December 09 – January 10

Five directors predict how the role of non-executive directors will change in the next decade

KIRSTIN FERGUSON

MAICD

Global CEO of Sentis, NED of SunWater

At 37, I am a relatively young NED and therefore, one of only a handful of Generation X NEDs and also relatively rare, a female director. However, by 2020, both of these factors will have changed – the average age of Generation X will be 50. This will affect the values of boards (and the organisations they direct) and how directors interact with one another and management. We will hopefully also have far greater proportion of women on our boards.

By 2020, baby boomers will no longer dominate Australia’s boardrooms. The rise of Generation Xs as NEDs will change how boards conduct themselves moving well into the 21^st century. This will include a move towards innovation within the boardroom and ensuring time is available during meetings to focus on long-term business strategy rather than spending so much time on regulatory matters and risk-management processes. This will not come at the expense of good governance but will acknowledge that NEDs have skills and value to contribute to an organisation beyond just ensuring compliance.

More Generation Xs as NEDs will result in boards that are avid adaptors of technology and are excited to be working in a collaborative digital age. Directors will be on Facebook, LinkedIn and other online communities, making them more accessible to those in the organisations they direct and the sector in which they operate. The veil of privacy often available to NEDs will be lifted as Google allows someone to read material online which will have been generated across an entire career.

By 2020, there will also be a far greater representation of women in Australia’s boardrooms. According to Tammy Erickson (Harvard Business Review, July 2009), Xs were the first generation to grow up with high divorce rates and, thus, women in independent authority roles. The acceptance of diversity and the values placed on balancing work with other commitments will see boards promoting corporate responsibility in their organisations to include encouraging women to gain the experience they need for directorships during their careers.

Finally, by 2020, there will have been a recognition that the risk/reward equation of being a director today does not always balance. If remuneration for directors does not rise in line with the increasing personal responsibility and risk to personal brand, it will be much more difficult to find highly skilled and experienced directors prepared to sit on boards. However, as remuneration for directors increases, expect to see more executives positioning themselves as professional directors for the future.