Trust and respect key to board and management relationship, says non-exec director

A board and management relationship based on trust and respect is far more successful than a boss-subordinate one, according to executive director Nicola Wakefield Evans.

Wakefield Evans is a non-executive director of Macquarie Group, Lendlease, Australian Institute of Company Directors, Viva Energy Australia, Metlife Australia, Clean Energy Finance Corporation, UNSW Foundation and chairman of the 30% Club Australia.

She delivered the keynote address at the Governance Institute of Australia’s Governance and Risk Management Forum last week, and said that while it’s important for the board and management to be aligned in achieving the same vision and objectives, in reality their roles are different.

“To hold management to account the board expects management to understand and accept that the board's role is to monitor and question, probe issues, seek clarification, offer insight and share its knowledge and experience. Asking questions of management is not necessarily criticising management,” said Wakefield Evans.

The expectation of the board is not to criticise, but to test, she said.

“The chairman and the board is not there to run the company either. And if you see boards getting too involved in day to day management, then that's when you're likely to see some of that trust, some of the respect and some of the relationship breakdown because then you get management querying what they're doing.”

Wakefield Evans believes that the most important relationship in a company is between the chair and the CEO.

“The board's primary responsibility is to hire and fire the CEO. To understand how that then works in practice, the chair who is the main person responsible for what the board does, needs to have a good and respectful relationship with the CEO,” she said.

“They don't have to be best friends, but it needs to be one that's based on trust and respect.”
If the relationship does not have this strong and healthy foundation, then the board must step in before the dynamic threatens the success of the company.

“It's up to the board, the rest of the directors sitting around the table, the company secretary and senior management to have their radars out for when that relationship breaks down because when it breaks down, that's when you obviously see the first signs of issues arising in a company.”