Two Sides of the Board Table

[00:00:01] Intro: Welcome to Minutes by boardcycle, where in each episode we pack the insights from one of Australia's boardroom leaders into just a few minutes.

[00:00:10] Speaker: Today, host Richard Conway interviews Alison Watkins, former CEO of Coca-Cola Amatil, Graincorp and Berri, and now, director of Wesfarmers and CSL, on how to go from being a CEO to a non executive director.

[00:00:25] Richard: All right. Welcome to the minutes podcast. I'm your host, Richard Conway, and today I'm joined on the podcast by Alison Watkins. Alison currently holds a number of non executive roles, including on the boards of Wesfarmers and CSL. But prior to that, had an extensive executive career, including as CEO of Berri, Graincorp and Coca-Cola Amatil. Alison, welcome to the podcast.

[00:00:53] Alison: Thank you, Richard.

[00:00:55] Richard: Alison on today's podcast, I wanted to talk to you about the career transition you've [00:01:00] undertaken from CEO to non executive directorships. It's not uncommon for CEOs to move into non executive roles. But that doesn't necessarily mean that it's an easy thing to do or an easy transition. So to start off with, I wanted to ask if you could give us an overview of your executive career and how you've moved from that career into non executive roles.

[00:01:22] Alison: Sure. Well, to summarise, I spent my first 15 years in professional services. Accounting, and then with McKinsey Company in consulting. I then moved into the kind of corporate leadership roles that, that you described for around about 20 years. And for the last three years now, I've been pretty much exclusively in non executive director roles.

[00:01:46] Alison: So I did have quite a period where while I was in those corporate leadership roles, I was also in non executive roles including Woolworth's and ANZ. [00:02:00] So I was very lucky. I had, Chairman and boards who were supportive of me taking on those non executive roles in parallel with holding CEO roles.

[00:02:10] Alison: So the last seven years of my, career, I was exclusively in a CEO role as CEO and managing director of Coca Cola Amatil. However, I guess I did have the advantage and I think it is an advantage of knowing what it was like to be a non executive director, while I was in that executive role.

[00:02:28] Richard: Yeah, absolutely. And did you always plan to move from executive to non executive roles? It's, I guess it's often seen as being a natural progression, but has that been your experience?

[00:02:41] Alison: I always was curious to get the experience of being a non executive director. And I think I was, yeah, very fortunate to be able to do that in parallel with my executive career. I did always see post executive taking [00:03:00] on some non executive roles as being an incredibly, interesting and, kind of a satisfying way to continue contributing. And obviously, yeah, it's a real privilege, not something to take for granted that you will get those opportunities. But it is a really satisfying way to be able to continue to stay involved in large complex organisations, which I've been in and around my whole career.

[00:03:27] Alison: And so in that sense, I always hoped but never took it for granted.

[00:03:33] Richard : Absolutely. And what do you find, what would you say are the most significant differences on being at the board table as a CEO versus being at the board table as a non executive director?

[00:03:46] Alison: Richard, it's completely different.

[00:03:49] Alison: Obviously, the nature of the role is very different. As a non executive director, and I'm putting the chairman role to one side because I think that's a bit different, but you're a part time, if you're [00:04:00] the CEO, you are 24 by seven. If you're a non executive director, you don't really have any people leadership responsibilities.

[00:04:08] Alison: Whereas if you're the CEO, you're succeeding or failing on your people leadership ability. And the big difference I think is as a non executive director, you mostly walk away without any problems on your lap to solve. Whereas the CEO typically ends up with all the problems to solve on their lap. And sitting around the board table, that creates a very different dynamic.

[00:04:33] Alison: I think if you're there as a non executive director versus being there as the CEO. As the CEO, you know that the board has chosen you. They want you to succeed. And that they're continually evaluating whether they've got the right person. Are you the right person? Are you going to succeed?

[00:04:53] Alison: And do they think you've got the right team around you? And you also know that some [00:05:00] non executive directors will be forming judgments based on highly imperfect information, snippets in time, recency bias. And you will not always agree with the judgments that they're forming, but those judgments can be quite influential.

[00:05:18] Alison: They can say or do things as a result of them that create quite big ripples and can be really quite disruptive. So it's a tricky dynamic.

[00:05:29] Alison: You know if you can secure their backing, that's incredibly empowering. And that you've got to somehow try and manage all of those dynamics to yeah, achieve as productive a relationship and good outcomes for the organisation as you possibly can.

[00:05:47] Alison: And as a CEO, the rest of the board is looking to you a lot of the time. And there's a real skill in how you manage that dynamic. Particularly, being very [00:06:00] disciplined about avoiding the temptation to seem defensive or seem dismissive. And both of those can be real risks because it can be quite frustrating at times when you're sitting there as the CEO and you hear views expressed that yeah, you just plain disagree with or think are wrong.

[00:06:18] Alison: When you walk out of the room, you walk out with a clear, sort of view of, well, that was a successful meeting, and I achieved a positive impact with the rest of the board. And we can get on and do the things that we think are right or not, if it went off the rails. You have a clear feeling.

[00:06:39] Alison: As a non executive director, it's much more imprecise, I suppose. You can go along, you can ask, you can hopefully ask good questions you can challenge well, you can be supportive. Those are useful things to do. You can try to form a view that the CEO is making good [00:07:00] judgments and that the recommendations are well put thought through.

[00:07:03] Alison: You can try to be aware of falling prey to recency bias or judgments based on highly imperfect information. And you can also be very aware of the disproportionate impact that your comments or a lack of interest in a topic, looking bored, or walking out or, all of those behaviours have a lot of impact as a non executive director. So you can be aware of those things and try to manage those. But you also know that if you have a skillful CEO, that they will receive your questions and comments, whether they're incisive or not, with respect and deference. And often you never really know if you landed anything.

[00:07:50] Alison: And quite often you'll leave a few meetings and wonder if you did actually make a difference or not. So it's a very different [00:08:00] experience. Being around a board table as a CEO compared with being a non executive director.

[00:08:05] Richard: Yeah, absolutely. And I guess how much do you think having been there as a CEO and being aware of those dynamics et cetera, helps you now as a non executive director?

[00:08:19] Alison: I like to think it helps. I definitely like to think it helps. And I think I particularly, as a former CEO, have a lot of empathy with how it is for the CEOs of the organisations that I'm involved in. And particularly, the importance of backing the CEO. Having high expectations of a CEO, obviously that they're putting forward well reasoned recommendations going through a good process of challenging those.

[00:08:52] Alison: But at the end of the day, backing their judgement and knowing that to disagree with the [00:09:00] CEO's recommendations is a really a big deal and can be quite undermining. And is a to be avoided except in the most extreme situations. So I know that matters. I also know that it means a lot to a CEO and their team to have a board who's well prepared, who's interested, who's engaged, who's attentive, who's asking good questions.

[00:09:27] Alison: Who's giving positive feedback? And those things are, those are easy to do and they do matter. So I think I'm conscious of that as well. I hope also, I think as a former CEO, I think one of the, boards have a huge amount of responsibility. There's a lot of different rabbit holes that you can go down as a board.

[00:09:50] Alison: There's a lot of different action items that you can send management on chasing between board meetings. And I think as a former [00:10:00] CEO, I really try and I'm conscious to remind everyone that we've got to focus on what really matters, what the priorities are. There's always going to be a lot of things that are not perfect.

[00:10:13] Alison: There are always going to be a lot of things that we could be doing that we're going to choose not to do. And too many of those sort of wild goose chases and distractions. Boards, I think unwittingly can do at times.

[00:10:26] Richard: Yep. And Alison, you talked at the beginning of the podcast about the benefit of being able to have CEO roles and non executive roles at the same time. What did you see as the advantages of doing those two things together and how did you manage the pressures of those two different things?

[00:10:45] Alison: Well, I think that it was, yeah, it was, it was a huge privilege and I'm very thankful to the boards who supported me in doing both of those because it can be a juggle at times. And [00:11:00] I think, many organisations are understandably reluctant or concerned that juggle might become too hard to manage at times. But I found the additional workload certainly, came out of my hide, I guess, in that it was, it's quite a lot of extra work with significant organisations like ANZ and Woolworths to be well prepared for.

[00:11:25] Alison: But it was enormously beneficial, I hope, for both the organizations that I was involved in as well as for the experience that I gained and how it helped me subsequently be a better CEO at Coca Cola Amatil and then a better non executive director down the track.

[00:11:43] Alison: I think particularly being a current serving CEO, you are very in touch with the issues of the moment. Be those sort of policy issues or issues around, changing [00:12:00] of legislation, regulation, attitudes, stakeholders, you're in touch with shareholders, proxy groups. And so you're very contemporary and able to, I think, support the CEO in the judgments they're making and credibility and weight and the rest of the board who were not in a CEO role would look to you to kind of validate what they were hearing from the CEO of the organisation. And so I think that was a useful thing. But yes, definitely a juggle and a privilege to be able to serve in both of those roles concurrently.

[00:12:42] Richard: Yep. And Allison, if you were a CEO today who hasn't gone down the non executive path at this stage, what advice would you give to us, to a CEO in that position who wanted to get started or put things in place for that future career? Okay.

[00:12:58] Alison: Well, I'd say that, [00:13:00] no, first of all, you should really know that your experience as a former CEO does add a huge amount of value to a board and a CEO of a company. Because you do have a good sense of what really matters, what's really important. And an ability to really help clarify the do's and the don'ts for an organisation, I guess, what to focus on and what not.

[00:13:25] Alison: And you naturally have an approach of wanting to support the CEO, back the management team and build an environment of trust. So you can add a lot of value. I think. You do, as a former CEO, always have to be really clear about where you draw the line between executive and non executive responsibilities.

[00:13:47] Alison: And many CEOs, many former CEOs, will have a tendency of naturally keeping want to go over that line, and even their colleagues around the board table may have a tendency to look to them and say, well, what would you have done in [00:14:00] this situation?

[00:14:00] Alison: And, that dynamic is a really important one to be conscious of and to make sure that you don't compromise the accountability of the current CEO by being too operational or specific in your suggestions or having those conversations offline with your board colleagues about, well, I don't really agree with that and I would have done it differently. I think those things can be hugely disruptive if you stray down that line.

[00:14:31] Alison: I think also as part of that really important to have a sit down and have a good conversation with the serving CEO and discuss that and say, I want to watch my tendencies to do this. And let's make sure that we, we kind of talk about things.

[00:14:48] Alison: And, if you think, I've stepped over the boundary, tell me and agree with them to discuss things offline where you may genuinely have a view about how they're going about a [00:15:00] certain decision or execution. And you might actually, but maybe you think about having that conversation almost in a coaching sense offline rather than via the boardroom because of that dynamic.

[00:15:12] Alison: I think, for me as a former CEO I really thought hard about what I'd love to get involved in sectors. I don't know as much about partly for that reason, because I think you can't interfere. You can't operationally, uhm, make observations as easily as if it's something you're familiar with. It really brings your contribution to its purest essence of being a former CEO, not a former CEO in that particular industry or for that particular organisation. So that's a thought that I would consider if I were thinking about a non executive role as a former CEO.

[00:15:55] Alison: And I, I would say enjoy, really enjoy what's an [00:16:00] important responsibility as a non executive director, but a much less intense and direct accountability.