.

[00:05:34] Richard Conway: And that's very different to the approach that Company Secretaries are usually working to, which is a very planned approach. And so, I wanted to ask you how your expectations of the Company Secretary change when the Board becomes more dynamic than that. And particularly, what are things that you are happy for a Company Secretary to let go of at those times, if anything?

[00:05:57] Catherine Livingstone: Well, I think what you are relying on is that the Company Secretary will actually exercise the judgement of what can be let go or de-prioritised.

[00:06:05] Catherine Livingstone: So, in a crisis time, it's a bit contradictory, but you need good process, but you mustn't be swamped in process. So, it's the vital few that you're relying on the Company Secretary to make sure that they're maintained and there will be some other aspects of the process that come in.

[00:06:22] Catherine Livingstone: So, what happens in a crisis, and yes, things are moving very quickly, unless the decisions that are being made on the run often are well documented. First of all, you know it was, you run the risk, you lose your legal protection because you can't say why you made a particular decision. But that's less the point of knowing what happened, when.

[00:06:41] Catherine Livingstone: And that's where the Company Secretary can play a crucial role. In making sure that the process around documenting the decisions that are made very quickly and in different contexts that that is a robust record of what has happened.

[00:06:53] Catherine Livingstone: But you certainly don't want the Company Secretary overloading the situation with more process. Because then that will impede the decision making that might be necessary to get through, whether it's transformation or whether it truly is a crisis.

[00:07:07] Catherine Livingstone: I would say in a crisis situation, for those that you can anticipate, like for example, cyber attack, having a well-documented playbook in advance is really important. And even when you think you've got one, when you get into the crisis, you find that it's not as robust as you thought, or it doesn't quite work like that.

[00:07:28] Catherine Livingstone: But it is certainly very helpful to guide you through, in a systematic way, the things that you have to remember to do.

[00:07:34] Richard Conway: And I guess in those scenarios, it's important for a Company Secretary to think about the core of the processes that they're doing. What is the fundamental point of it, and what are we doing, perhaps in normal times where we have the luxury of doing things that perfect and polish that, which you can live without, perhaps, when you need to be more dynamic.

[00:07:54] Catherine Livingstone: That's right. So, for example, minutes might be more dot points than more discursive, for example. Just to get them down and make sure that that's, there's a documentary trail on that. Your agendas might look a little rough and ready but there is an agenda, for example.

[00:08:11] Catherine Livingstone: You want a Company Secretary that is not telling you why things can't be done. You want a Company Secretary that's helping you work out how they can be done.

[00:08:19] Richard Conway: Yes, absolutely. Well that's a good segue to the next question which was going to be asking you around have there been behaviors you've seen in these situations from Company Secretaries that have made your job as a director harder? Or on the converse things that you've found that make your life much easier when you're in these kinds of high-pressure scenarios?

[00:08:40] Catherine Livingstone: On the latter, making life easier, it's really having someone where you know they're thinking all the time, and they're anticipating. And they're asking questions in and of themselves, not waiting for you to instruct, if you like. So, you want someone who is keeping pace, if not ahead of you actually. So that's what makes your life easier.

[00:09:02] Catherine Livingstone: What makes your life more difficult is, as I say, when people really become, process becomes the objective. And all the reasons why this process has to happen or these things can't be done because of the process, that is really, really unhelpful.

[00:09:18] Catherine Livingstone: This isn't about cutting corners and not doing what needs to be done. It's saying what is the core, what is the vital few? And we do that because time is of the essence. That's in a crisis, in a transformation.

[00:09:30] Catherine Livingstone: The transformation processes are by definition longer and quite often you can lose sight of where we started and why we're doing this. And a good Company Secretary will help that standing back from time to time saying, "Okay, well what was the original objective and where are we up to?" Not because they're doing that sort of guardian or policing it. They're just another pair of eyes looking at the situation. And a very active pair of minds. That's what you want.

[00:09:58] Richard Conway: Catherine, a question that occurs to me if you're expecting a Company Secretary to help you and the CEO prioritise is: how can a Company Secretary have the confidence to put their opinions forward. For example, if they're on a call with you and the CEO of an organisation who they know have been doing this for much, much longer than they have, and have the roles that you have for a good reason.

[00:10:24] Richard Conway: How do they get the confidence to speak up, if they think that there's a higher priority for the two of you to be talking about.

[00:10:31] Catherine Livingstone: Well, that 's part of the role. So, if you're not confident in doing it, perhaps you shouldn't be in the role would be what I say. I mean, yes, you might be then criticised by the Chair or by the CEO, but that doesn't mean you don't have a role to speak up. And I've always been very comfortable when, around the Board table or in a smaller group, the Company Secretary says, "Excuse me, Chair, but, XYZ..." And nine times out of ten, they're absolutely right. And for the time that they're not, it's fine.

[00:11:02] Richard Conway: I think the core point I try to remember there is you are that you are there for a reason. You've been hired for a reason, you are in the Boardroom. Boards don't have people in the Boardroom who they don't need. And they don't want note takers. So, just remember that all of that's there as well.

[00:11:20] Catherine Livingstone: Yes, yes. You want a Company Secretary who will, in the best spirit of “Yes, Minister” who will say to you sort of "Chair, that was a very courageous decision." So you want that guidance when it's appropriate.

[00:11:33] Richard Conway: Going back to these crisis scenarios. One thing that can happen in a Board in those situations is they can become compliance-focused, because you're trying to deal with that crisis.

[00:11:46] Richard Conway: And you've talked about the importance of governance being anchored in strategy and not compliance. So, what do you see as the role for a Company Secretary to help Boards sort of look up and maintain their strategic focus during those crisis times?

[00:12:01] Catherine Livingstone: That's slightly a tough one. Because you're actually relying on the Company Secretary to make sure that you don't misstep on the process and compliance side. Hopefully, on the strategic dimension, the Chair and the CEO, certainly doing the heavy lifting. But you just need the confidence that you are, as I say, not, there's no misstep on the legal and compliance side.

[00:12:23] Catherine Livingstone: So, I'm not sure that the Company Secretary has a role in guiding on the strategic side other than just making sure that something doesn't get missed.

[00:12:31] Richard Conway: Absolutely. And last question on this topic, Catherine, I wanted to ask you about the capabilities that you see as being required for Company Secretaries. So, what capabilities do you see required today that haven't been required in the past? And are there areas that you would encourage Company Secretaries to focus on for the future for their roles?

[00:12:53] Catherine Livingstone: I think, Richard, it comes back to really understanding the business. Because the business environment is changing very rapidly. And to support the Chair and the CEO in what comes to the Board, the agenda. As you know, I like to see an agenda that's divided into three parts: the first part being strategy, second part being business performance, and then the third part being compliance.

[00:13:18] Catherine Livingstone: And unless you have a really good understanding of the business and, then of course, the external context, what comes onto the agenda needs really careful thought. Because you can't have Boards meeting every week, for example. So even if Boards are meeting once a month, it's hard to cover the landscape.

[00:13:36] Catherine Livingstone: So, I would say: there's knowledge of the business. But there's also increasingly knowledge of technology. Because technology is so pervasive now. And the consequences of technology being employed in a business, and I'm not just talking about AI, but AI is a very big one. Both from an operational and a regulatory perspective.

[00:13:57] Catherine Livingstone: So being technology literate in a strategic sense, I think would be, to me, would be the number one for a Company Secretary at the moment.