Bolstering the boardroom

The pressure is on aged care organisations to make important strategic decisions as they respond to the changing policy landscape, but are their boards up to the challenge? 

Boards are critical to the good governance and functioning of an organisation. When the board works well with the CEO and other senior staff they collectively provide a powerful example of leadership and create the culture for the organisation. This greatly increases the ‘intelligence’ available to the organisation.

But, in order for a board to achieve this desired state, its membership must be diverse in age and gender, and it must have a range of skill and knowledge.

That’s according to Peter Miller, an executive coach and consultant to several national organisations who has published widely on leadership, management and governance. A previous board director of several companies, he has also been a former deputy chair of an aged care organisation.

Worryingly, Miller says the boards of many aged care organisations, particularly those in rural locations, do not have a strong diversity of membership, and many members lack the skills and knowledge to undertake their roles properly.

“My experience is that the members of governing boards of many aged care organisations in rural location, particularly the small to medium organisations that are not aligned to state or national players, do not have a good understanding of their compliance, legal role and responsibilities; their policy development role and strategic planning role vis-a-vis the CEO and other senior staff; and their monitoring role,” he says.

Many members have been on such boards for several years and were invited to membership because of friendships, church or other alliances, rather than because of the skills and knowledge they could bring to the organisation, he says.

“In reality, they offer very little input into board discussions and are little more than ‘passengers’ in the operation of the board. All too often, board members have no real understanding of the reform agenda in the sector and this places a very heavy burden on the CEO and other senior staff,” Miller says.

Ready for reforms

Sabine Phillips, principal at Russell Kennedy Lawyers, agrees that aged care organisations need diverse boards in order to make the informed decisions required to comply with new legislation and to put in place the financial modelling that is geared towards consumer-led aged care.

Phillips, who is a director of Northern Health and chair of RDNS’s human research ethics committee, says the quality of aged care boards is mixed.

“There are a lot of boards made up of people who have a great deal of knowledge and expertise, whether that be in aged care or in another industry, and they bring specialised skills such as financial, legal or clinical.

“However, there are still a lot of boards that operate on a more of a community approach and rely a great deal on the advice they get from their executive.”

Phillips says the majority of boards in the not-for-profit area are comprised of volunteers who participate because they want to support the elderly within a particular community.

“Having said that, sometimes there isn’t the understanding among those board members that they are in fact key personnel under the Aged Care Act; sometimes they’re not aware of the impact that may have if something untoward occurs within the organisation.

“Similarly, they also have responsibilities as directors of companies under the ASIC rules, and they are also accountable for the clinical governance within an organisation.”

Board members often rely on reports from senior executives that clinical operations in the organisation are compliant, when in fact they are not, she says. “Organisations can find themselves having sanctions imposed and the board being totally unaware that there were underlying issues.”

The board needs to understand the business and how it functions in order to challenge the reports they are receiving, she says.

Skill mix

It is incumbent on anyone wishing to join a board that they have a good understanding of the organisation, Phillips says. “They don’t all have to be experts in aged care, but they need to have a level of expertise that can be transferred to that board, be they someone who has good business acumen, a lawyer, an accountant and the like.”

For established boards, Phillips suggests they look at their structure and skill mix, perhaps undertaking a skills analysis.

“I’m on a couple of boards and we have a skills matrix; if someone is going off the board after their term has ended then we look for their specific skills.”

Phillips also advocates limit of tenure for board members. “And whilst that was being implemented they could source expertise by co-opting people, so you might co-opt a lawyer who rang in once a month to go over issues. Even in a rural and regional area, there are generally hospitals associated with those areas which have a wealth of expertise.”

Tyranny of distance

The task of securing the right skill and talent mix on a board is particularly challenging for organisations in regional and rural locations.

Sophie McNamara, an associate in Russell Kennedy, says that technology could offer these organisations an innovative solution.

“Technology is perhaps underutilised; it’s the idea you could Skype into a meeting, or you could have satellite meetings, where you fund everyone to commute to a different location. There are not insurmountable obstacles to getting everyone to a meeting,” says McNamara, who is a board member of Foster Care Association of Victoria.

New blood

Along with skill mix, many aged care organisations struggle to attract young people onto their boards.

McNamara says that one of the characteristics of Generation Y is a desire to volunteer: “More people from Gen Y are volunteers than any generation before us. There is a real keenness on the part of young people to get involved in boards.”

However, organisations need to reach out to this generation, she says. “A lot of smaller boards tend to ask someone they know, or someone in the sector; that’s incredibly limiting. They should consider advertising and perhaps targeting young people via social media. That would be an effective way of letting people know a board position was available, or articulating that you are seeking a younger board member.”

McNamara says this could be particularly beneficial for community organisations, as many young people would be keen to contribute to the area where they grew up. “Again that could be facilitated through the use of technology,” she says.

Phillips echoes this and says the aged care sector needs to develop interest among young people across the professions, from law and accounting to business and medicine. “Fresh eyes are always a good thing,” she says.

Sabine Phillips and Sophie McNamara will further discuss the issues facing aged care boards in their presentation at the Better Boards conference, taking place in Adelaide, 1-3 August. Click here for more information. AAA is a media partner of the conference.  

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Testing the talent

To attract high quality board members, Peter Miller suggests an organisation might wish to start with a board gap analysis:

• First analyse each current board member’s skills, knowledge and talents to determine how these fit with your vision, mission, values and strategic plan for the organisation.
• Then, use any gaps in skill, knowledge and talent to identify areas of need.
• Exit, in a dignified way, those current board members who are passengers or less active members on the board.
• Be sure not to extend board terms to be polite or because it has always been done that way.
• Now use your existing networks to proactively identify and target individuals who fill the gaps.
• Get to know these individuals and create a personal connection with them before raising the possibility of board membership.
• Use conversations to demonstrate how the targeted person’s interests might be aligned with those of the board and the organisation.

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